Sources close to the matter say that Guo Shuqing, the head of the China Banking Regulatory Commission is one of the top contenders to succeed Zhou Xiaochuan, head of the People’s Bank of China, when he vacates offices next year.
The international financial sector is keeping a close eye on the likely upcoming leadership transition at China’s central bank, due to the tremendous global repercussions of any adjustments to monetary or financial regulatory policy in the world’s second largest economy.
69-year old Zhou Xiaochuan first took office in 2002, and has since driven a heavy reform agenda for the Chinese financial sector, as well as taken pains to shore up the influence of the People’s Bank of China and the international clout of the renminbi.
While Zhou was originally scheduled to retire in 2013 at the age of 65, he retained his position following his appointment as vice chairman of a leading advisory group to the Chinese legislature.
Inside sources speaking to Reuters expect Zhou to retire following the next convening of the Chinese legislative assembly in March.
According to the sources Guo Shuqing, who assumed leadership of CBRC in February and has since launched a heavy-handed crackdown on the Chinese banking sector, is considered one of the strongest contenders for Zhou’s position next year, given his impressive qualifications, rich experience and heavy reformist bent.
Guo was appointed to the position after spending four years as governor of Shandong province, and has previously served as deputy governor of Guizhou province in the late 1990’s, as well as held executive positions with the central bank, the foreign exchange regulator and the stock market regulator.
He was a key figure behind the listing of China Construction Bank, and is considered a leading advocate of reform.
Guo is no shoe-in for the role of PBOC chief, however, with sources also pointing to 60-year old Jiang Chaoling, a veteran of the banking sector and current Communist Party secretary for Hubei province, as enjoying a roughly equal shot at the position due to the backing of key senior leaders.
Jiang was previously an assistant central bank governor as well as head of the China Development Bank, and played an instrumental role in bolstering the balance sheet of the debt-encumbered Bank of Communications prior to its listing on the Hong Kong and Shanghai stock exchanges.
Another potential candidate is 59-year PBOC vice-governor Yi Gang, who enjoys the support of Zhou Xiaochuan and makes frequent appearances in Chinese media as a spokesman for the central bank.
While Yi possesses immaculate credentials as an economist, he is considered a dark house candidate who does not enjoy the full support of senior leaders, due to his foreign training at the University of Illinois where he obtained his PhD.
Some outside observers believe Guo is the frontrunner candidate due to the continuity he will bring to monetary and banking policy, as China’s continues to grapples with the parlous task of maintaining economic stability while driving financial sector reform and deleveraging.
“Guo may offer more continuity,” said Rob Subbaraman, Nomura’s chief economist and head of global markets research for Asia-ex Japan to Reuters.
“That’s really what he represents – continuity of wanting to, over time, move to a more liberalised capital and financial market, and trying to ensure very good regulation and supervision.”
Irrespective of who ends up heading PBOC come Zhou’s imminent retirement, monetary and banking policy is likely to maintain significant continuity due to the restricted independence of the central bank under China’s current political system.
PBOC still lacks the independence and discretion of central banks in the West, with the final word on monetary and exchange rate policy determined by the senior-most Chinese Communist Party leaders of the Politburo.
