THE new head of the China Securities Regulatory Authority, Zhou Daojiong, comes to the job at a critical time in the development of China's securities market. He replaces a man who, although well liked among his peers, did not always have the full backing of his masters. Rumours of Liu Hongru's imminent demise have been circulating in both China and Hong Kong for almost a year and his departure did not come as a surprise to China watchers. If Liu Hongru's reign could be characterised it would be one of taking China's fledgling public companies to the world. He was instrumental in the development of the H share market, not to mention listings in New York. The bulk of the listings were successful, some were not. In New York local investors gave a distinctly chilly reception to some China stocks but nevertheless it was an important breakthrough for the mainland in its bid to join the global securities industry. Lui Hongru's strengths in developing overseas markets were also his Achilles Heel at home. A series of scandals culminating in the Shanghai bond futures debacle has damaged international perception of China's domestic markets and a firm hand is needed to get its house in order. Zhou Daojiong is something of an unknown. It is said that he prides himself on his scant knowledge of the industry thereby bringing a fresh pair of eyes to the complex problems of developing securities markets. He has pledged to bring the market's activities up to standard by speeding up legislation and strengthening the enforcement arm. Mr Zhou's dedication to clean up his own backyard before looking outside is the right approach to the job. It is crucial for China - now well and truly introduced to overseas financial markets - to demonstrate its willingness to regulate vigorously at home. It cannot afford more scandals and cannot afford to be seen to be turning a blind eye to local irregularities. There is too much at stake.