For continuity, China will re-appoint the central bank governor

BEIJING — China reappointed Yi Gang to head its central bank on Sunday in a move to reassure entrepreneurs and financial markets by showing continuity at the top while other economic officials are changing.

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

But the central bank governor acts as the monetary policy spokesman, 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.

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

Last year’s growth fell to 3%, the second-weakest level since at least the 1970s, putting President and leader of the ruling Communist Party Xi Jinping under extreme pressure to stimulate the economy.

A long-time veteran of monetary policy departments, Yi was appointed governor of the People’s Bank of China in March 2018, taking over from the highly regarded Zhou Xiaochuan.

Before becoming governor, Yi spent 20 years at the central bank after earning his Ph.D. at the University of Illinois, from 1986 to 1994 he worked as a professor of economics at Indiana University.

He is a co-founder and professor of the Chinese Economic Research Center of Peking University.

The ruling Communist Party made a similar decision in favor of continuity in 2013, when then-PBOC governor Zhou, who had been in the post for a decade, remained as governor while all other economic regulators changed.

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

Addressing corporate and household debt, which Beijing says has risen to dangerous levels, will be a priority. Tighter debt controls caused a decline in China’s massive real estate industry in 2021, adding to the pressure on the economy from the COVID-19 pandemic.

At the same time, the ruling party is trying to spend money on technology development and other strategic plans. This has prompted warnings of excessive political control over emerging industries, which could waste money and hinder growth.

Xi has favored officials who sometimes lack the experience of their predecessors and lack exposure to global industrial and financial markets. This reflects Xi’s drive to purge the Chinese system of Western influence and promote domestic strategies.