China appoints Yi Gang as its new central bank chief

Mr Yi Gang spent 14 years in the United States, an experience that puts him at ease when it comes to mingling with foreign central bank and economic officials.
Mr Yi Gang spent 14 years in the United States, an experience that puts him at ease when it comes to mingling with foreign central bank and economic officials.PHOTO: EPA-EFE

BEIJING • The appointment of central bank insider Yi Gang as the new People's Bank of China (PBOC) governor signals continuity in policymaking, even as Mr Yi is expected to have less room than his predecessor to push for reforms as Beijing focuses on stability.

The 60-year-old Yi, a vice-governor at the central bank since the outbreak of the global financial crisis a decade ago, has big shoes to fill in replacing the high-profile Zhou Xiaochuan, who stepped down after 15 years.

Mr Yi, a 20-year PBOC veteran, may to some extent operate in the shadow of Mr Liu He, an ally of President Xi Jinping, who was yesterday given a broad role supervising the economy and financial sector, and outranks him as a politburo member.

Both appointments were made during a five-yearly reshuffle of top jobs during the annual meeting of China's largely rubber-stamp Parliament that also saw Mr Xi launch his second term.

Mr Yi and Mr Liu have a close working relationship, policy insiders said, forged as Mr Liu headed the General Office of the ruling Communist Party's Central Leading Group for Financial and Economic Affairs, while Mr Yi was its deputy head.

An economist, Mr Yi spent 14 years in the United States completing his doctorate at the University of Illinois and teaching at Indiana University, experience that puts him at ease when it comes to mingling with foreign central bank and economic officials who were accustomed to the engaging Mr Zhou.

Mr Yi's long years outside China make him an anomaly in a leadership cadre that consists almost exclusively of domestically groomed officials.

Policy insiders said Mr Yi's appointment yesterday can be seen as a victory for Mr Zhou.

While Mr Yi has a track record of implementing policy changes and currency reforms in recent years, he faces formidable challenges in reducing China's reliance on credit to fend off financial risks while keeping economic growth steady.

Mr Yu Yongding, an influential government economist and former central bank policy adviser, said Mr Yi's appointment sends a positive signal for international markets. Chinese shares ended higher on Monday. "He is an important symbol of monetary policy continuity," Mr Yu said.

Mr Yi has advocated for interest rate and currency liberalisation, cautioning against risks from excessive credit and money growth.

He helped implement major currency reforms in 2005 and 2015, with the latter turning out to be less successful as it led to a wave of capital flight and currency depreciation, prompting the authorities to impose capital controls.

REUTERS

A version of this article appeared in the print edition of The Straits Times on March 20, 2018, with the headline 'China appoints Yi Gang as its new central bank chief'. Print Edition | Subscribe