Xi’s Finance Crackdown Grows as Over 40 Officials Ensnared
- China Merchants Bank shares slump after president is removed
- China’s economy is facing increasing headwinds amid probes
President Xi Jinping’s corruption crackdown on the nation’s sprawling financial sector is accelerating, reaching the upper levels at some of China’s premier institutions and further unnerving investors having to contend with mounting headwinds for the world’s second-largest economy.
At least 17 officials, including former China Merchants Bank Co. President Tian Huiyu, have been probed or penalized in April, according to announcements from the Central Commission for Discipline Inspection, the top anti-corruption body. That’s in addition to dozens of financial officials that had been ensnared since October when an inspection focused on financial institutions and regulators was launched.
The demotion and subsequent probe of Tian have sent shares of China’s largest retail bank down by almost 20% over the past five days at a time when the nation’s stock markets are already reeling. Investing in China is becoming increasingly precarious as Xi has cracked down on broad parts of the private sector, including the real estate industry and big technology companies. A growing virus outbreak is now further hobbling the economy, putting the government’s 5.5% growth target at risk.
Authorities on Friday announced a probe of Tian for suspected violations, just days after removing him from the bank he had helped build for nine years into a powerhouse. Later on the same day a similar probe was announced on Jiang Yunming, vice president of a Fujian provincial government-owned financial investment company. Jiang and Tian were roommates at Shanghai University of Finance and Economics, according to local media reports.
China’s top prosecutor on Friday arrested Zeng Changhong, a former official at the nation’s market regulator, on suspicion of taking bribes. A veteran at the regulator, Zeng had been in charge of approving initial public offerings and was known as IPO “Big Sister.”
Ding Shilu, ex-chairman of Chongqing Three Gorges Bank, a commercial bank in central China, was charged with bribery and expelled from the Communist Party, according to a statement on Monday from the Central Commission for Disciplinary Inspection.
Other officials that were put under scrutiny in April had worked for top regulators and state-owned banks including China Banking Regulatory Commission and China Construction Bank Corp. The April tally doesn’t take into account probes of lower-ranked officials announced by local governments.
The top disciplinary body sharply criticized more than two dozen financial regulators and state banks in February, saying they had common problems including prominent corruption around key positions and areas. Regulators including the People’s Bank of China as well as the financial institutions named had pledged to rectify the problems.
Xi has continued to press ahead with his signature anti-corruption drive after almost a decade in power, most recently focusing on law enforcement. The campaign has over the years brought down more than 1.5 million government officials, of which the most high-profile ones include the execution of Lai Xiaomin, the former chairman of China Huarong Asset Management Co., and life imprisonment of Hu Huaibang, the former chair of China’s biggest policy bank.