China’s ‘most hated’ ex-regulator warns that government intervention creates stock boom-to-bust cycles
- Xiao Gang, who oversaw China’s stock markets during the 2015 crash, stresses need to rectify authorities’ ‘fatherly love’ type of supervision
- He says previous loosening measures to boost growth have resulted in market bubbles, amid Beijing’s increasingly pro-growth policy to arrest a slowing economy
The former government official behind the nation’s stock market crisis in 2015, one of China’s most hated men, has offered a harsh lesson on the dangers of government intervention that have created many of the country’s boom-to-bust equity cycles.
Xiao Gang, a member of the National Committee of the Chinese People's Political Consultative Conference – China’s top political advisory body – and former chairman of the China Securities Regulatory Commission (CSRC), oversaw the mainland’s trillion-dollar stock market between March 2013 and February 2016.
During his three years as the top regulator, the mainland stock market underwent a roller-coaster ride that eventually went into a free fall in the summer of 2015, wiping more than US$3 trillion off value of shares, sending unprecedented shock waves through global financial markets, and making him an easy target for blame.
On Wednesday, Xiao told a financial forum in Beijing that rectifying the market regulator’s excessive “fatherly love” type of supervision was a very important lesson learned from the 2015 stock market rout.
Proper management is needed by the government, where the “tangible hand” and the supervisory authorities know what they have to do, Xiao said.