China reins in its once-freewheeling finance sector with purges and pay cuts
Subscribe to enjoy similar stories. Chinese leader Xi Jinping is bringing the country’s financial sector to heel, one banker at a time.
For decades, China sought to learn from Western finance. Now it’s purging many of the internationally experienced financiers who helped steer the country’s economic rise, while ushering in a new generation of loyal functionaries willing to carry out Communist Party edicts and disavow capitalist excess.
Financial heavyweights sidelined or purged under Xi include a former Deutsche Bank rainmaker who helped some of China’s largest companies go public; the longest-serving chairman of a leading Chinese asset manager; and several bankers who played influential roles in developing China’s financial industry during the 1990s and 2000s. The purges are being paired with other steps aimed at diluting pro-market instincts in China’s financial industry and bringing it more squarely under Xi’s control.
The Communist Party is curbing bankers’ lavish pay packages, ramping up political study sessions and centralizing decision-making on financial affairs. The governor of China’s central bank, a role helmed in recent decades by technocrats with international experience, has been downgraded in the party hierarchy.
Many economists and bankers fear the shake-up will damp the animal spirits that fueled China’s rise, as financiers and regulators become more conservative to avoid mistakes that could get them in trouble. China is also losing bankers and regulators with international experience and technical knowledge at a time when it faces complex financial risks that require sophisticated oversight, including how to work through trillions of dollars’ worth of off-the-books local government debts and how to
. Read more on livemint.com
