China's top securities regulator vowed over the weekend to step up law-based supervision and make strong efforts to advance high-quality capital market development, following the announcement that its former chairman is under investigation.

Financial experts said the pledge reflects the country's firm determination to address the remaining structural challenges in the capital market to foster steady, long-lasting market growth, with greater fairness and transparency at the core.

This photo taken on Feb. 17, 2023 shows a view of the China Securities Regulatory Commission (CSRC) in Beijing, capital of China. (Xinhua/Wang Quanchao)

The Central Commission for Discipline Inspection of the Communist Party of China and the National Supervisory Commission announced on Saturday that Yi Huiman, former chairman of the China Securities Regulatory Commission, is under investigation for suspected severe violations of discipline and laws.

The CSRC said in a statement on Saturday that it firmly supports the move of the country's top anti-corruption watchdogs and pledged to make a resolute push to win the tough battle against corruption, strengthen oversight of public power and curb new, hidden forms of graft, following a meeting to convey the decision to conduct the investigation.

Presided over by CSRC Chairman Wu Qing, who took over for Yi in February last year, the meeting vowed to strengthen law-based supervision, effectively guard against risks, and vigorously promote high-quality capital market development to better serve China's economic recovery and modernization drive.

Yi, 61, a native of Zhejiang province, currently serves as the deputy director of the Committee on Economic Affairs of the 14th National Committee of the Chinese People's Political Consultative Conference, the country's top political advisory body.

Before that, Yi served as chairman of the CSRC from January 2019 to February 2024, after working in China's banking system for decades.

During his five-year tenure, the number of A-share listed companies rose by about 1,700, according to financial media outlet Yicai. Over the same period, the benchmark Shanghai Composite Index fell below the 3,000-point threshold roughly 20 times by the measurement of closing price, data from market tracker Wind Info showed.

Tian Xuan, president of Tsinghua University's National Institute of Financial Research and associate dean of Tsinghua University's PBC School of Finance, said that further improving fundamental institutions is key to strengthening the internal stability and sustainable momentum of the A-share market.

"After a rapid rise, the market has seen a notable correction, reflecting subtle shifts in investor expectations and sentiment. The development also points to the inherent volatility and uncertainty facing the market, as well as lingering structural challenges yet to be fully resolved," Tian said.

Tian underlined the need to improve expectation management, enhance policy transparency and predictability and send timely positive signals to stabilize investor sentiment, while enforcing stricter information disclosure and refining the delisting mechanism to raise quality of listed companies.

China ramped up efforts to intensify the crackdown on securities violations and strengthen investor protection as it released a high-level guideline in April last year, rolling out nine measures to promote the high-quality development of the capital market.

As the latest step to strengthen the market, the CSRC proposed the first overhaul in 12 years of the rules on mutual fund sales commissions on Friday, aiming to sharply reduce investor costs and encourage long-term holdings.

Liu Jipeng, a senior expert on the capital markets and a professor at China University of Political Science and Law, said that further closing regulatory gaps to safeguard market fairness and investor interest will hold the key to future capital market reforms and steady market growth.

"A slow bull trend has taken shape. The goal should be making it steady and long-lasting so that the capital market can serve as a platform for common prosperity, where the majority of investors can share returns, rather than only a few getting rich overnight," Liu said.

Richard Tang, an equity research analyst for Asia at Swiss wealth management group Julius Baer, said the A-share market is far from a bubble despite a strong catch-up in performance.

"Valuation remains reasonable, and liquidity indicators suggest that market activity has increased but is not overheated. We expect further upside," Tang said.