A US-trained economist was yesterday appointed to succeed the longtime People’s Bank of China governor Zhou Xiaochuan (周小川), at a time when the Chinese Communist Party (CCP) is trying to reduce financial risks and surging debt.
The elevation of Yi Gang (易綱), a two-decade veteran of the central bank, to head the Chinese central bank was in a slate of promotions of finance and economic officials approved by the Chinese National People’s Congress as President Xi Jinping (習近平) tightens control over government.
Also yesterday, the congress endorsed the appointment of Chinese National Development and Reform Commission (NDRC) Vice Chairman Liu He (劉鶴), Xi’s economic adviser, to a post as vice premier, where he is expected to oversee economic reform.
Photo: AFP
The CCP is under pressure to control surging debt, defuse mounting trade tensions with Washington and Europe, and make the cooling, state-dominated economy more productive. It has promised to open more industries to private and foreign competition, but business groups and reform advocates have complained that Beijing is moving too slowly.
Yesterday’s promotions give unusual prominence to US-trained figures. Yi received his doctorate in economics from the University of Illinois, while Liu has a master’s degree in public administration from Harvard University’s Kennedy School of Government.
At the central bank, Yi’s potential tasks include making interest rates and the exchange rate of China’s tightly controlled yuan more market-oriented and improving financial regulation, Macquarie Capital chief China economist Larry Hu said.
“China is facing new challenges and the room for growth is smaller,” Hu said in a report. “Key is to unleash productivity by reforming the system, albeit containing risks in the process. It’s much easier said than done.”
The congress also endorsed the reappointment of NDRC Chairman He Lifeng (何立峰) and of Chinese Minister of Commerce Zhong Shan (鐘山) to second terms, and Liu Kun (劉昆) was named Chinese minister of finance.
Yi, 60, is well known to foreign investors and regulators as director of the Chinese State Administration of Foreign Exchange until 2016. He already was overseeing efforts to make the mechanism that sets the yuan’s exchange rate more flexible.
Before joining the bank in 1997, Yi taught at Indiana University. He also has a degree in business administration from Hamline University in Minnesota.
“Highly regarded in the international circles and seen as a pragmatic reformist, Yi Gang’s appointment is set to ensure policy continuity and a smooth transition,” Mizuho Bank said in a report.
Zhou, who is retiring after a record 15 years in the post, is the most prominent Chinese figure in global finance. At 70, he is well beyond official retirement age, but stayed on following the 2012 handover of power to a new generation of leaders under Xi in what was seen as an effort to reassure companies and financial markets of stability.
China’s surging debt prompted international ratings agencies to cut its credit rating last year. The ruling party has declared controlling financial risk a priority this year.
Zhou in October warned that rising debt could have a “severe impact” on the economy, but last week said that regulators believed they had debt under control.
The bank governor’s formal powers are limited despite the post’s high profile. Unlike central banks of other major economies, the bank does not make monetary policy. Instead, its mission is to carry out policy made by an official body, the identity of whose members is secret.
The bank is widely seen as an advocate of conventional, market-oriented economics.
The bank “acts more like an advisor and operator, but not a maker, of monetary policy,” Hu said.
Nissan Motor Co has agreed to sell its global headquarters in Yokohama for ￥97 billion (US$630 million) to a group sponsored by Taiwanese autoparts maker Minth Group (敏實集團), as the struggling automaker seeks to shore up its financial position. The acquisition is led by a special purchase company managed by KJR Management Ltd, a Japanese real-estate unit of private equity giant KKR & Co, people familiar with the matter said. KJR said it would act as asset manager together with Mizuho Real Estate Management Co. Nissan is undergoing a broad cost-cutting campaign by eliminating jobs and shuttering plants as it grapples
TEMPORARY TRUCE: China has made concessions to ease rare earth trade controls, among others, while Washington holds fire on a 100% tariff on all Chinese goods China is effectively suspending implementation of additional export controls on rare earth metals and terminating investigations targeting US companies in the semiconductor supply chain, the White House announced. The White House on Saturday issued a fact sheet outlining some details of the trade pact agreed to earlier in the week by US President Donald Trump and Chinese President Xi Jinping (習近平) that aimed to ease tensions between the world’s two largest economies. Under the deal, China is to issue general licenses valid for exports of rare earths, gallium, germanium, antimony and graphite “for the benefit of US end users and their suppliers
Dutch chipmaker Nexperia BV’s China unit yesterday said that it had established sufficient inventories of finished goods and works-in-progress, and that its supply chain remained secure and stable after its parent halted wafer supplies. The Dutch company suspended supplies of wafers to its Chinese assembly plant a week ago, calling it “a direct consequence of the local management’s recent failure to comply with the agreed contractual payment terms,” Reuters reported on Friday last week. Its China unit called Nexperia’s suspension “unilateral” and “extremely irresponsible,” adding that the Dutch parent’s claim about contractual payment was “misleading and highly deceptive,” according to a statement
The Chinese government has issued guidance requiring new data center projects that have received any state funds to only use domestically made artificial intelligence (AI) chips, two sources familiar with the matter told Reuters. In recent weeks, Chinese regulatory authorities have ordered such data centers that are less than 30 percent complete to remove all installed foreign chips, or cancel plans to purchase them, while projects in a more advanced stage would be decided on a case-by-case basis, the sources said. The move could represent one of China’s most aggressive steps yet to eliminate foreign technology from its critical infrastructure amid a
RSS