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China's forex chief to become central bank vice governor

Hu Xiaolian (胡曉煉), China's foreign-exchange regulatory chief, was appointed a vice governor at the People's Bank of China, state-run Xinhua News Agency said.

Hu, 46, will join four other vice governors at the agency after replacing Guo Shuqing (郭樹清) as head of the State Administration of Foreign Exchange in March. She's expected to hold both positions at the same time.

Hu is regarded as a rising star in the financial industry in China, where the government is trying to maintain the yuan's stability and to prevent foreign-currency flows from fueling inflation or deflating asset values. Her appointment comes five weeks after the government abandoned its decade-old currency peg to the US dollar, part of foreign-exchange regime changes aimed at making the yuan more convertible.

"It's a logical choice as the appointment can leverage on Hu's experience in foreign-exchange management as the Chinese government is giving more focus to the flow of money in and out of the country," said Qu Hongbin (曲宏賓), a Hong Kong-based economist with HSBC Holdings Plc.

The central bank is in charge of currency policy and the State Council, or Cabinet, has the final say. Still, the State Administration of Foreign Exchange is regarded as instrumental in pushing changes to make the yuan more flexible and eventually more convertible.

Since September 2003, the US has been appealing to China to allow the currency to appreciate. The Chinese government on July 21 replaced the yuan's peg with a system allowing limited fluctuation against a basket of currencies that includes the US dollar, euro and yen.
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