Why China hasn’t put a new head at the heart of its financial market mess
The China Insurance Regulatory Commission has remained headless for more than two months since Beijing’s corruption crackdown ensnared its former chairman
China’s insurance regulator has been without a chief for over two months while the industry the agency supervises continues to shiver amid Beijing’s latest clean-out of corruption.
Beijing hasn’t announced a replacement for Xiang Junbo, the former chairman of the China Insurance Regulatory Commission, one of China’s top three financial regulators, since he was placed under a corruption investigation in early April. While the lack of a chairman doesn’t stop the agency from performing its day-to-day functions, the vacancy reflects the Chinese top leadership’s mistrust of a sector that is both a key source of financial insecurity and the focus of corruption allegations, according to analysts.
The insurance industry’s latest shake-up occurred with the reported detention of Wu Xiaohui, the chairman of Anbang Group, who has close ties to some of China’s most powerful political families. Anbang said early on Wednesday that Wu had stepped aside “for personal reasons” and had left his empire to his subordinates. The Chinese magazine Caijing earlier reported that Wu had been taken away for investigation. While there is no direct link between Xiang and Wu, Anbang was allowed to sell high-risk and short-term insurance policies aggressively under Xiang’s watch.
“The delay in appointing a replacement [for Xiang] suggests the leadership has lost confidence in the institution as a whole, not just in a particular individual,” said Scott Kennedy, deputy director of the Freeman chair in China Studies at the Centre for Strategic and International Studies in Washington.
“The leadership is not only trying to rein in corruption, but decide on how to potentially restructure China’s financial regulators and it apparently is deadlocked on the various options,” Kennedy said.
China’s three watchdogs for banking, the stock market and the insurance industry are repeatedly targeted in China’s anti-corruption campaign – a hallmark political movement under President Xi Jinping – especially in the wake of the summer 2015 stock market rout that hurt Beijing’s credibility in managing its economy.
