China is currently facing enormous economic pressure, with a looming financial crisis. In just over a month, over 1,100 senior executives in listed companies have resigned, with the majority coming from the financial sector. Meanwhile, the Chinese Communist Party (CCP) has intensified its efforts to clean up the financial system more than ever before.
Former officials within the CCP system believe that the elite who control the financial lifelines are the most sensitive to the market. The wave of resignations among them reflects their collapsing confidence in China’s financial system.
The Shanghai and Shenzhen 300 Index, reflecting the overall performance of the Chinese stock market, has fallen by nearly 7% so far this year, marking an unprecedented fourth consecutive year of decline and nearing the low point of early 2019. On Friday, September 13, the Shanghai and Shenzhen 300 Index closed at 3159 points, hitting a new interim low.
As the Chinese stock market declines, a wave of “executive resignations” has swept through listed companies. Incomplete statistics show that from August to now, over 1,100 resignation notices have been issued by A-share listed companies, with a majority coming from financial institutions.
Resignations of high-ranking executives from banks include: on August 25, Liu Jin resigned from the positions of Vice Chairman, Executive Director, member of the Board Strategic Development Committee, and President of Bank of China for personal reasons; on August 18, Zhang Rongsen resigned from the positions of Executive Director and President of Zheshang Bank for personal reasons; on August 17, Wang Feng resigned from the position of Vice President of Jiangyin Bank due to job transfer; on August 1, Wu Tiejun resigned from the position of Vice President of Changshu Bank due to job transfer.
Some resignations from insurance companies include: on September 6, Wang Tingke resigned from the positions of Executive Director, Chairman, and Chairman of the Board Strategic and Investment Committee of China People’s Insurance Group; on August 28, Liu Xiaodan submitted his resignation to the board of China Pacific Insurance Group, resigning from the positions of Independent Director and Chairman of the Board Nominating and Remuneration Committee; on August 27, Pan Yanhong no longer serves as Chairman of Pacific Insurance Holdings’ Pacific Life Insurance.
There have also been numerous resignation announcements from executives of large CCP state-owned enterprises, including: on September 6, Wang Lixin applied to resign from the positions of Executive Director, CEO, and member of the Board Strategic and Investment Committee of China Railway Construction; on August 27, Dong Zenghe applied to resign from the positions of Director and Chairman of the Board of National Medical Products Administration, while Lian Yong applied to resign as Director and CEO of National Medical Products Administration; on August 24, Lu Jin resigned from the positions of Chairman of the 7th Board of Directors of China National Gold Group, Director, Chairman of the Board Strategic Committee, and Committee Director.
The situation became more extreme when Hualing Precision Engineering, a high-end Chinese mechanical manufacturing company, announced on August 26 that its CEO, Sheng Min, Chairman Luo Xu, and Chief Financial Officer and Vice President Zhang Genhong all resigned simultaneously.
Du Wen, a former CCP official now living in the United States and former Deputy Director of the Legal Advisory Office of the Inner Mongolia Legal System and Regulations Institute, expressed to reporters on September 13 that the large number of executive resignations is a precursor to the imminent collapse of China’s financial system.
Du believes that the wave of resignations is a result of multiple factors: increased pressure from “anti-corruption” campaigns, escalating internal risks within the financial system, political power adjustments, and the overall economic downturn. These executives are aware of the looming systemic crisis and have chosen to “wisely” step down from the stage.
He stated that the mass resignations of these executives reflect deep-rooted corruption and signs of systemic collapse within the Chinese financial system, exposing a serious internal and external loss of control situation. This indicates a collapse in confidence among the financial elite in the Chinese financial system, and even a thorough disillusionment with the country’s economic prospects.
“Faced with increasing political pressure and economic downturn, they know that the Chinese economy has reached a deadlock, and the financial system is one of the core pillars of this pathological system,” Du said. “It is likely that they know that the institutions they are in have become a potential ‘financial volcano’ ready to erupt at any time. Staying in top positions not only cannot guarantee their safety, but also makes them vulnerable to the next round of ‘anti-corruption’ investigations.”
