On April 30, several companies listed in the Shanghai and Shenzhen stock exchange markets concurrently announced that they had received notification letters about penalties or investigations by the China Securities Regulatory Commission (CSRC) regarding various charges against the companies or their executives.
Among those statements, Jiangyin Hengrun Heavy Industries (603985. SHA) said its former chairman and second-largest shareholder, Cheng Lixin, was accused of “market manipulation and insider trading.” Guangdong Liantai Environmental Protection (603797. SHA) said one of the company’s chiefs, Huang Wanru, was under investigation for a suspected violation of the law on “information disclosure.” Shenyang Yuanda Intellectual Industry Group (002689. SZ) said the CSRC told them they had violated “information disclosure” regulations, pending further punishment. Ningbo Joy Intelligent Logistics Technology (301198. SZ) confirmed the company’s chairman, Luo Yinhao, was detained by the local police for unknown reasons.
Other corporate announcements of note include CNNC Hua Yuan Titanium Dioxide (002145. SZ), which announced that Wang Zelong, one of the company’s de facto controllers, was suspected of “non-public equity offering and information disclosure.” The total amount of assets confiscated and fines imposed on Mr. Wang added up to approximately 133 million yuan (roughly $18 million).
Guizhou Transportation Planning Survey & Design Academe (603458. SHA) publicized that it had been recorded into the poor integrity list for “inaccurate disclosure of information” in part of its annual reports. In addition, the company’s chairman, general manager, and financial manager were also subject to interrogations. The chairman, Zhang Lin, is a national expert entitled to special allowances from the government of the State Council and the Guizhou Provincial Government.
Likewise, Dawning Information Industry (603019. SHA) stated on April 19 that the company’s chairman, Li Guojie, received a notification letter alleging that he was involved in “illegal short-swing trading.” The 80-year-old was a researcher at the Institute of Computing of the Chinese Academy of Sciences and an academician at the Chinese Academy of Engineering.
Tang Jingyuan, a current affairs commentator, told The Epoch Times on May 4 that he believes the CCP’s crackdown on listed companies has its economic backdrop. “The beleaguered communist regime needs to use anti-corruption measures to shift the public attention to China’s economic woes. It also strives to grab money from private companies to alleviate its fiscal deficits.”
CCP’s Purge of Stock Market
According to incomplete statistics by Chinese financial media Sina, in the early months of 2024 alone, at least 14 chief executives of listed companies were in a custodial situation. Since 2023, 78 de facto controllers of A-share listed companies have been investigated for information disclosure violations, insider trading, and securities and futures market manipulation.Lai Jianping, a former Beijing lawyer living abroad, believes the CCP’s centralized purge of listed companies and industry executives serves two purposes.
The first is that the CSRC stepped in to straighten out the stock market, intentionally shifting blame to the so-called unlawful listed companies and corporate executives. This takes responsibility away from the CCP’s poor governance, which caused the rapid decline of the entire national economy.
Secondly, in Mr. Lai’s view, the CCP wants to portray that it is rectifying the market per the law and regulations, to paint an image of adhering to an economic opening-up policy, and to restore investors’ confidence.
Moreover, the financial authorities’ efforts to clean up the stock trading sector would probably serve as a basis for the party to set the tone for its economic policy at its third plenary meeting this July, Mr. Lai told The Epoch Times.
