On July 20 it was reported that Liu Lefei, the son of one of the most powerful communist officials in China, had quietly resigned from his post at a major insurance firm. The reason? “Work-related reasons,” the reports said, shedding no light on the unusual announcement.
Liu was the director of New China Life Insurance, the third largest life insurer in China, which has an asset book value of $103.74 billion, according to Forbes. The reports did not say what new job he had gone on to.
Given Liu’s deep red political background, his resignation was bound to attract speculation and attention, especially given the context: Liu’s father is a close ally of the chief political enemy of Party boss Xi Jinping, and his New China Life Insurance flaunted demands by the central leadership not to sell any shares after the stock market crash, which some commentators in China think may have itself been manipulated by political interests.
Liu Lefei’s father is Liu Yunshan, a member of the Politburo Standing Committee and the chief of the Party’s propaganda and ideology leading group, a small but intensely powerful organ that controls the propaganda apparatus. Prior to heading that leading group, Liu was head of the Central Propaganda Department from 2002 to 2012, and was brought into the role by Jiang Zemin, the Party leader at the time. Jiang’s political network, which he continued to cultivate in the decade he was out of power from 2002, is the main target of Xi Jinping’s sweeping anti-corruption drive.
Liu Lefei himself is understood to be part of the political and social group that included Bo Xilai; the son of Zeng Qinghong, Zeng Wei; the daughter of former premier Li Peng, Li Xiaolin; and the purged China Central Television host Rui Chenggang, according to Radio France Internationale (via China Digital Times).
When the Shanghai Composite Index started to fall in early July, Chinese premier Li Keqiang launched a series of measures to save the stock market. Several state-run agencies, banks, and mutual funds bought into the market to restore investor confidence. The state securities regulatory authority called a moratorium on selling for the next six months for investors with stakes of more than 5 percent, adding that violations would be “dealt with severely.”
But China Life, Liu’s company, seemed to ignore that order—even if only a little—appearing to challenge the direct command from Party Central. News reports on finance websites in China, and then Hong Kong, revealed that on July 10, China Life sold down its holdings of CITIC Securities from 6.05 to 5.74 percent.
Ming Pao, based in Hong Kong, said the move “provoked controversy in the market,” and that “as soon as the news came out, it caused an uproar.”
Ten days later, China Life announced Liu’s resignation due to “work-related reasons.”