Earlier this month, China’s top stock regulator offered to resign after an experiment with a circuit breaker went horribly awry, triggering a series of harrowing selloffs on the SHCOMP that reverberated through world markets.
The fiasco was humiliating for CSRC chief Xiao Gang who two Saturdays ago said elevated volatility in China is the result of an "immature market, inexperienced investors, an imperfect trading system and inappropriate supervision mechanisms." Apparently at a loss for how to right the ship, Xiao tendered his resignation. Or maybe he didn’t. According to Beijing, reports of his departure “do not conform to the facts,” but what’s clear is that things are not going well at China’s securities regulator which last year embarked on a CNY1.5 trillion effort to halt a dramatic decline in share prices that wiped away the life savings of many an illiterate Chinese day trader.
In the wake of the chaos, Beijing decided to crackdown on those “responsible” for the nefarious “manipulation” that caused Chinese stocks to crash. Of course the real cause of the meltdown was that 80% of the market was dumb retail money and investors were leveraged to the gills, but that didn’t stop Beijing from arresting dozens of people including officials at Xiao’s CSRC where Xi is apparently convinced some “graft” was taking place amid the plunge protection effort.
And while it became readily apparent that no one was safe from the long arm of Xi, one person we did not expect to see land on the list of those who have disappeared into the bowels of the Politburo was NBS chief Wang Baoan.
After all, pretty much all you have to do at the NBS is make sure you don’t deviate too far from the Party’s 7% growth “target”, and your job should be secure, but on Tuesday, an announcement posted on the website of the Central Commission for Discipline Inspection said Wang was being investigated for “severe disciplinary violations.”
As AP notes, the news “came hours after Wang had briefed reporters at a news conference in Beijing about China's economy in 2015.”
"The surprise announcement is bound to raise new questions about the accuracy of Beijing's economic statistics," CNN remarked.
Those statistics are "reliable" Wang told the press on Tuesday just before the graft investigation was announced. Wang also said George Soros' "hard landing" call should be dismissed as coming from "just one school of thought."
"Facts." he chided, "speak louder than words" and the Chinese economy is "tall, rich, and handsome" compared the rest of the world, a play on the "cleanest dirty shirt" meme.
As The Straits Times recalls, "Wang was appointed head of the National Bureau of Statistics in April of last year [and] previously spent about 17 years in various positions in the finance ministry, including as vice-minister."
The obvious question here is why Beijing wants Wang gone. Was he pushing back against the country's cooked books? Was he set to reveal something disconcerting about the real pace of growth in the world's second largest economy? Or perhaps it's the other way around: maybe China is looking to move towards a more honest reporting system for its economic data and is trying to clean house first - although we doubt it.
It's also possible Wang is simply the latest high-ranking official to become ensnared in Xi's "tigers and flies" campaign and the investigation isn't linked to his oversight of the country's all-important GDP prints. "Analysts say that given his short tenure at the statistics agency, the corruption allegations are likely to stem from his career at the finance ministry," FT wrote, earlier today. Still, given the heightened scrutiny on China's GDP numbers, it seems at least possible that there's some connection between Wang's alleged corrupt activities and his management of the country's manipulated data.
For now, we'll simply close with the following quote from The Straits Times who reminds us that whatever it is Wang did or didn't do, we've likely seen the last of him.
Internal investigations into high-level party officials operate without judicial oversight. Once announced, they are likely to lead to a sacking followed by criminal prosecution and jail sentence.