Thursday, September 16, 2004

I am totally speechless about the impending personnel change in the Chinese financial sector. According to the South China Morning Post, Shang Fulin will step down from the CSRC and move to the CBRC. Liu Mingkang will step down from CBRC and become the governor of Fujian. Finally, deputy mayor of Chongqing and former Shanghai official Huang Qifan will take Shang's place. I can see Huang Ju's hand behind all of this, since Huang Qifan was a key official during his tenure as Shanghai party secretary. Huang Ju is of course in charge of the financial portfolio. Truth be told, Shang will probably do a better job at CBRC than he did at CSRC. Everything in Shang's background speaks of a cautious central banker, rather than a market maker.

But, sadly, it seems that Liu will go the way of Dai Xianglong, perhaps ending his career in the obscurity of provincial leadership. Liu is 58, which is just a couple of years away from ministerial level retirement age, so unless he gets promoted to the State Council, he will look forward to a nice post in the NPC or the CPPCC. This is probably what Huang Ju had planned, to slowly ease Zhu Rongji's key lieutenants from the financial sector. It remains to be seen what will happen to Wen's key lieutenant, Yan Haiwang, who is currently the party secretary of CBRC.

Thursday, September 16, 2004
WATCHDOGS Regulators reshuffle pack at the top News of the changes sends mainland stock markets surging
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The mainland's stock markets staged their biggest one-day gain in 20 months yesterday on reports the country would get a new chief of securities regulation as part of a personnel reshuffle at two regulators.
Sources said Shang Fulin, chairman of the China Securities Regulatory Commission (CSRC), was likely to take over the China Banking Regulatory Commission (CBRC), with current chief Liu Mingkang becoming governor of Fujian province.
Mr Shang, seen as a moderate conservative, had been criticised by brokers and fund managers for failing to rebuild public confidence in the A-share markets.
"What has he done in the last two years?" asked one Shanghai-based fund manager. "He lost credibility a long time ago."
In February, the central government proposed nine measures to boost stock-market development, including ensuring returns to investors and resolving the issue of state shares, but none had been properly implemented.
Mr Shang is expected to be replaced by Huang Qifan, a former top economic policymaker in Shanghai and the deputy mayor of Chongqing.
Sources in Shanghai said Mr Huang's imminent appointment was a boost for the markets as "he plays the markets himself".
The Shanghai A-Share Index jumped 4.2 per cent yesterday while its Shenzhen counterpart rose 4.6 per cent, capping two consecutive days of gains after hitting multi-year lows on Monday.
Although the securities industry cheered Mr Shang's expected departure, sources said he was a poor choice for the CBRC's top job, despite previous stints at the People's Bank of China and the Agricultural Bank of China.
He was more familiar with monetary policies and did not have substantial experience regulating banks during his central bank tenure.
Reviews for Mr Liu were less harsh.
A western banking analyst lauded Mr Liu's strengthening of the regulatory regime, particularly risk management and capital adequacy requirements, in a country where banks have been desperately racing to expand operations.
"It's remarkable what he has done at the CBRC and it's been much tougher than I had expected," the analyst said.
But appraisals from the industry were mixed.
"Mr Liu has done a great deal in introducing advanced western regulatory practices," said a former banker. "However, he sometimes showed a lack of understanding of the domestic industry."
Another source said Mr Liu's imminent transfer to Fujian reflected central government concerns that the speed of financial and banking reforms was too slow.
Mr Liu was deputy governor of Fujian from 1993 to 1994.

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