Xi’s Markets Shakeup Surprised Insiders, Showing Alarm Over Rout

(Bloomberg) — Staffers at China’s main securities regulator had been working around the clock for weeks on ways to prop up the nation’s tumbling stock market when the bombshell dropped.

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Late Wednesday, the official Xinhua News Agency reported that their boss Yi Huiman had been ousted, becoming the biggest Communist Party casualty of a $5 trillion selloff that’s undermining confidence in the fragile economy.

The announcement sent shockwaves across the industry and within the China Securities Regulatory Commission, according to people familiar with the matter, who asked not to be identified discussing private information. Prior to the Xinhua news, there had been no internal announcement from the Communist Party’s organization department, which typically shares key personnel changes internally before they go public, the people said.

The departure of Yi, a surprise to even high-ranking CSRC officials, underscores the growing sense of alarm within President Xi Jinping’s government over the speed and scope of the market meltdown that’s now entering its fourth year. Wu Qing, a close ally of Premier Li Qiang, is taking over as chairman of the regulator.

The CSRC didn’t immediately respond to a request for comment.

China watchers say the move may signal additional measures to revive the world’s second-largest stock market. An earlier flurry of support in the runup to the Lunar New Year holiday, when exchanges are closed for six days beginning Friday, had failed to restore investor confidence.

“This is long overdue in my opinion, if one chief cannot do the job, then maybe we should give someone else a chance,” said Jiang Liangqing, managing director at Zhuhai Greenbamboo Private Fund Management. “At the minimum, a new broom sweeps clean and he could be more bold in taking action instead of just words.”

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Anticipation of more fulsome efforts to end the rout had been mounting for days, after Bloomberg News reported that…