[SHANGHAI] Chinese Premier Li Keqiang took the nation's financial regulators to task for the way they handled a rout in stocks and the yuan, making him the most senior official to date to fault the response to the turmoil.
Regulators didn't respond actively to declines and some even have management problems, Li said in a State Council meeting on Monday, according to a Beijing News report carried on the government's website. Li didn't specify the regulators at fault and defended the decision to intervene in equity and foreign-exchange markets as necessary to head off systemic risks and "defuse some bombs." "Looking back, the major responsible departments took inadequate actions and had internal management issues," Li said.
The China Securities Regulatory Commission has drawn criticism recently over a series of steps such as as the circuit-breaker system that had to be rescinded just four days after it was introduced in January. The CSRC's chairman, Xiao Gang, blamed factors including incomplete trading rules and an inappropriate regulatory system, and said officials will learn from their mistakes.
The benchmark Shanghai Composite Index has tumbled more than 40 per cent since a June high even after state funds spent billions of dollars to prop up equities. The government also tightened capital controls and spent almost $300 billion of its foreign exchange reserves in the last three months to prop up the exchange rate.
The yuan posted its biggest advance in more than a decade on Monday in Shanghai after central bank Governor Zhou Xiaochuan voiced his support for the currency.