China has recently replaced the head of its securities regulator as a result of growing public discontent over the stock market’s collapse. After assuming the role in January 2019, Yi Huiman has been replaced by Wu Qing, who is a banking veteran and was most recently the deputy party secretary of Shanghai. Wu previously served as the chairman of the Shanghai Stock Exchange and has had more than two decades of experience working with financial regulators, including the CSRC. The markets have had a dire year, losing an estimated $6.1 trillion in market value since their recent peaks in February 2021, with Chinese stock markets being the worst performers globally.
In response to the turmoil in the stock markets, officials in China are making efforts to stabilize the situation and draw a line under the market rout. These efforts included Central Huijin Investment, the equity arm of China’s sovereign wealth fund, announcing that it would increase its buying of shares, which received firm support from the CSRC. As a result, the mainland Chinese stock markets gained for a second straight day, with the Shanghai Composite Index ending up 1.4% and the Shenzhen Component Index jumping 2.9%. Despite these attempts to rescue Chinese stocks, the underlying challenges facing the economy, including weak demand, deflationary pressures, a crashed real estate sector, and rising trade tensions with the United States, remain unaddressed. Furthermore, a brief period of market calm following reassuring statements from Beijing was disrupted after a Hong Kong court ordered Evergrande, a company hit by China’s property crisis, to liquidate, causing renewed investor panic.
