On the afternoon of April 22nd, during the seventh special topic learning session on the capital market held by the Chinese State Council, Wang Xiaohong, in charge of public security, gave a speech that was deemed unusual. Analysts believe that Xi Jinping’s call for the financial regulatory authorities to have “long fangs and sharp claws” signals that the public security system, as the Chinese Communist Party’s enforcer, will be ready to crack down on individuals within the capital market, leading to turbulent times ahead in the financial sector.
According to a report from the official Chinese Xinhua News Agency on April 23rd, Chinese Premier Li Keqiang presided over the special learning session on the capital market. Vice Premier Ding Xuexiang, Liu Guozhong, State Councilor Wang Xiaohong all delivered speeches, while Vice Premier He Lifeng submitted a written statement.
Political commentator Li Linyi told Da Ji Yuan on April 23rd that having the Minister of Public Security speak during the State Council’s special learning session on the capital market indicates the role of the public security system in the so-called Communist Party’s supervision of the capital market, mainly focusing on “arresting people” and intimidation tactics.
“Because Xi Jinping requires financial regulatory authorities to have ‘long fangs and sharp claws,’ Wang Xiaohong, as the enforcer, is at the forefront, ready to catch individuals within the capital market at any moment, leading to a stormy period in the finance industry.”
Xi Jinping, the leader of the Chinese Communist Party, mentioned during the opening ceremony of a finance-themed seminar attended by provincial and ministerial-level officials in early January that financial regulation should be precise and strict, embodying the concept of “long fangs and sharp claws.” Official reports indicate that high-ranking officials present at the seminar’s concluding ceremony included Chen Wenqing, Secretary of the Central Political and Legal Affairs Commission, Liu Jingguo, Deputy Secretary of the Central Commission for Discipline Inspection and Minister of the State Supervision Commission, and Wang Xiaohong, Minister of Public Security, who are all responsible for key departments within the Communist Party.
Furthermore, the Chinese Ministry of State Security, which was previously shrouded in secrecy, has recently raised its voice on issues related to financial security and the capital market.
Taiwanese political and economic commentator Wu Jialong stated on January 21 that the elevation of financial security by the Chinese authorities to the level of national security indicates the emergence of a systemic crisis. Xi Jinping’s utilization of public security and state security to intervene in financial regulation aims to uncover illicit funds associated with local corruption to fill fiscal gaps.
Former Chinese lawyer Liang Shaohua mentioned that economic development requires space and vitality, rather than stifling economic activities. Xi Jinping’s approach to resolving economic issues revolves around enhancing regulation – his call for financial supervision to have “long fangs and sharp claws” signals a message that disobedience will not be tolerated, akin to the previous statement from Cai Qi about dealing with the people harshly, which is evidently a form of intimidation.
On April 12, the Chinese State Council issued new “State Nine Articles” concerning the capital market, with the first article emphasizing the need to “adhere to and strengthen” the Communist Party’s leadership in the capital market. The FTSE China A50 Index (FTXIN9) closed down by 0.86% on the same day. Many internet users expressed skepticism about the latest government document, believing that involving the Party would lead to a flawed outcome.
On April 16, the Central Commission for Discipline Inspection dispatched inspection teams to the Party committees of 34 financial and economic units, emphasizing political inspections.
Chinese affairs expert Wang He mentioned to Da Ji Yuan on April 18 that due to the turbulence in the Chinese economy, the stock market, real estate market, bond market, and currency market are all in disarray, leading to the inability to convene the Third Plenum. Xi Jinping believes that various departments below are not working diligently, hence the political inspections to discipline every department.
Lai Rongwei, Executive Director of the Taiwan Inspirational Association (TIA), commented on April 18 to Da Ji Yuan that the Chinese financial sector has always been a stronghold of princelings and the second-generation reds, with many dissenters present, refusing to comply with Xi Jinping’s directives.
In the summer of 2015, China experienced a major stock market crash, known as the A-shares crash, which was considered a “financial coup” launched by Xi’s political opponents in response to his anti-corruption campaign. Subsequently, authorities transitioned from the “financial anti-corruption campaign” to a “political and legal purge,” successively arresting a group of financial and political officials.