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.