Following recent announcements of serious disciplinary violations, the financial community has been shaken by news regarding the former China Securities Regulatory Commission (CSRC) Chairman Yi Huiman. As Vice Chairman of the Economic Committee of the 14th National Committee of the Chinese People's Political Consultative Conference and former CSRC Chairman, Yi Huiman is under investigation for suspected serious violations of discipline and law.

Market rumors suggest that during a period of persistent stock market doldrums, leadership once questioned Yi Huiman about China's lackluster stock market performance. When Yi cited several reasons, including challenges in the real economy, leadership reportedly responded with displeasure, questioning how the economy could be considered poor.

In reality, compared to the real economy's performance, the imbalance between market financing and investment functions may be the primary cause of the A-share market's continued weakness.

During Yi's tenure as CSRC Chairman, the securities market's balance had never been so tilted - with capital markets celebrating on one end while secondary market investors faced disappointment on the other.

This former "IPO King," who helmed China's capital markets for over five years from January 2019 to February 2024, set a historical record for new stock issuances in A-shares: 1,908 newly listed companies raising a total of 2.22 trillion yuan.

**A Banker's Capital Market Experiment**

Yi Huiman's career trajectory was once an inspirational story. After graduating from Zhejiang Banking School with a degree in urban finance, he began at the People's Bank of China's Hangzhou branch and rose through the ranks to become Chairman of Industrial and Commercial Bank of China before being appointed as the ninth CSRC Chairman in 2019.

Upon taking office, he recognized the challenging nature of his position, famously describing the CSRC Chairman role as being "on a volcano," with stock markets affecting millions of investors' interests.

This regulator from the banking system brought both the prudence and expansion mindset characteristic of bankers. He promoted registration-based IPO reforms starting with the Science and Technology Innovation Board (STAR Market), gradually extending to ChiNext and the Beijing Stock Exchange, ultimately achieving comprehensive registration-based reforms in February 2023. This series of reforms was described as "touching the underlying logic of regulation and implementing inward-facing reforms."

**The Numbers Behind the IPO Great Leap Forward**

Yi's IPO statistics during his tenure were remarkable: virtually one new stock listing per day, with average daily fundraising exceeding 1 billion yuan. The number and scale of new stock issuances during his term far exceeded the combined total of his eight predecessors, with fundraising amounts accounting for 41.59% of A-share IPO totals over 32 years.

However, behind these impressive figures lay serious market mechanism imbalances.

While IPO expansion accelerated, delisting mechanisms failed to keep pace - only 151 companies were delisted over five years, less than one-tenth of IPO numbers. This "entry without exit" market ecosystem led to severe capital drainage from A-share markets.

**PE Firms' Feast and Investors' Dilemma**

Yi Huiman's IPO Great Leap Forward indeed created a capital market feast. In primary markets, Pre-IPO investment became the hottest investment model, with countless PE firms enjoying institutional dividends. However, secondary market investors paid a heavy price.

Beyond IPO capital drain, substantial share reductions by major shareholders of listed companies became another widely criticized aspect of Yi's tenure. Data shows that during his term, major shareholders of A-share listed companies cumulatively reduced their holdings by approximately 2.27 trillion yuan. Combined with new stock issuances and major shareholder reductions totaling over 4.69 trillion yuan, this massive drainage effect kept A-share markets struggling below the 3,000-point threshold.

Market indices illustrate the problem: during Yi's five-year tenure, the Shanghai Composite Index only rose from 2,597.78 points to 2,788.55 points, a mere 190-point increase. During this period, the A-share Shanghai Composite Index experienced 33 typical "defense battles" around the 3,000-point level.

**Gains and Losses in Reform**

Objectively speaking, Yi Huiman was not without contributions to A-share markets. The overall direction of registration-based reforms was correct, improving capital markets' capacity to serve the real economy.

During his tenure, he launched the STAR Market, established the Beijing Stock Exchange, and achieved comprehensive registration-based reforms - all of which will leave their mark in China's capital market development history. However, deviations occurred during reform implementation: while registration-based systems emphasize marketization, this doesn't mean laissez-faire approaches.

The shocking figure of over 1,900 IPOs, combined with audit authority delegation to exchanges, failed to effectively curb financial fraud. Cases emerged of new energy companies inflating revenues by 2 billion yuan in their first year of listing, and pharmaceutical companies artificially boosting profits by 1.5 billion yuan through related-party transactions, severely eroding market trust.

**The Paradox of Power and Regulation**

Ironically, during his tenure as CSRC Chairman, Yi Huiman repeatedly emphasized the importance of financial anti-corruption efforts. In October 2021, he stated that the struggle between "hunting" and "anti-hunting" in capital markets remained intense, with anti-corruption tasks in the CSRC system still burdensome.

He emphasized at the time: "We must genuinely strengthen power supervision and checks and balances in issuance registration, effectively coordinate business supervision with disciplinary inspection and cadre supervision, and vigorously promote transparent approvals and sunshine governance."

However, these statements now contrast sharply with his current situation. In recent years, anti-corruption efforts within the CSRC system have intensified, with multiple officials including former CSRC Vice Chairman Wang Jianjun and former Central Commission for Discipline Inspection Group Leader Wang Huimin being investigated.

In 2024, an Issuance Review Committee member was accused of accepting bribes exceeding 10 million yuan from companies during IPO reviews, exposing the dark chain of regulatory power rent-seeking.

**What Balance Do Capital Markets Need?**

Capital market reforms must balance financing and investment functions.

On one hand, capital markets should provide financing support for the real economy; on the other hand, they must protect investor interests and maintain market fairness and efficiency.

Registration-based reforms are not about relaxing regulation, but about achieving better integration of effective markets and effective government. While advancing market-oriented reforms, stricter regulatory mechanisms must be established to prevent power rent-seeking and market imbalances.

Yi Huiman's story represents a microcosm of China's capital market development - filled with ambition and regret, reform and imbalance. His IPO Great Leap Forward indeed allowed PE capital to enjoy a feast, but at the cost of secondary market investors. His registration-based reforms left institutional legacies, but the absence of power supervision also became a profound anti-corruption lesson.

History will remember the market imbalances and regulatory deficiencies brought about by the IPO records created by this former CSRC Chairman. China's capital market development requires balance between financing and investment functions, wisdom that combines reform progress with proper regulation.

The development of China's capital markets needs balanced consideration of both financing and investment functions, combining reform initiatives with appropriate regulatory oversight.