Current Chinese leader Xi Jinping is bracing to secure his reelection as the General Secretary of the Chinese Communist Party (CCP) for a third term. Accordingly, he has been busy stretching his power in all aspects, one of which is to prevent a financial coup.
Wang Youqun, a columnist for Chinese media Da Ji Yuan, believed that Xi had taken at least five measures ahead of the 20th National Congress. Wang holds a doctorate in law from the Renmin University of China
Take down the most powerful financial tycoon
Earlier in June, multiple media reported from sources that Xiao Jianhua, the founder of Tomorrow Group and once the wealthiest person in China, was soon to stand trial on criminal charges. He has been missing since 2017 and was never heard of in public until this year.
Columnist Wang said the schedule of his trial was no coincidence. Xiao’s whereabouts were a mystery until the 20th National Congress loomed. He believed Xi Jinping was planning this to send a deterrent warning to his political foes.
Xiao is often referred to as a key individual behind the 2015 Chinese stock crash, unofficially perceived by many as an attempted financial coup.
Xiao was the most powerful financial tycoon in China before his disappearance. In its heyday, the total assets of the Tomorrow Group were as high as $447 billion.
Chinese exile law professor Yuan Hongbing claimed in an interview in 2017 that Xiao triggered the stock meltdown to retaliate against Xi for heightening his anti-corruption campaign.
Scrutinize senior financial officials
Under Xi’s leadership, a handful of financial officials have been purged. Among them were top financial regulators, such as those from the China Securities Regulatory Commission, the China Banking Regulatory Commission, and the China Insurance Regulatory Commission.
Wang said even top leadership from the banking system was rounded up, including those from China’s central bank, state-owned Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China, China Construction Bank, and Bank of Communications. In addition, policy banks, joint-stock banks, and the insurance industry were also targeted.
Among them, Lai Xiaomin, former chairman of Huarong Group, the largest state-owned financial asset management company in China, was sentenced to death and executed.
Powerful Chinese tycoons
Many financial middle persons for CCP officials have been taken down. They are more commonly known as the Financial Crocodiles who dominate China’s financial market food chain.
Besides arresting the most powerful one, Xiao Jianhua, Beijing has also arrested others on suspicion of economic crimes. Among them were Xu Xiang, general manager of Shanghai Zexi Investment Management Company Limited, Ye Jianming, chairman of China Huaxin Group, Che Feng, the actual controller of Hong Kong Digital Domain, Wu Xiaohui, former nephew and son-in-law of Deng Xiaoping, also the former chairman of Anbang Insurance Group.
Xu Xiang was apprehended on charges of insider trading offenses that led to the 2015 stock market crash.
Step up supervision
Beijing has vigorously monitored banks and regulators. Wang recalled that the country’s top anti-corruption agency has been busy dispatching disciplinary inspection and supervision teams to finance departments and banks.
On June 17, Xi Jinping joined the Report on the Rectification and Development of Financial Units in the Eighth Round of Inspections of the Nineteenth Central Committee. After the meeting, officials declared that the financial sector’s inspection, supervision, and rectification must be strengthened.
Later that day, Xi stated, “Anti-corruption struggle is the biggest political battle that affects people’s hearts and minds. It is a major political struggle that cannot be lost and must not be lost.”
Wang commented that significantly more senior financial officials and financial giants would be purged in the future.
The five fouls
News agency Seeking Truth May 15 released part of Xi Jinping’s speech at the Central Economic Work Conference on December 8, 2021.
When Xi discussed capital supervision, he said preventing some capital from growing relentlessly was critical. He added it was necessary to counter against monopoly, huge profits, sky-high prices, malicious speculation, and unfair competition.
The most prominent example of the disorderly expansion of capital is billionaire Jack Ma’s Ant Group, an affiliate of Alibaba.
After Ma publicly criticized Xi in front of senior Chinese officials in October 2020, Xi blocked Ant Group’s initial public offering. The IPO would have been the most historic listing globally. It was estimated to value more than the world’s largest banks. Both Ma and Ant are known for having a close association with the Jiang Zemin faction.
Afterward, Ant was forced to restructure, and the IPO cancellation heralded Beijing’s ruthless clampdown on multiple sectors that shook the world’s second-largest economy.
Xi summed up these cases in his 2021 remark about the five problems his administration had to address: again, they were monopoly, huge profits, sky-high prices, malicious speculation, and unfair competition.
According to Wang Youqun, the five fouls were about stopping capital expansion and powers linked to the anti-Xi forces.