China extends Zhou’s record 10-year tenure as central bank chief

China extended Zhou Xiaochuan’s record tenure as central bank governor, a signal the nation’s new leaders will deepen a shift toward making the financial system more market-driven.

The reappointment of Zhou, 65, was made at the National People’s Congress yesterday in Beijing as it approved a new economic team for Premier Li Keqiang, who replaced Wen Jiabao on March 15. The announcements didn’t disclose whether Zhou will remain the People’s Bank of China Communist Party secretary or if another official will take the post.

Adding to Zhou’s decade in the role provides stability as China grapples with rising shadow-banking risks and changes how it conducts monetary policy. The governor, whose omission from the party’s new Central Committee in November fueled speculation he would retire, will be charged with loosening interest-rate controls and expanding international use of the yuan.

“Zhou has proved to be a capable central banker who is recognized both within China and globally,” said Lu Ting, head of Greater China economics at Bank of America Corp. in Hong Kong. “Zhou’s rich experiences will be valuable for new leaders who may not be so familiar with conducting monetary policy.”

Zhou’s reappointment was approved by a vote of 2,753 to 158, with 41 abstentions, the third-most negative ballots yesterday behind the housing and environment ministers. It comes after Xi Jinping’s ascent to the presidency, suc- ceeding Hu Jintao, and Li’s selection as premier, completing a transfer of power that started in November when Xi was named head of the party and Li its No. 2.

The negative votes may reflect sentiment that “in the past five years a lot of money has been printed, and inflation is too high and home prices are too high,” Lu said. “Some of these criticisms are not fair.”

China is retaining its best-known finance official internationally while central banks in Japan, the U.K. and Canada are getting new chiefs this year. Even so, the PBOC governor works within the confines of a system where China’s State Council, or cabinet, decides on policies including interest rates, leaving the central bank without the autonomy of counterparts in the US and Europe.

The Communist Party’s omission of Zhou as a member of its 205-member Central Committee in November, and a Feb. 2 profile by the official China Securities Journal that said he’d step down in March, had suggested that the governor, who took office in 2002, would leave as part of China’s once-a-decade leadership change.

Minister-level officials such as Zhou also usually hold the post of the agency’s party secretary. Media reported last month that Bank of China Chairman Xiao Gang would take that position at the PBOC while Zhou remained governor. Xiao may become securities regulator instead. Zhou was named March 11 as one of 23 vice chairmen of the nation’s top government advisory body, the Chinese People’s Political Consultative Conference.