China advocates continuity and reappoints central bank governor

BEIJING – China reappointed Yi Gang as central bank governor on Sunday in a bid to reassure entrepreneurs and financial markets by showing continuity at the top while other economic officials are changing.

Yi, whose official title is governor of the People’s Bank of China, does not play a role in shaping monetary policy, unlike his peers in other major economies. Its official duties lie in the “implementation of monetary policy” or the implementation of decisions of a political decision-making body, the membership of which is secret.

But the central bank governor serves as monetary policy spokesman, is the most prominent Chinese figure in global finance and is responsible for reassuring bankers and investors at a time when China’s economy is recovering from drastically slower growth.

Opening the annual session of China’s parliament, the National People’s Congress, on March 5, China announced plans for a consumer-led revival of the struggling economy, setting this year’s growth target at “around 5%.”

Growth last year fell to 3%, the second-lowest level since at least the 1970s, putting extraordinary pressure on President and ruling Communist Party leader Xi Jinping to revive the economy.

A longtime veteran in monetary policy departments, Yi was appointed governor of the People’s Bank of China for the first time in March 2018, succeeding the highly respected Zhou Xiaochuan.

Before becoming governor, Yi spent 20 years at the central bank after earning his Ph.D. from the University of Illinois and served as Professor of Economics at Indiana University from 1986 to 1994.

He is also a co-founder and professor at the China Center for Economic Research at Peking University.

The ruling Communist Party made a similar decision to choose continuity in 2013, when then-PBOC governor Zhou, who had been in office for a decade, stayed on as governor while all other economic regulators changed.

Yi’s reappointment came on the penultimate day of the congress, which also appointed Xi loyalists as finance minister and head of the cabinet’s planning authority to implement a program to tighten control over entrepreneurs, reduce debt risks and increase state-led technology development support financially. Incumbent Wang Wentao was reappointed as Minister of Commerce.

A priority will be managing corporate and household debt, which Beijing fears has risen to dangerous levels. Tighter debt controls triggered a slump in China’s massive real estate industry in 2021, adding to downward pressure on the economy from the COVID-19 pandemic.

At the same time, the ruling party is trying to reallocate money into technology development and other strategic plans. This has prompted warnings that too much political control over emerging industries could waste money and hamper growth.

Xi has preferred to promote officials who sometimes lack the experience of their predecessors and exposure to global industry and financial markets. This reflects Xi’s efforts to rid the Chinese system of Western influence and encourage domestic strategies.