Every public appearance by Zhou Xiaochuan could potentially be his last as China’s central bank governor.
After a remarkable 15 years at the helm of the People’s Bank of China — the longest of any PBoC governor — Mr Zhou is expected to step down around the time of the Chinese Communist party congress later this year that will mark the start of President Xi Jinping’s second five-year term.
Under the 69-year-old Mr Zhou’s leadership, a gradual opening of China’s capital account has allowed the market a greater role in determining the value of the renminbi and the currency’s slow but steady internationalisation.
Speaking this week at a financial forum in Shanghai, Mr Zhou called for a greater role for foreign competition in China’s financial sector and warned that “protectionism leads to laziness” — a message consistent with his reputation as one of the Chinese government’s most powerful reform advocates.
However, Mr Zhou’s final year in office will be remembered more for reform setbacks than accomplishments.
Advances on opening the capital account have been halted with the recent imposition of foreign exchange controls to combat capital flight. The PBoC has also faced criticism for the lack of transparency in the new process for setting the renminbi’s “daily fix” against the US dollar, from which it is allowed to rise or fall no more than 2 per cent.
PBoC watchers believe one of the men below will succeed Mr Zhou. The person chosen will play a key role in restoring and advancing Mr Zhou’s reformist legacy — or further tarnishing it.
Guo Shuqing China Banking Regulatory Commission chairman
Guo Shuqing, 61, is the technocrats’ choice to lead the PBoC. Like the outgoing central bank governor, he rose to prominence in the 1990s under Zhu Rongji, the former premier who pushed through a series of difficult economic and financial reforms and negotiated China’s entry into the World Trade Organisation.
Mr Guo was summoned back to Beijing this year after serving as Shandong province governor, the second highest provincial post after party secretary. He was appointed head of the China Banking Regulatory Commission with a mandate to clean up risky practices in the sector. “If the banking industry becomes a complete mess, I will resign,” he reportedly promised at a meeting of financial regulators in April.
Under his leadership, the CBRC has launched a review of banks’ dealings with four of China’s most acquisitive groups. News of the review, which emerged on June 22, sent shockwaves through the global M&A industry
Many people thought the CBRC post was not worthy of a man who had previously been a PBoC vice-governor and led China’s foreign exchange regulator, securities regulator and one of the “big four” state banks.
Some of Mr Guo’s supporters have speculated his CBRC appointment was part of a plan to create a long-discussed, PBoC-led “super regulator” that he would also lead. Mr Guo has quizzed international visitors about regulatory consolidation in recent meetings, according to people who have attended them.
But senior Chinese officials also say in private that creating a super-regulator would be a bureaucratic nightmare and argue that it is enough to appoint tough, committed reformers to lead the PBoC, CBRC and the securities and insurance regulators.
One person close to Mr Guo also says he was disappointed not to have been appointed party secretary during his time in Shandong, which would have given him greater clout in the race to succeed Mr Zhou.
Jiang Chaoliang Party secretary of Hubei province
Jiang Chaoliang, the 59-year-old party secretary of Hubei province, emerged as a possible PBoC successor only recently. Andrew Polk at Trivium, a Beijing-based economic consultancy, calls Mr Jiang “the real frontrunner” with a “stellar resume” for the PBoC job.
Like Mr Guo, he has alternated between provincial leadership posts and top finance jobs, including stints running China Development Bank, the country’s largest policy bank, and a big-four state lender. He has been promoted three times by Mr Xi since 2014, suggesting he might be more of a Xi loyalist than the other PBoC candidates.
He also played a lead role in the resolution of China’s largest-ever bankruptcy — the $5bn default of Guangdong International Trust and Investment Corporation in 1999.
In that capacity he worked closely with Wang Qishan, Guangdong vice-governor at the time who was given the task of negotiating a settlement with Gitic’s creditors, including international lenders who had wrongly assumed the state-owned company’s debts would be honoured by Beijing. Mr Wang is now the widely feared head of Mr Xi’s anti-corruption campaign.
Before his work on Gitic, Mr Jiang ran the PBoC’s office in Shenzhen, the special economic zone that borders Hong Kong and one of the central bank’s most important regional branches.
Liu Shiyu Chairman of China Securities Regulatory Commission
Liu Shiyu, 56, was not well known before he was chosen to lead China’s securities regulatory last year. But he has since distinguished himself as an outspoken and politically savvy operator, and established himself as many analysts’ favourite dark-horse candidate for Mr Zhou’s job.
Unlike Mr Guo and Mr Jiang, Mr Liu has never headed a large Chinese financial institution or held a power provincial position. Most of this career has been spent at the PBoC, where he rose through the ranks and served eight years as a vice-governor.
Mr Liu inherited a securities regulator that was in disarray. His predecessor had done little to discourage a stock market bubble that burst spectacularly in 2015, and played a key role in a botched government rescue when the market collapsed.
While the benchmark CSI 300 is up about 20 per cent since Mr Liu’s appointment, he has not lived up to his name, which investors note has the phonetic similarity with the phrase “bull-market rain” in Chinese. He has instead established himself as a regulatory hawk bent on rooting out market malpractice and ballooning financial risks.
Last year he attacked “barbarian” insurers who used huge amounts of leverage to build up large positions in listed companies. Within weeks other regulators were repeating his colourful language and corruption investigators were sweeping through the sector.
“I was shocked by the chaos I saw in financial markets after I came into office,” Mr Liu said this year, adding that the securities regulator would “get even with financial crocodiles who have hurt small investors”.
Yi Gang People’s Bank of China deputy governor
Yi Gang, 59, is the leading in-house candidate to replace Mr Zhou, having served as deputy governor of the PBoC since 2008.
A fluent English speaker who spent eight years in the US, where he completed his doctorate and taught at Indiana University, Mr Yi selection would be welcomed by his global peers, for whom he has become a familiar face at international events.
Mr Yi returning to China in 1994 and took a position at Beijing University, before moving to the PBoC three years later. His supporters say he would be an excellent choice for an institution that has worked hard to improve its communications with the outside world since an August 2015 change to the formula used to calculate the renminbi’s daily fix sparked panic on global financial markets.
However, fluent English speakers who are popular on the international conference circuit rarely succeed in competitions for highly sought-after Chinese government posts.