Zhang's international experience won him admirers within the party. In 2010, he joined ICBC, which named him senior vice president. The appointment, according to state media, made him the first official from a foreign financial institution to become a top executive at a "big four" state bank -- a move that required approval from the party's top personnel department.

He started aligning his public remarks with party priorities. "Financial talents must be pillars of the nation, identify with the 'China Dream'...and take up their responsibilities for 'overall national security,'" he wrote in a 2017 essay.

Zhang left ICBC in 2018, citing "family reasons," before becoming co-chairman of Hopu Investments, a Chinese private-equity firm founded by another Goldman Sachs alumnus. He remained active in finance circles until late 2023, when authorities announced they were investigating Zhang for allegedly violating party discipline and the law.

The party expelled Zhang in May, accusing him of wide-ranging political and criminal misconduct, such as trading public power for private gain, cultivating political brokers and accepting "extremely large" bribes. He also allegedly read impolitic books and indulged in superstition, according to the party's top disciplinary commission.

In November, Zhang pleaded guilty to charges that he abused his powers as an ICBC executive and accepted more than 177 million yuan -- or roughly $24.5 million -- worth of bribes in return for providing favors to others in loans, financing and job appointments. The court hasn't announced a verdict. The Journal couldn't locate him for comment.

A new crop

The older guard is often being replaced with officials with little internationalin experience. CICC, which had Western-trained executives in senior management since its establishment in 1995, is now led by a new chairman, Chen Liang, who spent his entire career at homegrown Chinese brokerages.

In late July, China's securities regulator replaced one of its vice chairmen, Fang Xinghai, a Stanford-educated economist and World Bank alumnus regarded by foreign investors as an advocate for market-style reforms. Fang, who had reached retirement age, was succeeded by Li Ming, an official previously in charge of the regulator's efforts to curb insider trading and other misconduct.

The party has exerted more control over China's central bank, with its two most recent governors -- both Western-trained economists -- not holding full membership of the party's elite Central Committee, a departure from precedent that dated to the late 1970s. This has meant that the central-bank governor's standing within the party hierarchy has moved closer to that of top executives at China's biggest state banks.

In the past, China's regulators would frequently solicit views from economists, including those working for foreign banks, several of those economists said. Their suggestions weren't always adopted, but they were consulted. That two-way communication has become rare, they said.

Executives at international fund managers said meetings with Chinese regulators feel more stilted, with officials often sticking to prepared talking points.

Chinese regulators have also increasingly issued "window guidance," or largely verbal instructions, to local financial institutions, according to strategists and economists at these firms. Such guidance has included telling fund managers to refrain from offering products that invest in global markets to wealthy Chinese customers.

Being "red," or politically loyal, is now considered more important for Chinese financial professionals than being competent, said Zhiwu Chen, a finance professor at the University of Hong Kong and former adviser to China's securities regulator.

"If you are not loyal enough to the party, your professional sophistication will not be of any value," Chen said. "If anything, it may be of negative value, because you may use your talent and sophisticated skills to try to hurt the party."

Write to Rebecca Feng at rebecca.feng@wsj.com and Chun Han Wong at chunhan.wong@wsj.com

(END) Dow Jones Newswires

January 13, 2025 21:00 ET (02:00 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.