China: Graft crackdown in the financial sector enters "deep waters"
Source: Asia Insurance Review | May 2017
The detention of CIRC Chairman Xiang Junbo last month by the Communist Party’s anti-corruption agency is seen as the start of a wider crackdown on graft in the insurance and financial services sectors.
The probe into Mr Xiang for “severe disciplinary violations” has been described as spelling a “looming earthquake” in the financial arena.
“After the fall of Xiang Junbo, the best show is yet to come,” declared the international edition of the People’s Daily, a Party-run newspaper, after Mr Xiang was detained.
On the same day that Mr Xiang’s detention was announced, Premier Li Keqiang called on authorities to “root out corruption in the financial sector”.
Mr Li Yongzhong, a former deputy director of the China Academy of Discipline Inspection and Supervision, said that Mr Xiang’s detention indicated that the anti-graft drive in the financial sector has entered into “deep waters” and the probes could expand.
He said that more than four years of high-pressure anti-corruption efforts, initiated by Chinese President Xi Jinping in late 2012, have unearthed a lot of issues in the financial sector as investigators chase the money trail. Mr Xiang is to date the highest-ranking cadre from the financial industry caught in Mr Xi’s anti-corruption campaign.
Period of risky deregulation
After taking over as CIRC Chairman in 2011, Xiang oversaw a period of deregulation that critics say has contributed to enormous risks in China’s debt-laden financial system, with insurers aggressively marketing short-term high-returns universal products and investing hugely in Chinese listed companies and overseas assets including foreign companies and real estate.
Media reports from China suggest that Mr Xiang’s violations relate to the industry’s frenzied asset purchases in recent years that exacerbated stock market volatility. The investigation could also lead to corruption implicating top officials at other financial regulatory bodies. A