China's Financial Sector Is the Focus of Xi's Anti-Corruption Initiative

 Investors are uneasy and worry about political risk due to the investigation into top officials.

The Central Commission for Discipline Inspection (CCDI), China's main anti-graft body, has so far conducted investigations against more than a dozen senior executives at the most significant financial organizations in the nation. Three prominent executives have been investigated by the CCDI or charged, including Wang Bin, the former CEO of state-owned China Life Insurance, Liu Liange, the former chairman of the state-owned Bank of China, and Li Xiaopeng, the former chairman of China Everbright Group. According to Chongyi Feng, an assistant professor of China Studies at the University of Technology Sydney, the crackdown is Xi Jinping's hallmark effort, and the banking industry is the final of the three crucial sectors over which Xi will be able to exert total authority. Assets held by China's banks and insurers are $60 trillion, or 340% of the yearly GDP of the nation. The extensive financial industry is under increasing scrutiny, which might frighten investors and harm the mood of business, which is already uneasy about the political climate.

Xi demands "full authority" over banks, causing authorities and investors to get alarmed.

 

China's banks and insurers have become the newest targets of a broad anti-corruption campaign, with prominent officials getting implicated in probes and causing worry among investors and businesspeople.

 

Over a dozen senior executives at the most significant financial institutions in the nation have reportedly been under investigation so far this year, according to a CNN analysis of statements made on the Central Commission for Discipline Inspection (CCDI), the Communist Party's top anti-corruption agency. Li Xiaopeng, the former chairman of China Everbright Group, one of the oldest and largest state-owned financial enterprises in the nation, is among the prominent figures at the top of China's financial sector who have been the subject of investigations or charges by the CCDI. Li is reportedly being investigated for for "severe breaches of law and discipline."

In a similar vein, on Friday, officials launched a similar investigation into Liu Liange, the former chairman of the fourth-largest lender in China and state-owned Bank of China. According to a filing by the bank, Liu quit last month, claiming "work modifications." Wang Bin, the former CEO of the state-owned China Life Insurance from 2018 until the beginning of 2022, was accused in January for accepting bribes and concealing foreign investments.

 

Experts think that Bao Fan, a prominent investment banker and well-known figure in the IT industry who vanished in February, may possibly have been involved in the dragnet. They claim that given the CCDI's announcement last week that it will audit more than 30 significant state-owned businesses, including banking behemoths, the crackdown may become more pronounced. like the Agricultural Bank of China, China Investment Corp., and China Development Bank.

 

China's president, Xi Jinping, won an unprecedented third term in October and took steps to strengthen the party's control over the economy. Since he assumed office in 2012, the Communist Party in power, the government, the military, and state-owned businesses have all been subject to Xi's trademark anti-corruption drive, which has resulted in millions of officials being punished.

 

The present financial crackdown, in Chongyi Feng's opinion, is a new phase in Xi Jinping's anti-corruption campaign against the financial sector with the purpose of consolidating his authority. Chongyi Feng is an associate professor of China Studies at the University of Technology Sydney. After the military and the internal security system, he continues, the banking sector is the final of the three crucial sectors over which Xi will exercise total authority. In addition, the sector is the party's main source of revenue, and Xi has to consolidate control over it in order to address China's worsening economic and financial crises and be ready for a financial conflict with the United States.

Beijing is dealing with a wide range of internal and international issues, including as a property market that is experiencing its worst slump on record, high rates of youth unemployment, and struggling local governments that are burdened with massive debt and forced to slash benefits. Also, American-Chinese relations are at their lowest point in decades, contributing to rising tensions in technology and investment.

 

As the environment for private business has worsened and foreign enterprises have been caught in the crossfire of geopolitical turmoil, investing in China has grown riskier. The People's Bank of China's most current data shows that the assets of China's banks and insurers total $60 trillion, or 340% of the nation's annual GDP. Investors may be alarmed by the expanding crackdown on the enormous financial industry.

 

The value of the bank's stock fell dramatically after Bao, the founder, and CEO of China Renaissance, vanished. Since mid-February, the stock has lost 27% of its value. With hundreds of billions of dollars in market value lost as a result of its own collision with Xi's governing Communist Party, China's IT industry is still nursing its wounds. Alibaba's stock is still down by over