Walter Hutchens’ Blog

Laura Cha (aka 史美伦, Shi Meilun) has resigned as vice chair of the China Securities Regulatory Commission, according to news today from the PRC press (and now here in English).

Among high PRC officials Cha has been unusual in that she was not a career Party cadre or even mainland native. She spent much of her career in Hong Kong and once held a US “green card.” She holds a US law degree and formerly was vice chair at the Hong Kong Securities and Futures Commission. Her CSRC appointment was part of an initiative by Zhu Rongji to hire world class talent. Reportedly she was paid an exorbitant salary like those of Hong Kong officials, though she apparently declined funds not used for her Beijing living expenses and directed that they be spent on CSRC staff development.

Cha struck me as temperate and even cautious in her public pronouncements, but sometimes she has been a target of critics of the “hai gui pai” or returnees faction. Some argued her policy initiatives were “too foreign” and not suited to PRC conditions. At times there may have been some truth to that. She was I think a big backer of the initiative to require all listed companies to have independent directors–a nice idea, but one probably too aggressive in its implementation (where could they have gotten enough qualified independent directors in time to meet the original schedule?). But some of the criticism of Cha was based on the school of thought that it is the job of the regulators to boost the market. In contrast Cha thought it was the job of the regulators to regulate impartially, to build a transparent market for the long term, not to worry much about short term index fluctuations. My view: amen to that.

I guess I am not surprised that she’s leaving; rather, I’m surprised she hung in there as long as she did, given that the CSRC’s current “line” seems to be that “stable development” (稳定发展, wending fazhan) is the foundation for “reform and opening” (改革开放, gaige kaifang). I take that to mean that the “regulators must boost the market” school of thought is in the ascendancy. In this current climate of gridlock over fundamental reforms, I doubt she could accomplish much. Indeed, as tepid as Cha sometimes seems to be, she could seem like a “hair on fire” radical in comparison to current CSRC chairman Shang Fulin. Shang Fulin may in fact be the Mandarin translation of soporific.

When Cha and Gao Xiqing were both at the CSRC, it had two “commissioners” (vice chairs in PRC parlance) with US law degrees. I am not aware of any US JDs remaining at that level. No doubt there are many gifted and dedicated officials still in the CSRC, some purely PRC-trained and some with foreign degrees and experience. Some there must have bold visions and the tenacity to pursue them. I am sure Cha wishes them well. For those in the anti-hai gui faction happy to see her go, I would suggest that even if “sea turtles” become extinct at the CSRC, PRC stock markets will not flourish until current structural problems (unlisted shares, government selection of issuers, inadequate monitoring mechanisms) are resolved.