Sources mull China cen­tral bank head op­tions


China’s top bank­ing reg­u­la­tor Guo Shuqing and veteran banker Jiang Chao­liang are front run­ners to suc­ceed Zhou Xiaochuan, the coun­try’s long­est-serv­ing cen­tral bank head who is likely to step down next year, ac­cord­ing to mul­ti­ple sources fa­mil­iar with the mat­ter.

The lead­er­ship reshuf­fle at the Peo­ple’s Bank of China (PBOC) is closely watched in global fi­nan­cial mar­kets as mon­e­tary pol­icy changes and any moves to fur­ther lib­er­alise the fi­nan­cial sys­tem of the world’s sec­ond-large econ­omy would have reper­cus­sions well be­yond China’s shores.

The 69-year-old Mr Zhou has spear­headed fi­nan­cial re­forms and boosted the yuan’s global clout, as well as the cen­tral bank’s pol­icy in­flu­ence, since tak­ing up his post in 2002.

Mr Zhou is likely to re­tire around the time of the an­nual ses­sion of par­lia­ment next March, ac­cord­ing to the seven sources with ties to the lead­er­ship and close to the cen­tral bank.

Mr Guo, chair­man of the China Bank­ing Reg­u­la­tory Com­mis­sion (CBRC), whose rich ex­pe­ri­ence and re­formist cre­den­tials are sim­i­lar to Mr Zhou’s, is seen as more qual­i­fied for the job, the sources said.

How­ever, Mr Jiang, the Com­mu­nist Party chief of Hubei prov­ince, has the back­ing of some top lead­ers and is seen as hav­ing a roughly equal chance of get­ting the post, they noted.

The PBOC and the CBRC did not re­spond to re­quests for com­ment, while of­fi­cials at Hubei Com­mu­nist Party com­mit­tee’s pro­pa­ganda depart­ment de­clined to com­ment.

Yi Gang, 59, a PBOC vice-gov­er­nor who has a PhD in eco­nom­ics from the Univer­sity of Illi­nois, is the lead­ing in-house can­di­date to re­place Mr Zhou but is not seen as a fron­trun­ner.

Mr Yi is a well-trained economist who is sup­ported by Zhou, but his back­ground as a “sea tur­tle” — a col­lo­qui­al­ism for Chi­nese who have re­turned from over­seas — means he is less likely to gain the full trust of China’s lead­ers, the sources said.

One of the sources, who cor­rectly pre­dicted a reshuf­fle of the coun­try’s top bank­ing, se­cu­ri­ties and in­sur­ance reg­u­la­tors in 2011, said that Mr Guo is most favoured, helped by his un­der­stand­ing of the fi­nan­cial mar­kets and the global econ­omy.

“His ap­point­ment would boost con­fi­dence,” the source added.

Mr Guo, 61, was sum­moned back to Bei­jing in Fe­bru­ary to lead the CBRC af­ter serv­ing as gov­er­nor of Shan­dong prov­ince for four years — his sec­ond re­gional stint af­ter serv­ing as a deputy gov­er­nor of Guizhou prov­ince in the late 1990s.

Un­der Mr Guo’s lead­er­ship ear­lier this year, the CBRC started what was widely dubbed a “reg­u­la­tory wind­storm” to force banks to cut debt, but he later eased up af­ter the move fu­elled fears of a liq­uid­ity crunch.

Mr Guo, a phi­los­o­phy ma­jor and once a vis­it­ing scholar at Ox­ford Univer­sity, has served as a deputy cen­tral bank gov­er­nor and as the top for­eign ex­change reg­u­la­tor, and steered China Con­struc­tion Bank Corp to a suc­cess­ful share list­ing. As a top stock mar­ket reg­u­la­tor, Mr Guo ce­mented a rep­u­ta­tion as an eco­nomic re­former.

Still, Mr Jiang, who has also al­ter­nated be­tween top fi­nan­cial and pro­vin­cial posts, re­mains a for­mi­da­ble chal­lenger for Mr Guo, the sources said.

The 60-year-old Hubei party chief, who has had stints as an as­sis­tant cen­tral bank gov­er­nor and head of China Devel­op­ment Bank, the coun­try’s largest pol­icy bank, emerged as a pos­si­ble suc­ces­sor to Mr Zhou rel­a­tively re­cently.

Mr Jiang has been cred­ited with help­ing to trans­form the state-owned Bank of Com­mu­ni­ca­tions, which had been plagued by bad debt, into a bank with a stronger bal­ance sheet that then listed in Hong Kong and Shang­hai.

“Mr Jiang is not a dark horse, his re­sume is very good and he has been proved to be very ca­pa­ble,” said one of the sources.

Who­ever takes the helm of the cen­tral bank will face tough chal­lenges as he will have to walk a tightrope be­tween en­sur­ing eco­nomic sta­bil­ity and push­ing re­forms to rein in debt risks.

Mr Zhou has been steer­ing broad fi­nan­cial and cur­rency re­forms, loos­ened con­trols on in­ter­est rates and moved away from what had ef­fec­tively been a yuan peg to the US dol­lar — a step along the path to turn­ing it into a global cur­rency on a par with the green­back.

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