Yi Gang has best cards to become PBOC-governor - Victor Shih

+Victor Shih 

Speculations have been mounting the current governor or China´s central bank PBOC, Zhou Xiaochuan, is up for retirement soon. Bloomberg asked financial experts who they expect might be the next central banker. Financial expert Victor Shih explains why he puts his cards on Yi Gang.

Bloomberg:

Yi, who holds a doctorate in economics from the University of Illinois, has been managing the country’s foreign-exchange reserves, now at $4 trillion, since July 2009. This year he also became a deputy director of the Communist Party’s Office of the Central Leading Group for Financial and Economic Affairs, a key position in mapping out policies. 

A onetime competitive swimmer who studied and worked in the U.S. from 1980 to 1994, Yi joined the PBOC in 1997 and often represents China at international meetings. 

“As the Fed begins to contract global liquidity and move U.S. rates higher, it is more important to have someone with extensive understanding of the linkages between external and domestic liquidity,” said Victor Shih, a professor at the University of California at San Diego who studies China’s politics and finance, and wasn’t a survey respondent. “In that area, I think Yi Gang has the deepest experience,” Shih said in an e-mailed response to questions.

More in Bloomberg.

Yi Gang

Victor Shih is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers´ request form. Are you looking for more financial experts at the China Speakers Bureau. Do check our latest list. 

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Old hands take over finance regulators - Wei Gu

Wei Gu

While the world was watching new party leader Xi Jinping taking the stage, real changes are taking place at the lower tiers. Reuters' Breakingviews columnist Wei Gu describes how the old guard is taking over positions at the financial regulators. Experience wins from reform.

Wei Gu:

The most high-profile change is at the People’s Bank of China where Zhou Xiaochuan, governor for the past decade, is now expected to retire. That’s prompted speculation about his replacement. Xiao Gang, chairman of Bank of China, who was promoted to the 205-member central committee, should advance. A former deputy governor, who is also young enough to serve a full ten-year term, Xiao may have a chance of succeeding Zhou. But the heads of China’s banking and securities regulators, who are more senior, could also get the nod. 

Other candidates for promotion include Lou Jiwei, chairman of China’s sovereign wealth fund, who could become finance minister. A former deputy finance minister, Lou’s international experience should come in handy as China becomes increasingly integrated into the global financial system. 

Picking a new central banker in China is not as momentous as, say, selecting a new chief for the U.S. Federal Reserve. Monetary policy is still  believed to be set behind the scenes by the country’s premier or its State Council. Running the central bank may be more about following the party line, as Zhou showed last month when he cancelled a high-profile speech in Japan following a territorial dispute. Moreover, the likely new heads aren’t much different from the ones they are replacing. Most of them, including Lou and Xiao, earned their promotions in the era of former premier Zhu Rongji. 

Still, personality matters in China’s hierarchy-driven society. Under Zhou, the PBOC has developed a more open culture with lively debates. Although it may not have the final say on interest rates, it can lead key initiatives, such as yuan internationalisation, which helped to loosen the country’s rigid control on the exchange rate. China’s new financial guard won’t automatically lead to faster reforms. But at least they have plenty of experience in pushing for changes from within.

More at Reuters' Breakingviews.

Wei Gu is a speaker at the China Speakers Bureau. Do you need her at your meeting or conference? Do get in touch or fill in our speakers' request form.

The China Weekly Hangout on November 1 focused on what we can expect for the Xi Jinping tenure, discussed by Janet Carmosky, Greg Anderson and Fons Tuinstra.

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