Two younger officials promoted to the Communist Party’s ranks are standing out as the most likely candidates to be tasked with steering the People’s Bank of China through challenging economic times.

The ruling party’s twice-a-decade congress didn’t include Governor Yi Gang or Guo Shuqing, party secretary at the central bank, on its leadership list, suggesting changes may be coming.

Economists see two contenders as successors if there’s to be a shake up: Yin Yong, 53, a former deputy central bank governor and currently vice party chief in Beijing city, and Yi Huiman, the 57-year-old head of the securities regulator. Both men were promoted to the Central Committee over the weekend.

Here’s a look at their track records:

Yin Yong

Yin’s chances of becoming governor are strong, analysts say, given his prior career at the central bank and his international experience. He has a Phd from the prestigious Tsinghua University and a Masters degree in public administration from Harvard University. In the early 2000s, he had a brief stint managing the Singapore office of China Investment Corp., the nation’s sovereign wealth fund.

Almost two decades of Yin’s career was spent at the State Administration of Foreign Exchange, which manages the nation’s massive foreign reserves, currently standing at $3 trillion. As director of the SAFE Investment Center -- a position he occupied for eight years -- he led the institution through turbulent times, including the shock devaluation of the yuan in 2015.

Yin made an unusually big jump in his career in 2015 to become assistant governor of the PBOC, a position previously held by Yi Gang. A year after that, he became the youngest deputy governor of the PBOC at 46, according to Chinese media. His fast promotion was a sign of top leaders’ approval of efforts to liberalize the yuan, a Chinese columnist wrote at the time.

In 2018, he became Beijing’s vice mayor, a strategic move seen by analysts as a way to prepare him for bigger roles. Colleagues described Yin at the time as having “excellent abilities and an amiable personality,” the National Business Daily reported in 2018.

Many financial sector leaders were appointed deputies at provincial governments around that time to promote financial stability. In Beijing, Yin oversees local financial regulation and works closely with the city’s top official Cai Qi, a key ally of President Xi Jinping.

“Yin’s stint as vice Beijing mayor and later party boss has been strategic in elevating him to ministerial posts,” said Hui Feng, co-author of “The Rise of the People’s Bank of China” and a senior lecturer at Griffith University.

In public speeches, Yin has kept a low profile and has mostly repeated official lines around preventing financial risks and sticking to Xi’s vow for no speculation in housing market.

Yi Huiman

Compared to Yin, Yi Huiman has more diverse experience in China’s financial industry. While he’s a contender for PBOC governor, his prior experience makes him a strong candidate to replace Guo as chairman of the China Banking and Insurance Regulatory Commission. Like Guo, Yi could also take on the position of party secretary at the PBOC.

The PBOC will likely continue the “dual-chief” model where the governor and party chief roles are split between two people, said Bruce Pang, head of research and chief economist for Greater China at Jones Lang LaSalle Inc. Yi Huiman could become the party chief to take on responsibilities over macroprudential matters -- mostly focusing on financial risks -- while Yin Yong may become governor, he said.

Yi has been the head of China’s securities market watchdog since 2019, a position that’s put him in the public eye because of China’s vast retail investor market. He’s seen as a pragmatist who rose from relatively humble beginnings, graduating from a little-known junior college in the eastern province of Zhejiang.

During his tenure, he pushed for reforms including the launch of a new Nasdaq-style board for high-tech listings in Shanghai, trials of the registration-based initial public offering system and greater access for foreign banks such as Goldman Sachs Group Inc. and JPMorgan Chase & Co. to take full ownership of their securities units in China.

Prior to that, Yi held various roles during a 34-year tenure at Industrial & Commercial Bank of China Ltd., the nation’s largest lender by assets, and eventually became its chairman. He began his career at a local office of the PBOC in the eastern city of Hangzhou, though his time there only lasted a few months.

“While Yi is a commercial banking veteran who also did a great job to head China’s securities regulator, he only worked at a grassroot level at the PBOC for half a year in his early career,” said Pang. If Yin, who spent years with the PBOC and the foreign exchange regulator under it, could become governor to oversee monetary policy and the yuan, that “would make a formidable combination,” he said.

Growing Risks

The possible departure of the top two officials at the central bank would be a major shake-up for an institution that’s grappling with significant economic risks: how to manage the country’s worst housing downturn in history, record-low consumer confidence under Covid restrictions, and a plunging currency.

Any new central bank leaders will also have to navigate a political environment in China where President Xi has consolidated power around himself, raising concerns that policies could become more dominated by his agenda and increasing the risk of policy mistakes. China’s equity markets and the yuan have plunged in the days following the close of the party congress.

Unlike the US Federal Reserve and other major central banks, the PBOC doesn’t enjoy full autonomy in setting monetary policy. The central bank falls under the State Council, led by the premier, and would need its approval before major policy decisions, such as interest rate moves.

It’s possible that the new premier the PBOC will have to report to is Li Qiang, who was promoted to the No. 2 official in Xi’s new Politburo Standing Committee unveiled over the weekend. Currently Shanghai’s party chief, Li is a staunch ally of Xi.

“The central bank needs an effective political figure to lobby for its views internally, especially as it grapples with the current downturn,” said Christopher Beddor, deputy China research director at Gavekal Dragonomics. “The balancing act between political effectiveness and market credibility is getting tougher.”

There’s also a chance current PBOC governor Yi, Guo, or both retain their roles even though they are no longer on the Communist Party’s central committee. Former PBOC Governor Zhou Xiaochuan was dropped from the committee in 2012, but was elected vice chairman of the top political advisory body the next year -- an arrangement that allowed him to stay on in his position at the central bank until 2018.

Source:
courtesy of BLOOMBERG

by Bloomberg News

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