China Signals Central Bank Leadership to Change Next Month
China signaled it’s preparing for its first new central bank chief since 2002 as an official newspaper said Zhou Xiaochuan will step down from his position next month.
The China Securities Journal, published by the state-run Xinhua News Agency, didn’t attribute the information to anyone in its Feb. 2 profile of Zhou, governor of the People’s Bank of China. The ruling Communist Party previously indicated in November that Zhou would leave, without saying when, by omitting him from its central committee list.
The successor to Zhou, 65, whose decade of service makes him the longest-tenured PBOC chief, will help decide the pace of loosening controls on interest rates and capital flows. China’s benchmark stock gauge, the Shanghai Composite Index (SHCOMP), has gained 24 percent since Dec. 3 on optimism the world’s second- largest economy is rebounding from growth at a 13-year low last year.
“The central bank governor change will be part of China’s government reshuffle in March,” with Zhou reaching retirement age, said Zhu Haibin, chief China economist at JPMorgan Chase & Co. in Hong Kong. The successor “has to follow Zhou’s uncompleted reforms in liberalizing China’s interest rates and opening up the capital account,” Zhu said.
The PBOC news office didn’t immediately respond to faxed questions from Bloomberg News about how much longer Zhou will serve. Under Chinese law, China’s central bank governor must be named by the premier and endorsed by the National People’s Congress. The annual gathering of the full legislative body is in March.
Zhou was listed Feb. 2 as a member of the Chinese People’s Political Consultative Conference, the top political advisory body, in a further sign he will depart the PBOC post soon.
The China Securities Journal piece includes several unattributed anecdotes about Zhou. In one story, Zhou played tennis with Lawrence Summers, then the top economic adviser to U.S. President Barack Obama, in Beijing in September 2010 and “joked” that the winner of the game would dictate exchange- rate policies between the two countries. Summers lost, the newspaper said.
The newspaper said Zhou’s use of English phrases at central bank meetings once sent a department director rushing out of the room for a dictionary. The publication didn’t identify the official or what Zhou said.
Zhou oversaw an overhaul of the country’s exchange rate system in July 2005 that paved the way for the yuan to appreciate. He also loosened controls over the use of the yuan for international trade and investment purposes and gave banks more freedom to set lending and deposit rates.
Potential successors include Shang Fulin, the nation’s banking regulator, and Guo Shuqing, head of the securities regulator, David Loevinger, former senior coordinator for China affairs at the U.S. Treasury Department, said last year.
--Zhou Xin. Editors: Scott Lanman, Paul Panckhurst
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