Xi just fired China's top markets regulator. It shows his focus is still on control above all else.

• Beijing replaced the boss of the China Securities Regulatory Commission, the country's markets regulator, on Wednesday.
• The development followed news from Bloomberg that Xi was to be briefed on the state of the markets.
• China and Hong Kong's stock markets have lost trillions of dollars since hitting their peaks in 2021.

China's extended stock market rout was so bad that leader Xi Jinping was set to personally pay attention to it — and it looks like his solution was to fire the country's top markets regulatory late on Wednesday.

The new boss of the China Securities Regulatory Commission is Wu Qing, who is nicknamed "Broker Butcher" for leading a crackdown on traders over regulatory breaches during the 2000s, per Bloomberg.

The announcement of a new securities regulatory chief surprised insiders, the media outlet reported on Thursday, citing unnamed sources familiar with the matter. The development followed news from Bloomberg that Xi was to be briefed on the state of the markets that have lost trillions of dollars since hitting their peaks in 2021.

The news of Xi's personal attention — an unusual development — stoked traders' hopes of a forceful market rescue plan. After all, there were suggestions earlier that authorities are considering a stabilization fund to rescue the flailing stock market.

"Instead, Xi's involvement predictably produced a personnel change, showing that the impulse at the political level is to tighten administrative controls rather than address core challenges," wrote analysts at the Eurasia Group, a political risk consultancy, in a note on Wednesday seen by Business Insider.

This could be a problem for China, which needs to engineer a convincing recovery. The country has been unable to sustain a growth spurt more than a year after lifting COVID-19 lockdowns, denting investor confidence.

Stock markets in China and Hong Kong have accelerated losses into 2024.

While Beijing has pulled more than a dozen moves since January to try to stabilize a stock market rout and support downbeat property market demand amid its real-estate crisis, sentiment remains in the dumps.

"The lack of clarity on policy direction and the bias toward control and security-oriented policy will continue to weigh on confidence and disappoint expectations, entrenching a sense of economic malaise," the Eurasia Group analysts wrote.

The analysts at the Eurasia Group aren't the only ones who say China needs to double down on economic reforms to shore up its economy.

"Chinese government moves to restore private-sector confidence and boost the economy still lack a broad reform framework," Eswar Prasad, a professor at Cornell University and a former International Monetary Fund official in charge of China, told Nikkei in an interview published on Monday.

The Eurasia Group analysts added that it wasn't clear what conditions could trigger Beijing's perception that it needs to move beyond administration controls to "more extreme measures," but suggest it could be a sharp market slump that that causes systemic financial risks.

"Such an event can morph from a financial market issue to seriously affecting the real economy, driving up unemployment, and increasing public discontent," they wrote. "Ultimately, it may require social instability to shake loose the broader macroeconomic policy response function."

The Hang Seng Index was trading 1.1% lower at 3:25 p.m. local time on Thursday. It's down about 7% year to date.

China's bluechip CSI 300 Index was up 0.6% after falling about 2% so far this year.

The Hong Kong Stock Exchange will be closed for the second half of Friday until Tuesday for Chinese New Year holidays.

Mainland China's markets will be closed Friday and all of next week.