China’s Reformist Central Banker Could Be a Tough Act to Follow

Mr. Zhou’s expected retirement would be part of a broader reshuffle of the country’s leadership pegged to the Communist Party Congress, a twice-a-decade event that officials announced on Thursday would begin Oct. 18. Mr. Xi — who has emerged as the strongest Chinese leader since the death of Deng Xiaoping 20 years ago — is widely expected to use the shuffle to cement his control over the party hierarchy and military. That will give him a strong hand to shape the next government lineup and its financial priorities.


One possible successor is Jiang Chaoliang, who leads the central province of Hubei.

Garrige Ho/Reuters

China’s financial system long provided the fuel for the country’s powerful growth engine. But today it is plagued with debt and inefficiencies. Smaller businesses often cannot borrow the money they need to grow, while state-run banks steer vast sums of wasteful loans to bloated state-run companies. Economists worry that it could hold back China’s economic growth in coming years.

Mr. Zhou, a longtime regulator and bank official, has worked to change that. The governor of the People’s Bank of China since 2002, he helped private companies get more loans from government-controlled banks. He temporarily loosened Beijing’s hold over the value of China’s currency. He reached a deal with the International Monetary Fund that brought the currency, the renminbi, into the I.M.F.’s club of global currencies, a step that could help the renminbi someday join the American dollar and the euro as one of the world’s most widely used currencies.

Today, that effort appears to be ebbing.

China has put severe restrictions on the use of China’s currency for international transactions, a move that has crippled for now his dream of making it more globally accepted. The government has also begun discouraging banks from lending heavily to big, deeply indebted private conglomerates even as chronically unprofitable government-run enterprises appear to enjoy unrestricted access to loans.

Now 69, Mr. Zhou is well past the usual mandatory retirement age for someone of his ministerial rank.

One potential successor is Jiang Chaoliang, the leader of Hubei Province in central China. Mr. Jiang is a skillful bureaucrat within the Communist Party and has academic training as an economist, but he climbed China’s political ladder while steering clear of the party’s market reformers and skipping economic conferences with free-market themes. In a speech earlier this year, Mr. Jiang called for “spreading Marxist scientific theory with self-confidence, and persistently using Xi’s speeches to arm students’ and teachers’ minds.”

Mr. Jiang quietly made a few market-oriented changes during the four years that he ran the Bank of Communications, one of the larger state-run banks, where he led an initial public offering of shares on the Hong Kong stock market. But some advocates of a more market-based financial system have been discouraged by Mr. Jiang’s emergence as a leading candidate.

“If you don’t have a passion for financial reform, you can’t make that happen, and I don’t think Jiang Chaoliang has that passion,” said Gary Liu, the president of the China Financial Reform Institute, based in Shanghai.


Guo Shuqing, recently named as head of the China Banking Regulatory Commission, is another possible successor.

Bobby Yip/Reuters

Guo Shuqing, the newly appointed head of the China Banking Regulatory Commission, is another possible successor. Others include Pan Gongsheng, the director of the State Administration of Foreign Exchange; Liu Shiyu, a former central bank vice governor who is now the chairman of the China Securities Regulatory Commission; and Yi Gang, currently Mr. Zhou’s deputy.

Another possibility is that the central bank’s power could be sharply diminished. Mr. Xi set up an interagency committee in July to coordinate financial regulation that some experts say could expand to oversee all financial regulation.

Should Mr. Jiang get the nod, it would signal a shift away from Mr. Zhou, an English-speaking familiar face for many foreign leaders. By contrast, Mr. Jiang is perceived overseas as a bit of a mystery.

Mr. Jiang has worked in inland provinces that depend on steel and other heavy industries that have struggled to stay competitive and have required large loans from state-controlled banks to stay in business.

Officials did not respond to requests to interview Mr. Jiang. The People’s Bank of China declined to comment.

Residents in Wuhan, Hubei’s capital, said that they were not especially aware of Mr. Jiang, who unlike some provincial leaders has not pursued a propaganda campaign to burnish his personal image. Recent appearances in the state-controlled news media included meetings with leading tycoons including Jack Ma of Alibaba, the Chinese e-commerce giant.

Experts say he appears to enjoy a strong relationship with Mr. Xi.

“Jiang seems to be very tight with Xi Jinping,” said Scott Kennedy, a Chinese politics specialist at the Center for Strategic and International Studies in Washington. “The international community doesn’t know him very well, but Xi Jinping doesn’t seem to worry about that.”

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