Chinese Regulator Says Can Learn to Handle More Complex Markets

  • CSRC's Fang says markets pose `short-term challenges'
  • Regulator drew criticism recently over stock circuit breakers

China’s financial markets have become more complex and pose “short-term challenges” for authorities to deal with, the vice-chairman of the nation’s securities regulator said.

The China Securities Regulatory Commission’s Fang Xinghai also said the country has the talent to tackle those challenges, as he provided an optimistic assessment of the workforce available to the regulator. Fang was speaking on a panel in Davos, Switzerland on Thursday.

Fang Xinghai and Christine Lagarde in Davos
Fang Xinghai and Christine Lagarde in Davos
Photographer: Matthew Lloyd/Bloomberg

Many CSRC employees had left amid mounting pressure from rapid changes in capital markets and measures have to be taken to deal with the exodus, the regulator’s Chairman Xiao Gangsaid at its annual meeting in Beijing on Saturday. He was the second senior finance industry official this month to highlight the lack of skilled professionals to handle the agency’s ever-widening responsibilities amid turmoil that rocked the nation’s markets.

“These are short-term challenges,” Fang said. “The market of course has got a lot more complex and sometimes we don’t know how to deal with the market very well yet. But, you bet, we can learn.”

The CSRC has drawn criticism recently over the functioning of market mechanisms, most recently earlier this month when it scrapped a stock circuit-breaker system just four days after its introduction. An immature bourse and participants, incomplete trading rules, an inadequate market system and an inappropriate regulatory system were to blame for the market turmoil and regulators will learn from their mistakes, Xiao said last weekend.

Stock-market crises will return if the regulator doesn’t resolve its talent shortage, Li Jiange, vice chairman of Central Huijin Investment, a unit of China’s sovereign wealth fund, said at a conference on Jan. 9. His comments were in a transcript of a speech compiled by the Paper, an online news provider backed by Shanghai United Media Group.

Li questioned if the regulator was capable of providing effective supervision if the quality of its officials failed to keep up with those that they are supposed to govern, according to the transcript.

“China has the talent,” Fang said. “You have so many people going to universities, going to graduate school. Government service, public service still carries a very high esteem in China, so I have no doubt that we have the talent.”

— With assistance by Darren Boey

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