China's Yi Gang nominated as new central bank governor -parliament delegates

China's Yi Gang nominated as new central bank governor -parliament delegates

Kerry Wise
March 21, 2018

During his record 15-year term, Mr Zhou won kudos for his management of the PBoC during the global financial crisis and his success at bringing the country's yuan currency to reserve-currency status.

The People's Bank of China has a new governor, Yi Gang.

China plans to name a new central bank chief on Monday in a move that signals Beijing will continue with an ambitious - and, some say, much needed - financial shake-up undertaken by the bank's current governor, two people familiar with the decision said.

Parliament approved the nomination of Xi's influential adviser Liu He, a Harvard-educated Communist Party official who as vice-premier is expected to oversee the financial and economic sectors.

The NPC ends with a news conference in the Great Hall of the People on Tuesday.

Yi received his PhD in economics from the University of IL, while Liu has a master's degree in public administration from Harvard University's Kennedy School of Government.

Beijing is aiming to streamline regulators and ministries to cut inefficiencies while expanding the remit of the central bank to boost its policymaking powers.

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The PBoC's lack of independence will constrain Yi's ability to set the direction of policy, Julian Evans-Pritchard, an economist at Capital Economics, said.

Analysts viewed Yi's promotion as a sign of continuity for the world's second-biggest economy.

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Zhou was known as an advocate of Western-style reforms for China's once closed off economy.

Yi has a solid pro-market record and should be able to communicate well with worldwide markets, so market participants have welcomed his appointment, said Ether Yin, a Beijing-based partner at advisory firm Trivium China.

"Yi's two main challenges will be striking a balance between financial de-risking and avoiding a credit crunch, and finding ways to lobby for his agenda within the system as he takes on a more political role", Yin told Caixin.

In addition to promoting Liu, the rubber-stamp parliament on Saturday elevated Wang Qishan, a Xi confidant and former trade negotiator, to the vice presidency, giving him another experienced ally to deal with Washington.

Mr Yi has been a protégée of his predecessor at the PBOC, Zhou Xiaochuan, who has been in the post since 2002.

The PBOC will likely ensure more resources are given to targeted areas of the real economy by decreasing their financing costs, said Zhu - areas such as infrastructure in underdeveloped areas, transportation, and high-tech industries.

US-educated Yi Gang, 60, has been vice PBOC governor since 2008.

Some economists see no need for China to increase rates this month because Beijing's deleveraging campaign has already tightened financial conditions.