Xiao Gang, who was in charge during last year's crash, will be 'dismissed' from his post at the China Securities Regulatory Commission and replaced by Liu Shiyu, Chairman of the Agricultural Bank of China, a news agency said.

As growth slows and stocks deflate, capital has flooded out of the country, leaving Beijing desperate to win back waning confidence in the once vaunted economic oversight that has made China the world's second-largest economy.

Chinese stocks slumped 23 percent in January, their poorest month since the depths of the global financial crisis in 2008, a performance that made the Shanghai exchange the world's worst-performing major market.

Xiao, 57, took over as Chairman of the China Securities Regulatory Commission in March 2013.

He spent most of his career in China's banking system, including the Central Bank and the state-owned Bank of China, one of the country's 'Big Four', which he headed for 10 years before moving to the CSRC.

The plunge was triggered when regulators changed the rules on traders' use of borrowed money, bursting a debt-fuelled bubble that had seen Shanghai's benchmark index surge 150 percent in the year to mid-June.

Calls for Xiao's departure, heard regularly since the debacle, heated up early in January after the CSRC's deployment of a 'circuit breaker' closed the Shanghai and Shenzhen exchanges early twice in four days before it was scrapped.

At the time, many angry investors took to the Twitter to condemn Xiao's abilities as head of the regulator.

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