Next China Central Bank Chief's Hands May Be Tied – by Xi: BNP - Bloomberg

Next China Central Bank Chief's Hands May Be Tied – by Xi: BNP
Bloomberg News
March 15, 2018, 6:50 PM GMT+11

The People's Bank of China headquarters in Beijing. Photographer: Qilai Shen/Bloomberg
Gone are the days of China’s central bank governor as a center of reformist energy.

President Xi Jinping’s efforts to centralize control mean that who the new boss of the People’s Bank of China is won’t matter as much, according to Chi Lo, greater China senior economist at BNP Paribas Asset Management in Hong Kong.

“It’s very clear Beijing’s policy direction is that it wants to centralize all departments, ministries, officials and governors to Beijing’s central direction," Lo said Thursday in a Bloomberg Television interview. “No matter whether or not the person is very liberalized, he or she won’t be able to go outside the framework Beijing has already set.”

China’s central bank lacks the independence of its global peers, and operates under the control of the State Council, China’s cabinet. The Financial Stability and Development Committee, a high-level State Council body created in July to oversee the financial system, still lacks clear leadership and its relationship to the central bank isn’t fully defined.

PBOC Governor Zhou Xiaochuan, who said in October he’ll retire "soon," told reporters at a briefing this month that market access reforms should be accelerated and that the world’s second-largest economy “can be bolder in opening up.”

While the central bank got expanded regulatory powers during this year’s National People’s Congress, Xi has amassed even greater economic control in recent months after enshrining his beliefs in the constitution and scrapping term limits. That adds to policy powers he’s already concentrated in the Communist Party’s small leading groups.

— With assistance by Jeff Kearns, and David Ingles