Unfortunately for the embattled now former China Securities Regulatory Commission (CSRC) head, part of the rally in Chinese equity markets overnight has, rightly or wrongly, been attributed to the announcement that he will be replaced.
But Xiao Gang will not be alone.
As you may recall, we had heard Xiao Gang’s replacement could come as part of a broader reshuffle of China’s economic leadership driven personally by President Xi Jinping himself, a re-shuffle that is likely to eventually end up as high as at the Deputy Premier level (see SGH 1/15/2016, “China: Xi Planning Economic Leadership Reshuffle”).
*** As part of President Xi Jinping’s personnel arrangements, Xi agreed with Premier Li Keqiang to appoint Liu Shisu to replace Xiao Gang as chairman of the CSRC. As consolation, Xiao Gang will be named Deputy Secretary-General of the State Council to support Vice Premier Ma Kai in handling the banking sector. ***
*** And in light of the current tough economic conditions, we understand Xi is also going to name Huang Qifan, mayor of Chongqing, to Secretary-General of the State Council to help navigate China through its many thorny economic problems. Huang Qifan, one of the key rising stars we had flagged under consideration for top leadership positions in the 1/15/16 report, is a very well regarded and highly capable official, with a strong track record of success in managing Chongqing. ***
Vice Premier Ma Kai has from what we understand suggested again to Xi and Li to let Huang work with him on bank, stock and insurance issues.
If the highest decision-making body — the Politburo Standing Committee of the CPC Central Committee — endorses Huang’s promotion, the State Council will submit its proposal to the National People’s Congress, China’s top legislature. However, any prospect for the appointment of Huang as Secretary-General of the State Council must first be approved by the NPC. Huang is therefore likely to be named in mid-March at earliest.