Western-trained bankers in line to lead China’s central bank

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China has chosen a Western-trained risk firefighter to lead the country’s central bank, a move that is expected to provide some degree of market certainty as Xi Jinping oversees the financial sector.

The People’s Bank of China announced on Saturday that Pan Gongsheng has been appointed to the role of Communist Party chief at the bank, replacing Guo Shuqing.

The party chief is the most powerful political position in the bank and can hold more influence than the governor. Pan is also expected to be announced as the next bank governor, replacing Yi Gang, who has served in the role for more than five years.

“The appointment will bring some reassurance to the market on the continuity for the likes of China’s top central bankers,” said Chen Long, co-founder of Beijing-based research firm Plenum. “Of all the possible candidates, (Pan) is the one who knows the market best, and whom the market knows best.”

Pan’s appointment as PBOC governor is being quickly reviewed because he will turn 60 next week, the unofficial retirement age for many Chinese officials, according to a person familiar with the matter.

On Saturday, the bank said Guo and Yi had resigned from their party roles.

The reshuffle at the central bank comes at a time when the world’s second-largest economy is reeling from a three-year pandemic lockdown that hangs in the balance.

An initial bounce in the first quarter, followed by disappointing economic data and a bleak outlook in the second quarter, are building hopes that Beijing will offer additional monetary or fiscal stimulus to boost growth. China’s currency renminbi is also trading close to a seven-month low against the dollar.

PAN is a well-known name in the international finance sector. He has served as the PBOC’s deputy governor since 2012, a role that has seen him interact with the media and Western financiers and regulatory counterparts. Since 2016, he has also headed China’s foreign exchange watchdog.

Pan completed his postdoctoral research at the University of Cambridge and was a senior research fellow at Harvard.

He also trained at UK-headquartered Standard Chartered, where he sits as a research specialist, according to an online profile at the National Center for Financial Research at Peking University.

He also holds a doctorate degree in economics from Renmin University of China.

PAN’s experience over the past three decades spans foreign exchange, bond and asset financing regulations, cryptocurrency regulations, and state banking reforms.

The news of Pan’s appointment as governor was reported by The Wall Street Journal on Saturday.

His reputation as a financial risk firefighter was built when he helped stop the capital flight that destabilized the financial system during the mid-2010s.

However, Pan’s appointment comes amid some apprehensions of eroding PBOC influence in the market.

The plenum’s Chen said Pan’s appointment is unlikely to result in any significant changes to China’s monetary policy as the central bank has weakened after Beijing reformed its financial regulation structure in March.

Xi, who is starting his third five-year term as president, in March established a new national financial watchdog to oversee all financial activities except the securities industry.

Under the new regulatory regime, the PBOC will lose some power over financial holding companies, including Jack Ma’s Ant Group.

Experts said a new Communist Party-led committee – the Central Financial Commission – was also created, which tightened Xi’s direct control over the sector.