The key man behind Shanghai’s efforts to transform itself into a global financial centre, has been promoted to the role of vice-chairman of China’s securities regulator, two sources with knowledge of the matter said. Observers said the appointment of Fang Xinghai was likely to help the government to further reform the mainland’s capital markets. Fang, known as a reformed-minded financial official who also has a PhD in economics from Stanford University, will replace Liu Xinhua at the China Securities Regulatory Commission, the sources said. Liu has exceeded the official retirement age. A source close to the securities regulator said the appointment of Fang, a technocrat with a good understanding of Western financial markets, reflected Beijing’s attempt to drastically reform China’s domestic securities sector following a recent stock market rout that sparked fears of a financial crisis in the world’s second-largest economy. The securities regulator declined to comment on the appointment. Fang was previously a bureau director at the Office of the Central Leading Group for Financial and Economic Affairs, a high-level organisation that advises Communist Party bosses on financial and economic policy. Fang is the second newly-appointed vice chairman of the regulator in recent weeks. Li Chao, formerly vice head of the country’s foreign-exchange regulator, was named last month to fill a vacancy left by the retired Zhuang Xinyi. The appointment of Fang as a senior securities regulator is widely believed to have a far-reaching significance because of his reformist outlook and close relationship with China’s top leaders. He was the director of the Shanghai Financial Service Office between 2007 and 2013 in charge of drawing up and implementing plans to develop the city into an international financial centre. He and President Xi Jinping briefly worked together in Shanghai when the president was the city’s Communist Party chief in 2007. Sources said Fang wrote a letter to the president in early 2013 to express his keen interest in serving the country’s financial industry development before he was transferred to the leading group for financial and economic affairs in Beijing. “In the near term, stability will be given top priority,” the source said. “But the new officials are set to bring some big changes in long-term policymaking.” Fang has also worked at the World Bank, China Construction Bank and the Shanghai Stock Exchange. When he was the financial service office director in Shanghai, Fang strongly advocated further liberalising cross-border capital flows through the local and overseas stock exchanges. He was the key official to support the creation of an international board at the Shanghai bourse where foreign corporate giants could raise yuan funds before their shares were traded. The board has yet to be established. Fang is also known to have a close relationship with Zhou Xiaochuan, China’s central bank governor. It was Zhou, the then head of China Construction Bank, who invited Fang to return to China in 1998 after he worked for several organisations including the World Bank.