BEIJING (Reuters) - Guo Shuqing, head of China’s new regulator for the banking and insurance sectors, can be expected to also be installed soon in the role of Communist Party chief of the People’s Bank of China (PBOC), two sources with knowledge of the matter said on Sunday.
Unlike other central banks in the world, the PBOC is not fully independent. While its governor can be expected to manage the bank’s daily operations, its party chief is the ultimate boss.
An announcement on the appointment of Guo, who only became chairman of the China Banking and Insurance Regulatory Commission last week, to the position in the central bank is likely to be made this coming week, a third source told Reuters.
The PBOC’s new governor, Yi Gang, only took over earlier this month. Yi’s predecessor, Zhou Xiaochuan, served as both the bank’s governor and party chief for 15 years. Yi is widely regarded as wielding far less political clout than Zhou.
Sources familiar with the matter say Yi, a U.S.-educated economist and previously Zhou’s right-hand man, was likely to manage the PBOC’s day-to-day operations.
The New York Times, which earlier on Sunday reported that Guo had been appointed to the top PBOC post, said he would outrank Yi, noting that in the Chinese system the governor is responsible for running the central bank but the party chief has the final say on strategic decisions.
Guo’s strong political and financial background will enable him to effectively coordinate policy between the PBOC and the new banking and insurance regulator, the first two sources said.
The new PBOC party chief has a reputation as a heavyweight reformer.
As head of China’s previous banking regulator he started what was widely dubbed a “regulatory windstorm”, implementing a flurry of new measures to tackle the sector’s most complex problems, from shadow banking and regulatory arbitrage to hidden bad debt.
During his 17 months as chief stock market regulator from 2011 to 2013, Guo drew up 80 new policies, fought widespread insider trading, advocated reform of the initial public offerings system, promoted the delisting of loss-making firms, and boosted the participation of foreign investors.
Guo previously also served as a deputy central bank governor, the top foreign exchange regulator, and a deputy governor of Guizhou province.
Reporting by Shu Zhang and Matthew Miller; Additional reporting by Kevin Yao and Lusha Zhang; Writing by Tom Daly; Editing by Richard Borsuk and Alex Richardson