Sun, Mar 17, 2013 - Page 13 News List

China extends Zhou’s record tenure at central bank

WELL RESPECTED:Responsible for a series of monetary reforms, Zhou is rated highly within China and abroad, and his experience will be valuable to China’s new leaders


China extended Zhou Xiaochuan’s (周小川) record tenure as central bank governor, signaling the nation will deepen market-oriented changes to the financial system.

The reappointment of Zhou, 65, was made at the National People’s Congress yesterday in Beijing as it named a new economic team for Chinese Premier Li Keqiang (李克強), who replaced Wen Jiabao (溫家寶) on Friday.

Yesterday’s announcements did not say whether Zhou will remain the People’s Bank of China Communist Party secretary or if another official will take the post, setting them up as Zhou’s successor.

Adding to Zhou’s decade in the role provides stability as China grapples with rising shadow-banking risks and changes how it conducts monetary policy.

The governor, whose omission from the Chinese Communist Party’s new Central Standing Committee in November last year fueled speculation he would retire, will be charged with loosening interest-rate controls and expanding international use of the yuan.

“Zhou has proved to be a capable central banker who is recognized both within China and globally,” Lu Ting (陸挺), head of Greater China economics at Bank of America Corp in Hong Kong, said before the announcement.

Zhou’s “rich experiences” will be valuable for new leaders who may not be so familiar with conducting monetary policy, Lu said.

Zhou’s reappointment comes after Xi Jinping’s (習近平) ascent to the presidency, succeeding Hu Jintao (胡錦濤), and Li’s selection as premier, completing a transfer of power that started in November last year when Xi was named head of the party and Li its No. 2.

“Zhou is also believed to be a reformer and has done quite a lot of financial reforms in the past few years, so he is acceptable to those reform-minded new leaders like Xi and Li,” Lu said.

China is retaining its best-known finance official internationally while counterparts in Japan, the UK and Canada are getting new chiefs this year. Even so, the bank’s governor works within the confines of a system where China’s State Council, or Cabinet, decides on policies including interest rates, leaving the central bank without the autonomy of counterparts in the US and Europe.

Minister-level officials such as Zhou also usually hold the post of the agency’s party secretary.

Zhou was on Monday named as one of 23 vice chairmen of the nation’s top government advisory body, the Chinese People’s Political Consultative Conference. The position allows him to serve beyond retirement age, a person with direct knowledge of the leadership discussions said last month.

The governor led the central bank during the global financial crisis and oversaw exchange-rate reforms in July 2005 that paved the way for the yuan to rise more than 30 percent against the US dollar.

He also expanded the bond market, gave banks more freedom to set lending and deposit rates and loosened yuan controls.

Zhou’s most recent comments signal a heightened focus on controlling prices.

He said at a press briefing on Wednesday that China should be on “high alert” over inflation after last month’s figures exceeded forecasts. Monetary policy is “no longer relaxed” and is “relatively neutral” as demonstrated by a 13 percent target for money-supply growth that’s tighter than expansion in the last two years, Zhou said.

Last month’s inflation, distorted by the week-long Lunar New Year holiday, accelerated to a 10-month-high of 3.2 percent.

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