Reports are circulating that Zhou Xiaochuan will be replaced at the People’s Bank of China midway through his third term. Here’s what we know:
- There is talk of a turf war between the PBOC and competing agencies
- New President Xi Jinping aimed to push reforms but there’s evidence he’s slowing/shifting
- More central bank independence hasn’t been mentioned publicly since it was first mentioned last Nov
The rumored candidate to replace him is Guo Shuqing although Xiao Gang, Shang Fulin and Yi Gang have also been rumored.
Guo Shuqing
What we know about him.
- He’s 58 years old
- Is a native of Inner Mongolia
- Fluent in English
- Protege of Zhou
- Similar career arc to Zhou,led China Construction Bank and the China Securities Regulatory Commission
- Currently governor of Shandong
- Likely to push for more liberalization
MNI reports that there’s a Shandong-premium in bonds there because of Guo’s influence and power in the central government:
We also know that Guo Shuqing isn’t going to remain in Shandong. Asked about a quirk of the bond market in which bonds sold by the Shandong government paid out less than those of the Ministry of Finance, a PBOC official told MNI last month that “Mr. Guo will return to the central government.”
But whether it’s Zhou or Guo leading the PBOC, maybe we’re asking the wrong question. Maybe we should be asking: Who is really pulling the strings? The PBOC isn’t independent and if Zhou is being replaced, it could be more about a shift in power to Beijing than who replaces him. And there is evidence that Beijing is shifting back to a grow-at-all-costs model.
