PBOC leader Zhou may be replaced
The Wall Street Journal is out with a report saying PBOC leader Zhou Xiaochuan may be replaced in what would be a huge move. The report doesn’t sound like vague speculation, they name some of the people who could be involved, including Guo Shuging.
Chinese leader Xi Jinping is considering replacing Mr. Zhou, say party officials, as part of a wider personnel reshuffle that also comes after internal battles over economic reforms.
The discussions occur as Mr. Xi, now two years in office, tries to place more allies into top positions in the government, military and Communist Party, according to the officials with knowledge of the plans. The personnel shifts are expected around a major party conclave to be held next month, the officials said, while cautioning that no final decision about Mr. Zhou has been made.
Last week China delivered a surprise 500B yuan injection into the five biggest banks. That move came just days after reports saying PBOC officials didn’t want to intervene and wanted to squeeze out some of financial excess in the economy.
The mixed messages left traders puzzled but if there’s a power struggle at the central bank it makes more sense. The WSJ frames the story saying Zhou has pushed for reforms but the central government wants to ensure growth targets are met. If that’s the case (I’m not so sure) and a new regime that’s more prone to juicing growth is introduced, then it’s a huge potentially positive catalyst for commodity currencies and risk assets.
In the short-term, however, uncertainty about the loss of a stabilizing force in markets could cause some fear in markets.
Zhou Xiaochuan, PBOC leader