China's financial sector crackdown aimed at laying groundwork for overhaul, says analyst

Beijing's string of investigations into the financial industry is not aimed only at cleaning house, analysts say - it is also laying the groundwork for overhauls to make the sector more efficient and market-oriented.

The latest salvo came on Friday, when the Communist Party's top anti-corruption watchdog announced that Yao Gang , vice-chairman of the China Securities Regulatory Commission, had come under investigation.

Yao, 53, second only to chairman Xiao Gang , was in charge of approving initial public offerings before he moved to oversee bonds and futures earlier this year. He was put under probe for suspected "serious violation of party discipline" - a euphemism for corruption, according to the Central Commission for Discipline Inspection.

The latest news comes less than two weeks after the shock detention of Zhang Yun , president of the Agricultural Bank of China, who was "assisting" with the industry-wide investigation. A source familiar with the situation said he had been relieved of his duties.

"It is safe to say that this round of investigations will turn out to be a ruthless attack on the finance industry with deep-rooted corruption problems," said Zhuang Deshui , who studies anti-graft policy at Peking University. "The leadership has been planning for the clean-up effort for a long time."

It was widely expected that a clutch of influential figures in policymaking bodies and major institutions would be swept up by the investigations, Zhuang said. CCDI teams have fanned out to the central bank, the securities watchdog, as well as the big four state-owned commercial banks in the aftermath of the summer's stock market rout. "It's the time to take action," Zhuang said in a People's Daily commentary in September. "Research and preparation for a deep and thorough anti-graft campaign has been in the works for years."