China’s government has sentenced the country’s former insurance regulator to 11 years in jail, after finding him guilty on a charge of accepting bribes in his capacity as a government official.
Xiang Junbo, the former chairman of the China Insurance Regulatory Commission (CIRC) before the industry regulator was merged with the bank supervisory body, was sentenced by the Changzhou Intermediate Court in Jiangsu province, according to a statement. The former official, who also served as deputy governor of the Chinese central bank, was fined 1.5 million yuan and had his assets confiscated.
Xiang, who was fired from his job at CIRC and placed under investigation in April 2017, accepted 18.62 million yuan (US$2.63 million) in bribes between 2005 and 2017, according to the statement.
During that decade, Xiang served as deputy governor of the People’s Bank of China (PBOC), headed the Agricultural Bank of China and sat at the apex of the insurance industry, according to his resume.
Xiang’s fall from grace in 2017 capped a year-long shakeout of the country’s financial services industry – ending in his regulatory commission absorbed by the bigger bank regulator – followed the government’s intervention into madcap corporate raids financed through insurers’ high-yielding products, an aspect of financial liberalisation that went awry and roiled corporate China under his watch.
Now 63, he holds a doctorate in law. A discharged soldier, he saw battlefield action and was wounded during China’s 1979 military invasion of Vietnam. He began his career as an auditor, rising eventually to near the top central bank post. He was president of Agricultural Bank of China, at one point operator of the country’s biggest banking network.
It was as the chairman of the CIRC that Xiang left his legacy. He pushed for policy reforms that gave China’s privately owned insurers leeway to invest their funds for more returns. These included lifting the cap on equity investments to 40 per cent of an insurer’s assets, unlike global norms where insurers typically allocate 80 per cent to long-term investments like bonds and 10 per cent to equities.
By the first quarter of 2016, premium collected from universal life products – a form of high-yielding financial instruments with guaranteed returns – had more than tripled to 596.9 billion yuan in China, or 38 per cent of total life premium in the industry. By November of that year, much of that premium was invested in the stock market, with 1.89 trillion yuan, or 12 per cent of total assets.