Zhou Xiaochuan, head of China’s central bank, will step down from his post next month after a decade’s work overseeing the monetary system of a superpower-in-the-making and the balance sheet of the world’s most liquid financial institution — the Chinese government.
Although Zhou is not a member of the country’s top decision-making body, the Communist Party’s Politburo Standing Committee, he is a vocal advocate on important monetary issues that are vital for China’s pursuit of sustainable development and global economic leadership.
The legitimate reason behind his withdrawal from the official post is simple; he has just turned to the retirement age of 65 for ministers in China. Zhou, the longest-serving governor at the People’s Bank of China (PBoC) will leave his position, official media reported yesterday. His departure became obvious after he was absent from the list of China’s central committee, announced during the party meetings in November last year.
Now the big question is what his next role will be and who will succeed him. Guo Shuqing, chairman of China Securities Regulatory Commission (CSRC), is thought to be one of the possible successors. Guo has very similar knowledge and experience as Zhou; he has followed in Zhou’s footprints for most of his career. Like Zhou, he had senior positions at the PBoC and led the State Administration of Foreign Exchange. His current job is Zhou’s previous job.
Guo has made significant contributions to China’s financial reform. He initiated effective measures to rescue China’s domestic stock market, cutting the trading fee by 25% and requiring underperforming companies to be removed from the bourse. He also simplified the listing process and improved the transparency of listing hopefuls, which all helped improve investor confidence and attract capital flows back to China’s languishing equity market.
Xiao Gang, chairman of Bank of China, is seen as another possibly replacement. He had senior roles at PBoC and had been a member of the Monetary Policy Committee. His ability to deliver effective solutions under challenging circumstances has won him much praise in the industry.
Other potential successors include Shang Fulin, chairman of China Banking Regulatory Commission, and Jiang Jianqing, chairman of China’s biggest bank, ICBC.
Zhou has raised the standard of China’s central bank governorship. He has a doctorate in engineering from Tsinghua University, the only PBoC chief with such academic achievement.
Whoever takes Zhou’s job is expected to push through financial reform, preferably without making too many waves in the country’s banking system and still ensuring the state-owned enterprises’ privileged status. A tough job indeed.