BEIJNG, CHINA – NOVEMBER 13: Illuminated skyscrapers stand at the central business district at sunset on November 13, 2023 in Beijing, China. (Photo by Gao Zehong/VCG via Getty Images)
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China’s Cabinet on Wednesday appointed markets veteran Wu Qing as chairman of the China Securities Regulatory Commission, state media Xinhua said, replacing Yi Huiman to navigate Beijing through the turbulent waters of a market downturn.
Nicknamed the “Broker Butcher” for his crackdown on traders, Wu was previously the acting vice mayor of China’s major financial hub Shanghai and served nearly two years as chairman of the Shanghai Stock Exchange.
His predecessor, Yi, took the mantle of the CSRC in 2019, tasked to undertake a spate of sweeping capital markets reforms.
Wu’s appointment comes on the footsteps of the CSRC over the past two weeks announcing new supportive policies to stabilize and revitalize China’s stricken stock market, which has become a casualty of volatility in the property sector and widespread investor pessimism over the outlook for the world’s second-largest economy.
The measures came as the CSRC earlier this week pledged a new spartan “zero-tolerance” policy against malicious short selling — betting that a certain asset or assets will fall in price — warning potential offenders that they will “lose their shirts and rot in jail,” according to Reuters.
“The CSRC will crack down on the use of securities lending transactions to implement improper arbitrage and other illegal activities in accordance with the law to ensure the smooth operation of the securities lending business,” a commission spokesperson said Feb. 6, according to a Google-translated statement.
Exacerbating the picture, China’s CSI 300 tumbled to a five-year low on Jan. 31, after the country’s manufacturing activity shrank for the fourth straight month. Citing undisclosed sources, Bloomberg News reported that Chinese President Xi Jinping would discuss the state of the stock market with financial regulators, after last month giving a speech that extolled the merits of “high-quality financial development,” the “combination of the rule of law and the rule of virtue,” and activating a “financial culture with Chinese characteristics.”
In late January, Chinese Premier Li Qiang called for “more powerful and effective measures to stabilize the market and confidence,” according to a Google-translated statement, raising expectations that a so-far reluctant Beijing will mobilize a massive stimulus package, amid increasing fears of deflation biting into growth after the Chinese economy underwent a slower-than-anticipated post-Covid-19 recovery.