Victor Shih
Victor Shih

The surprise dismissal of China´s financial regulator Xiao Gang does not mean that its policies and approach are really going to change, says political analyst Victor Shih in the New York Times. His successor Liu Shiyu is certainly no bold reformer, says professor Shih.

The New York Times:

The shake-up also does little to solve the underlying problem: a government increasingly under the control of one man, President Xi, who is trying to subdue economic turbulence. It is this penchant for control, investors and analysts say, that is driving talent away from the technocratic bureaucracy and rewarding officials who fall in line.

“That’s the problem of a very top-down policy style that’s emerging in China now,” said Victor Shih, a professor at the University of California, San Diego, who studies the confluence of finance and politics in China. “No one dares to challenge whatever preconceived notion the top leadership has.”…

While Mr. Liu has little experience with markets, he does have connections. In the mid-1990s, he worked the state-owned China Construction Bank. The bank, at the time, was headed by Wang Qishan, who is now overseeing the anticorruption campaign as one of seven members of the Communist Party’s ruling Politburo Standing Committee.

“He’s definitely not a bold reformer,” Mr. Shih said of Mr. Liu.

The new securities chief may be in an impossible position, expected to control inherently uncontrollable markets and take the blame if the efforts fail. The push by Mr. Xi’s to assert state control over the markets and the economy go against the philosophy of China’s early reformers under Deng Xiaoping, the paramount leader who sought to give more space to the market.

More in the New York Times.

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