Bank of China’s Xiao named top securities regulator

The appointment of Xiao Gang, the former chairman of Bank of China, as the mainland’s top securities regulator suggests that officials in Beijing are keen to preserve the status quo during the critical first few years of the new leadership.

Xiao is known as a prudent and cautious figure. As much as China’s freshman leaders want to improve the functioning of the country’s capital markets, their new chairman of the China Securities Regulatory Commission (CSRC) is expected to prioritise the country’s existing financial order.

However, as all China’s senior appointments are made behind closed doors, outsiders can only speculate about the real meaning behind such decisions.

The reshuffle came as a surprise as Xiao had been expected to succeed Zhou Xiaochuan as the governor of the People’s Bank of China, the country’s central bank — and Guo Shuqing, the former CSRC chairman, had been in the office for just 17 months.

But it was also clear that Xiao was being groomed for an important role after he was named as a member of the powerful central committee of the Communist Party. His experience at the central bank, where he has served in a number of senior roles, also helps.

Unlike his outspoken predecessor, Xiao is known to be conservative. His only high-profile comment on China’s capital markets came in a carefully worded article on the country’s shadow banking system, which was published by China Daily last October.

Guo is seen as something of a market saviour and has made significant contribution to China’s financial reform. He initiated measures to rescue China’s domestic stock market, cutting trading fees and requiring underperforming companies to be removed from the exchange. He also simplified the listing process and improved the transparency of listing hopefuls.

The China Securities Journal, a newspaper designated to carrying the securities regulator’s announcements, said on Sunday that Xiao had been named chairman of CSRC, but didn’t say what Guo’s next job is going to be — though he is widely expected to become the governor of northeast China’s Shandong province. Market sources say his appointment has been confirmed.

Bank of China said in a statement Sunday night that “due to the need of the state financial work, Xiao Gang resigned as chairman and non-executive director of the company and its principal operating subsidiary, Bank of China (Hong Kong), with effect from March 17, 2013”.

The bank said that Xiao has confirmed that he has no disagreement with the board and there are no matters with respect to his resignation that need to be brought to the attention of the company’s shareholders.