China Cracks Down on Financial Corruption: Dozens Detained in New Year
As part of President Xi Jinping’s efforts to make China a “financial superpower”, Chinese authorities have launched a sweeping crackdown on financial corruption, detaining over 30 state regulators, bankers, and senior finance executives so far this year.
Crackdown Targets Collusion and Kickbacks
The crackdown has targeted officials accused of colluding with bankers and executives to approve loans in exchange for kickbacks and other favors. According to a tally by the South China Morning Post, 17 of those netted in the past five months were senior managers of state-held banks or their regional branches, including four former vice-presidents of China Development Bank.
Investigations and Detentions
The Central Commission for Discipline Inspection (CCDI), China’s top anti-corruption agency, has announced investigations into several high-ranking officials, including:
- Lou Wenlong, a 66-year-old former vice-president of Agricultural Bank of China, who is being investigated for “serious violations of party discipline and the law”.
- Ren Chunsheng, a former leading figure in China’s insurance industry, detained on May 7 for “serious violations of party discipline and the law”. Ren was once chairman of China Insurance Investment Co Ltd and the Shanghai Insurance Exchange.
- Yao Qian, director of the technology supervision department at the China Securities Regulatory Commission (CSRC), who was once hailed as the “crypto man” for his role in developing the digital yuan.
Impact on the Industry
The crackdown has sent shockwaves through the industry, with analysts saying that some of these regulators are well-known public figures. The downfall of these officials has highlighted the importance of fighting financial corruption.
President Xi’s Warning
President Xi has ordered the CCDI to focus its efforts on the finance sector, warning about prominent problems such as:
- Repeated financial disorders and corruption
- Weak financial supervision and governance capacity
China must “comprehensively strengthen financial supervision”, Xi said at a twice-a-decade financial work conference in October.
Analyst Expectations
Analysts expect more heads to roll as Beijing is determined to stamp out any risks linked to financial corruption and maintain stability. “We can see from past CCDI cases that businesses, especially property developers, would bribe bankers for loans to finance their projects,” said Xie Maosong, a senior researcher at Tsinghua University’s National Institute of Strategic Studies.
“Cases involving regulators have accounted for only about 10 percent of CCDI investigations in the finance sector, but their impact can be far-reaching. The losses because of financial corruption are actually like stealing from the public,” he added.
Conclusion
Deng Yuwen, a former deputy editor of the Study Times, the official newspaper of the cadre-training Central Party School, said Beijing will keep up the pressure because cases of financial corruption were often intertwined. “On the surface, you might never know who is colluding with whom. But once you have cracked one case, you will probably find a few more, just like harvesting crops,” he said.
The crackdown on financial corruption in China is expected to continue, with many more officials and executives likely to be detained as Beijing seeks to maintain stability and strengthen financial supervision.