Exclusive: China considers replacing head of markets regulator - sources

Mon Aug 10, 2015 9:52am EDT
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By Benjamin Kang Lim and Pete Sweeney

BEIJING/SHANGHAI (Reuters) - China's ruling Communist Party has begun looking for an eventual replacement for the top securities regulator, who faces internal criticism over his handling of this year's boom and bust in Chinese stock prices, sources with ties to the leadership said.

The party has in recent weeks sounded out potential candidates to succeed Xiao Gang as chairman of the China Securities Regulatory Commission (CSRC), and party elders will discuss the matter at meetings this summer, two sources said.

The search for a successor is unusual so early in Xiao's term, which does not expire until end-2018, and reflects the party's unhappiness with his performance, but a final decision has not been made yet on whether to replace him, they added.

Some in the party believe an immediate change of leadership at the CSRC, which is at the forefront of a government campaign to shore up share markets, could increase market uncertainty.

"The central (leadership) is not very satisfied with Xiao Gang, but maintaining market stability is the top priority," one source said.

Xiao, who turns 57 this month, was appointed only two years ago. He has come under fire by investors for what they see as a clumsy response to the market panic that began in mid June, and for not doing more to curb the markets' earlier excesses.

The Shanghai and Shenzhen markets rocketed ahead in the first half of this year then tumbled more than 30 percent in three weeks. The sell-off triggered a series of interventions by the CSRC, including new restrictions on selling shares.

The party's Organisation Department has recommended a shortlist of at least three candidates to replace Xiao, the sources said, adding that the secretariat of the party's Central Committee had already sounded them out.   Continued...

China Securities Regulatory Commission Chairman Xiao Gang addresses the Asian Financial Forum in Hong Kong January 19, 2015. REUTERS/Bobby Yip