Yi’s Removal and Wu’s Appointment
On February 7th, the Chinese Communist Party’s (CCP) Central Committee appointed Wu Qing as both Chairman and CCP Committee Secretary of the China Securities Regulatory Commission (CSRC). Wu replaced now former Yi Huiman who served in both positions since 2019.
Wu’s Background
Wu served in various party and government positions in the Shanghai region, including as the Vice Mayor of Shanghai from 2018 to 2019 and a member and Deputy Secretary of the Shanghai Municipal Party Committee from 2019 to 2023. He also served as a Party Leadership Group member of the Shanghai municipal government from 2017 to 2019 before joining the city’s Standing Committee. Wu is a delegate to the 20th CCP National Congress and an alternate member of the CCP’s 20th Central Committee.
Regarding Wu’s economic and financial background, he served as both Party Secretary and Chairman for the Shanghai Stock Exchange (SSE) from 2015 to 2016. He also served as Chairman of the Board of the Shanghai Advanced Institute of Finance at Shanghai Jiao Tong University during the same time as he was mayor. Wu also served briefly as the Director of the Office of Promoting the Construction of the Shanghai Science and Technology Innovation Center in 2019. He was also the director of the Management Committee of the Shanghai Zhangjiang High-Tech Industrial Development Zone during this time.
Furthermore, Wu was also the Director of the Shanghai Office for Promoting the Construction of Science and Technology Innovation Center from 2019 to 2021. He also served as the Director of the Management Committee of the Shanghai Zhangjiang High-Tech Industrial Development Zone during this period.
Analysis
The Standing Committee removed Yi because the SSE hit a five-year low on February 5th, which was the latest but most significant decline in the exchange. The stock market declines also caused several A-share investors to privately question Yi’s ability and call for his resignation to prevent any further declines and reverse them. Yi’s removal also occurred one day after Central Huijin Investment Co. and other state-owned investment firms stepped up the purchase of stocks and ETFs to stabilize the market.
The Committee realized that Yi lacked the necessary knowledge and background to head the CSRC during this time since he came from a banking rather than investment background. For example, Yi held several planning, management, and internal party positions at various levels in the Industrial and Commercial Bank of China from 1985 to 2019. Wu served as the SSE’s Party Secretary and Chairman, as well as being the director of several offices that the government looks to revive the Chinese economy. For example, he served as the director of various science and technology innovation centers in Shanghai from 2019 to 2021.
The Standing Committee also likely replaced Yi because the CCP needed a scapegoat to blame for the deteriorating Chinese stock market, especially after the February 5th decline. They viewed him as the most appropriate since he was not only the CRSC head, but the investors had previously called for his resignation. The Committee likely believes that Wu’s past background and experience will enable him to solve the issues with the stock market. For example, the FTES China A50 Futures Index rose 0.12 percent after the Standing Committee appointed Wu as the CSRC’s Party Secretary/Chairman.
However, Wu’s appointment will likely not provide the necessary means to reverse the declines in the long term. The reason is that Wu’s appointment will not solve China’s economic issues, such as the real estate crisis, weak consumer spending, and increased political centralization. Furthermore, the Chinese stock market will continue to face declines and weak growth in the long term during Wu’s tenure, which would likely lead to his future dismissal.