BEIJING (AFP) - Xi Jinping reshaped his core economic team on Monday (March 19), promoting two trusted, US-educated lieutenants to key positions at a time of escalating trade tensions with Washington and concerns over a growing debt mountain.
Parliament approved the nomination of Xi's influential adviser Liu He, a Harvard-educated Communist Party official who as vice premier is expected to oversee the financial and economic sectors.
The deputy governor of the People's Bank of China (PBOC), Yi Gang, was elevated to head the central bank, replacing Zhou Xiaochuan, another advocate of reforms who had held the job since 2002.
The appointments were made at an annual session of the National People's Congress that has boosted Xi's influence on the world's second-largest economy, with presidential term limits abolished and his name added to the constitution.
The reshuffle gives Xi trusted hands at the economic controls as China faces the prospect of a tit-for-tat trade war with the US and concerns that ballooning debt has made the country vulnerable to a potential crisis.
Liu travelled to Washington earlier this month and met with US officials at the White House, but his trip has not stopped Trump from considering new trade measures against China.
"The most important task is carrying out a stable monetary policy, and at the same time pushing forward financial reform and opening, while maintaining financial stability," Yi told reporters after his appointment.
"There will be a series of reform and opening policies and measures to come," Yi said, according to the central bank's news outlet Financial News.
While at the PBOC, Yi has called for greater market access for foreign investors and further internationalisation of China's currency.
At a press conference earlier in the annual parliamentary session, Yi said the central bank would work to push through reforms that will bring about "equal treatment for domestic and foreign investors".
He specifically cited liberalisation of China's financial sector, by "allowing greater access or eliminating restrictions on foreign ownership" altogether.
Last year Beijing said it would permit companies to own majority stakes in financial firms within three years.
Market access restrictions have been a top complaint from the US and Europe which have repeatedly said their firms face major hurdles to doing business in China, including being forced to share their know-how and technology with local partners.
Earlier this year, Yi wrote an op-ed in local business weekly Caixin pushing for the further reform of China's currency renminbi, which has long been allowed to fluctuate within a range set by the PBOC.
A massive overhaul of China's bureaucracy announced last week - the biggest in a decade and designed to boost efficiency - will give the central bank more power to push through such reforms.
As part of the shake-up, the PBOC was given the responsibility of drafting new laws and regulations for the banking and insurance sectors, and with it new authority over China's financial system.
An economic reformer, Yi studied in the US, earning a PhD in economics from the University of Illinois and then a tenured faculty position at Indiana University, before returning to China to take a position at Peking University. He moved to the central bank in 1997.
Chief among his concerns will be China's mounting debt, whose growth analysts say resembles trends that precipitated financial crises elsewhere.
"The PBOC is in a very difficult position, because if it's trying to de-leverage in any significant ways that's going to put an enormous amount of financial stress," said Christopher Balding, a Peking University economics professor.
"But they are not going to accept that trade-off." .
Rocky US ties
Relations with the US are also among the first challenges Yi and Liu are likely to face.
The Trump administration is expected to unleash new tariffs on Chinese imports in the coming months while the Federal Reserve is projected to raise interest rates as the US economic recovery continues.
Both policies will be felt in China and may force responses from its central bank.
In addition to promoting Liu, the rubber-stamp parliament on Saturday elevated Wang Qishan, a Xi confidant and former trade negotiator, to the vice presidency, giving him another experienced ally to deal with Washington.
The country's foreign minister, Wang Yi, was also promoted to state councillor, making him a ranking member of the Cabinet with more influence on international policy.