POLITICAL motives are widely seen here as the main factor behind the surprise arrest in Beijing of Zhou Beifang. News that Mr Zhou, chairman of Shougang's Hong Kong operations, had been arrested for an 'economic crime' was quickly interpreted by London institutional investors as the beginnings of a purge of officials who have close connections with paramount leader Deng Xiaoping. However, it is also believed that market sentiment on China and China-related plays will not be fundamentally affected by the move. Peter Robertson, a director of M & G, the British fund manager that has recently allied itself with Dah Sing Financial to increase its institutional presence in the Asian region, said that the arrest implied Mr Deng's influence was virtually non-existent. 'It means he's on his way out,' he said. 'This is the start of some sort of purge of Mr Deng's followers. They are either getting rid of people before his death, or they will do it afterwards, as they did with Mao. 'We have the view that after Mr Deng dies, he will come in for much criticism,' said Humphrey Carey of Foreign and Colonial Emerging Markets. But Mr Carey said that the arrest was also probably part of a genuine desire by the Chinese to stamp out corruption caused by Mr Deng's attempts to liberalise China's markets. 'He will be criticised for the high level of corruption and that the reforms have come in too quick and too fast. 'This is indicative of the fact that Mr Deng's influence has gone to zero,' he said.