Du believes that as a minority “elite class” that controls the financial lifelines, they are the most sensitive to the market and can perceive the deepest crisis signals. Issues such as local debt, real estate bubbles, shadow banking, and liquidity crises are at play behind their resignations, as they try to absolve themselves of responsibility and avoid being scapegoated before a financial market collapse.
“Think about it, even the ‘insiders’ are eager to escape, indicating that internal power struggles may have spiraled out of control, and the chain of interests is collapsing. Their mass exodus signifies that a thorough financial collapse is only a matter of time. Undoubtedly, this marks the beginning of an irreversible systemic financial crisis. China’s economic system is heading deeper into the abyss,” he said.
Du also learned through contacts within the circle that the majority of resignation applications have not been approved because the central government is concerned about financial stability.
While the wave of executive resignations unfolds, the CCP authorities are continuing to strengthen their efforts in financial “anti-corruption”. According to incomplete statistics, at least 67 high-level officials in the finance sector have been investigated this year, with the six major state-owned banks being heavily impacted.
On September 10, according to CCP official media, based on incomplete statistics from the website of the Central Commission for Discipline Inspection and the National Supervisory Commission, among the 67 individuals investigated, 53 are officials from central-level party and state organs, state-owned enterprises, and financial enterprises, compared to 48 individuals during the same period last year.
Additionally, 45 financial industry professionals have faced disciplinary actions this year, including six “central-level officials” (senior officials directly managed by the CCP Central Committee), such as former Vice Presidents of the China Development Bank, Li Jiping and Wang Yongsheng; former Vice Presidents of the Industrial and Commercial Bank of China, Zhang Hongli and former Commission for Discipline Inspection Secretary Liu Lixian; former Deputy General Manager of China Pacific Insurance Group, Xiao Xing; former Chairman of China Everbright Group, Tang Shuangning. Last year during the same period, only one financial industry central-level official faced disciplinary action.
From an institutional perspective, the banking system, especially the six major state-owned banks under the CCP (ICBC, CCB, BoC, ABC, BC, PC), is a heavily affected area, with a total of 23 individuals under investigation, accounting for 34%. 22 individuals faced disciplinary actions, accounting for 49%, including 14 individuals expelled from the party and 8 individuals subjected to “double designation” (expulsion from the party and dismissal from public office).
Furthermore, senior management personnel from institutions like Sichuan Bank, China Merchants Bank, Guizhou Bank, Jiangxi Bank, Guangfa Bank, and Chongqing Rural Commercial Bank have also been investigated.
Du Wen expressed that the Chinese banking sector is currently a powder keg, with the financial system having the potential to explode at any moment. According to general rules, it should have already exploded, but only due to the CCP’s tight control has it persisted until now; theoretically, it should not have lasted this long.
There are rumors that CCP state-owned securities firms have recently instructed their investment bankers to hand over their passports and seek approval for all business and personal travel plans. These requirements are said to be following private directives from CCP regulatory agencies.
According to Du Wen, as far as he knows, the CCP is strictly controlling domestic travel for Chinese nationals because the next step after the wave of resignations is a “fleeing trend”, where people want to emigrate and seize the last opportunity to escape.
Jiang Chengjun, former Deputy General Manager of Haitong Securities, fled abroad in July, but just a month later, officials announced that he had been under investigation. It was disclosed that Jiang Chengjun was “apprehended overseas and repatriated,” with relevant officials stating that this was the outcome of the CCP’s “Sky Net” operation.
With the collapse of the Chinese real estate industry, the fiscal revenue of local CCP governments continues to decline. According to the official website of the CCP Ministry of Finance on September 9, the financial statements for July and the first half of this year for local fiscal revenue and expenditure in 31 provincial-level administrative regions in China, showed deficits in all 30 provincial-level administrative regions, with a total deficit of 5.7 trillion yuan (approximately $804 billion USD).