China has dismissed its top market regulator after a series of policy missteps that contributed to a massive stock selloff.
Xiao Gang, chairman of the China Securities Regulatory Commission, was removed from his post, state-run Xinhua news agency reported.
He was replaced by Liu Shiyu, head of the Agricultural Bank of China, a giant bank owned by the Chinese government.
The Shanghai Composite has shed 19% this year after the CSRC implemented a circuit-breaker mechanism to try to protect small investors from big market swings. Instead of offering protection, it created panic selling and had to be withdrawn.
The smaller Shenzhen Composite, which features many of China’s tech stocks, is down 20% over the same period.
China’s stock market has given investors whiplash since June. After swelling to record levels in the first half of last year, the market’s bubble popped in spectacular fashion. The benchmark Shanghai Composite crashed, wiping out about a third of its value in less than a month.
Authorities introduced increasingly draconian measures to try to stop the losses, including banning large shareholders from selling, outlawing forms of short-selling and chasing down individuals they blamed for manipulating the markets.
The CSRC played a key role in this rescue effort, which now appears to have been largely futile.
Xiao’s departure comes after he offered a surprisingly frank assessment of China’s boom-and-bust equity market.
The volatility “shows an incomplete trading system, an imperfect market system and an unadapted regulatory system,” Xiao said at a meeting of Chinese securities officials earlier this year, according to a transcript posted on the commission’s website. “It also exposes loopholes, maladjustments and ineffectiveness of supervision from the CSRC.”
It was unusually forceful self-criticism. Internal dialogue from institutions is not regular reading in China, and publishing Xiao’s words suggested the country’s leadership was not happy with how events unfolded during the summer.
Xiao, 57, is a veteran of China’s central bank who was appointed chairman of the CSRC in 2013.
— CNN’s Andrew Stevens contributed to this report.