At the height of the 2008 financial crisis, as Wall Street slashed jobs, Beijing took advantage of the disarray to poach top Chinese financial talent. The idea was to reform its stock markets.
By the summer of 2015, China’s Securities Regulatory Commission (CSRC) needed them more than ever — a year-long market boom had imploded in a few weeks, and the government was desperate to keep the crisis from widening.
But the best and brightest of the returnees, known in China as “sea turtles”, had already left, disillusioned and disappointed, for the private sector.
A former official at the CSRC, one of a group of 20 high-profile returnees, recalled the regulator’s appeal to make “sacrifices for the motherland”.
“We moved our families back to China and gave up high-paying jobs, because we wanted to contribute,” he said.
However, their idealism soon turned to cynicism. Pay was a fraction of what they could earn in the private sector, and worse, the CSRC didn’t seem to value them at all.
“Several years passed, and none of us got promoted,” said the official. “Some of us didn’t even get a concrete position.”
“Just at the time they needed people with both domestic and international experience, those most internationally experienced people were forced out,” said Liu Li-Gang, China economist at ANZ.
The CSRC did not reply to requests for comment.
An official at the Shanghai Stock Exchange said people are quitting every week, and the pace appears to be accelerating.
“They can get high pay outside at lower risk, higher return. Why not?” said Oliver Rui, professor of finance at the China Europe International Business School in Shanghai.
Result: the country’s markets are in the hands of people who don’t understand markets.
That led, he said, to misguided, counter-productive policies like the crackdown on derivatives and “malicious” short-selling that some say only accelerated the selloff.
“It’s not that they aren’t smart,” said an executive at a major fund who communicates regularly with the CSRC. “They just don’t have financial expertise.”