Starting overnight with an article in the Wall Street Journal was talk that China may replace central bank chief with someone in favor of more stimulus

A follow-up suggested that “PBOC head’s departure wouldn’t necessarily signal policy shift”

MNI have weighed in now, taking a pragmatic approach …:

  • A report that President Xi Jinping is considering replacing Zhou Xiaochuan as governor of the People’s Bank of China lends more credence to rumours that have been sweeping the capital for the past month
  • Even if the potential reshuffle … fails to materialize, People’s Bank of China Governor Zhou Xiaochuan will step down at some point and that raises questions about the continuity of monetary-policy making and the outlook for reform

It goes on (it is an extensive report, but a brief summary … bolding mine):

  • Zhou is past 65, the retirement age of government officials (he’ll be 67 this January)
  • It would be surprising if he served as head of the PBOC for the full five-year term of the new government
  • We also know that Guo Shuqing … a PBOC official told MNI last month that “Mr. Guo will return to the central government.”He didn’t know when or where
  • The departure of Zhou could shake confidence in China’s financial system and the hopes for reform which underpin a good deal of the widespread faith in the government. According to the Journal, that is the problem; Zhou is trying to move faster on financial system reform than the State Council would like. But that doesn’t explain the possibility of Guo taking over. Markets needn’t be concerned about the bona fides of his would-be successor. Were Guo to be appointed to replace Zhou at the head of the central bank, investors could expect continuity in the bank’s advocacy for more market-driven financial system underpinned by liberalized interest rates, a free-floating exchange rate and a mostly open capital account.
Guo Shuqing

Guo Shuqing