China’s Jinping drives economic bracing, sees Pan Gongsheng as central bank gov

The decision was made at a meeting of top cadres at the central bank. Pan, 59, is currently serving as a deputy governor at the People’s Bank of China and has a wealth of experience in the commercial banking sector, Bloomberg reported.

He will be taking over from Guo Shuqing, who retired as the party chief. Additionally, Yi Gang, who was Guo’s deputy and the central bank governor, also retired from his party role.

The Wall Street Journal earlier reported Pan will be named governor, citing unidentified people familiar with the matter. The central bank statement did not mention any next step for Pan after the party secretary appointment.

To become the governor of the People’s Bank of China (PBOC), an appointment by the state is required. Prior to Yi Gang, Zhou Xiaochuan held the positions of both the PBOC’s party secretary and governor.

In March, Yi Gang was appointed to a second term during the National People’s Congress, the annual parliamentary gathering in China. Some analysts speculated that Yi, who had reached the official retirement age of 65 for ministerial-level officials, might only serve for a short period to facilitate a smooth transition after the establishment of a new regulator aimed at strengthening oversight of China’s extensive $60 trillion financial system.

If Pan Gongsheng’s appointment is confirmed as the next governor of the People’s Bank of China, he would assume the position during a critical period for the Chinese economy.

President Xi Jinping is actively seeking ways to strengthen the Chinese economy, which is still facing challenges due to the strict Covid-19 restrictions that were implemented globally. The economy is grappling with concerns about the sustainability of consumer spending and a renewed decline in the real estate sector. As a result, there is mounting pressure for the implementation of stimulus measures.

Recent data released on Friday indicated a contraction in manufacturing activity in June, and other sectors have struggled to gain momentum. In response to the economic conditions, the central bank has pledged to intensify efforts to stabilize the yuan, which has depreciated towards its lowest level in 15 years following the release of the data. Additionally, the central bank has committed to providing broader support to the economy, recognizing that domestic demand remains relatively weak.

The PBOC has taken a moderate approach to monetary easing since the pandemic first erupted in 2020, refraining from cutting interest rates too much, and instead encouraging banks to lend more. It’s also made greater use of structural tools to funnel credit into targeted sectors of the economy like small businesses.

A change in the central bank’s top leadership also comes ahead of a possible trip by US Treasury Secretary Janet Yellen in early July. Details of her visit haven’t been officially announced but people familiar with the scheduling said she plans to have the first high-level economic talks with her new Chinese counterpart.

Janet Yellen has expressed her intention to establish communication with a “new group of leaders” in order to reduce misunderstandings between the world’s two largest economies, referring to China.

Pan Gongsheng has been serving as a deputy governor at the People’s Bank of China since 2012 and assumed the role of Administrator of the State Administration of Foreign Exchange in 2016, responsible for managing China’s substantial $3 trillion foreign reserves. Before joining the PBOC, Pan held positions at the Agricultural Bank of China Ltd. and the Industrial and Commercial Bank of China Ltd.

Pan holds a Ph.D. in economics from the Renmin University of China and has authored numerous papers and books on banking, finance, and the economy. His international experience includes conducting post-doctoral research at Cambridge University and serving as a research fellow at Harvard University.

Updated: 02 Jul 2023, 10:53 AM IST