Exclusive Insight: Breaking Faction Control: Personnel Changes at Bank of China and China Development Bank
The upcoming large-scale adjustment of the banking system will result in most of the major leaders in the system being cleared out, with the new leadership being either young professionals born in the
Today's outgoing chairman of Bank of China, Liu Liange, is the former secretary of Liu Hongru, a former vice president of the People's Bank of China and fellow native of Jilin. In 1992, when Liu Hongru became the first chairman of the China Securities Regulatory Commission, Liu Liange did not follow him and instead stayed in the People's Bank system to work as a foreign affairs officer.
In 2007, Liu Liange was transferred to the policy bank that supports foreign trade, the Export-Import Bank, as vice president, and was promoted to president in 2015, working alongside then-chairman Li Ruogu.
In June 2018, Liu Liange was appointed president of Bank of China, which has an emphasis on international business, working alongside then-chairman Chen Siqing. When Chen Siqing was appointed chairman of ICBC in 2019, Liu Liange took over as chairman of Bank of China.
Having long served as a foreign affairs officer in the People's Bank and a leader in policy banks, Liu Liange was relatively unfamiliar with the business and management of commercial banks.
Shortly after Liu Liange was appointed chairman of China Bank, the "Crude Oil Treasure" scandal erupted in April 2020. In short, the bank's wealth management product was linked to international crude oil derivatives. When the international crude oil prices experienced violent fluctuations, "Crude Oil Treasure" plummeted, and investors not only faced huge losses but also had to pay money to China Bank. China Bank's early disposal ignored the interests of investors, causing dissatisfaction among investors and regulatory agencies to intervene, jeopardizing the leadership at Bank of China.
At this time, Liu Hongru was 90 years old, and his subordinates were mostly in the China Securities Regulatory Commission system, where they were purged after the stock market crash in 2015. Hence, his influence was already very limited. Liu Liange no longer had a direct relationship with the upper levels of leadership and had to rely on Gong Zheng, then mayor of Shanghai, to indirectly communicate with Vice Premier Liu He, who was in charge of finance, to resolve the issue. In September that year, Bank of China signed a strategic cooperation agreement with Shanghai, fully supporting its development.
Liu Liange is under 62 years old and not yet at the age of early retirement for vice-ministerial level officials, so he is retiring prematurely. This adjustment marks the beginning of a large-scale adjustment of the financial system.
For a long time, the Chinese financial system has been controlled by several major families, including the descendants of the party elders, Wang Qishan, Zhou Xiaochuan, and Chen Yuan, as well as the civilian-born Zhu Rongji and his several protégés (Lou Jiwei, Guo Shuqing, and Li Jianhua). The system had rampant corruption.
The upcoming large-scale adjustment will result in most of the major leaders in the system being cleared out, with the new leadership being either young professionals born in the 1970s with less factional color or those born in the 1960s who have ties to Xi Jinping's core faction.
For example, another senior official in the financial sector whose post was adjusted today is the president of the China Development Bank. The outgoing president, Ouyang Weimin, was a former secretary of the People's Bank in the 1990s and had just turned 60.
The new president, Tan Jiong, born in 1966, has long worked for China Bank and is a former subordinate of current ICBC chairman Chen Siqing. He worked in the Fujian branch of China Bank in his early years.
The author of today’s exclusive insight is provided by Lao Zong, an Economics Ph.D., exclusively to The China Brief.