The party’s disciplinary committee has targeted several of the country’s top bankers in recent weeks. Foreign investors react nervously. Is leadership about stability or ideology?
This article lies IPPEN.MEDIA as part of a cooperation with Europe. Table Professional Briefing before – first published him Europe.Table on May 04, 2023.
China’s financial industry is in a state of alarm. The government recently targeted several top managers from banks and other institutions. Beijing’s enforcer is the dreaded Central Disciplinary Commission of the Communist Party (CCDI). She has launched a campaign to “resolutely” combat wrongdoing in the industry.
According to the CCDI, a record number of inspections have recently been launched at more than 30 state-owned companies in sectors such as finance, defense and energy. It’s all about the financial institutions. Chinese state media reported that investigations were launched against eight senior managers of state-owned banks in March alone as part of an “intensified anti-corruption campaign”. According to the Financial Times, more than a dozen managers have been investigated or fined since February.
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More penalties than ever before
Admittedly, the fight against corruption is nothing new under President Xi Jinping. For years, the authorities have repeatedly imposed harsh penalties on high-ranking government officials and managers. But there have never been so many in such a short time in the banking sector.
The best-known manager the CCDI is now investigating is Liu Liange. The 61-year-old was the chief executive officer of the Bank of China (BOC) until March. The CCDI is also investigating Wang Jianhong, the former head of BOC’s Beijing branch. In addition, Zhao Zhiran, who was previously responsible for the China Construction Bank in Shenzhen, has been targeted by the authorities. Li Li, former president of the Export-Import Bank of China, has already been charged. He is accused of taking bribes.
Investors become skeptical
The disappearance of Bao Fan in February also caused a stir. The Chinese billionaire and head of the Hong Kong-listed financial company Renaissance has not been found to this day. Bao Fan’s family have been informed that the 53-year-old is involved in an investigation, Bloomberg reported.
Industry insiders suspect Bao’s disappearance is linked to the troubles of another Renaissance executive named Cong Lin. He was arrested in September. The Chinese business magazine Caixin reported that he was being investigated in connection with his previous work for the financial leasing arm of the state-owned Industrial and Commercial Bank (ICBC).
Foreign investors are keeping a very close eye on what is happening in China’s financial sector. They have only just learned with great relief that the two-year regulatory crackdown on the technology sector has come to an end. In general, there is great hope that Beijing will finally loosen the reins after the corona opening and give preference to pragmatism.
The rich and the private sector unsettled
The state-run Global Times, for example, argues that the current crackdown is necessary to avoid financial risks such as those recently experienced by US regional banks. However, there is also a lot of ideology involved. The disciplinary commission criticizes the “hedonism” and the inappropriate “luxurious lifestyle” of the industry. A choice of words that is reminiscent of Xi Jinping’s “general prosperity”.
The president used this slogan, which aims for a fairer redistribution of wealth, four times at last fall’s party congress, causing great uncertainty among rich Chinese and in the private sector. Even then, many Chinese banks reacted with salary and bonus cuts for their top managers.
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