China Names New PBOC Party Chief, Sets Stage for Governor Change

(Bloomberg) -- China named Pan Gongsheng as the central bank’s new Communist Party chief, putting him in line to be the next governor.

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The decision was made at a People’s Bank of China meeting of top cadres on Saturday, the central bank said in a statement. Pan, 59, is a deputy governor at the central bank with extensive experience in commercial banking.

Pan replaces Guo Shuqing, who retired as party chief. Central bank Governor Yi Gang, who was Guo’s deputy, also retired from his party role, according to the statement.

The Wall Street Journal earlier reported Pan will be named governor, citing unidentified people familiar with the matter. The central bank statement did not mention any next step for Pan after the party secretary appointment.

Becoming governor of the central bank requires an appointment by the state. Before Yi, Zhou Xiaochuan was both the PBOC’s party secretary and governor.

Yi was appointed to a second term in March during the National People’s Congress, the annual parliamentary gathering. Some analysts saw Yi, who had reached the official retirement age of 65 for ministerial-level officials, only staying for a short time to help oversee a transition after China set up a new regulator to strengthen oversight of its $60 trillion financial system.

If confirmed, Pan would take office at a time when President Xi Jinping is looking for ways to strengthen an economy still struggling to recover from some of the world’s strictest Covid-19 restrictions.

Calls for stimulus are growing as concerns mount over the resilience of consumer spending and renewed weakness in the property market.

Data on Friday showed manufacturing activity contracting again in June and other sectors failing to build momentum.

The central bank on Friday vowed to step up efforts to stabilize the yuan after it dropped toward the lowest level in 15 years in the wake of the data. It also vowed to increase support for the economy more broadly, as domestic demand is still “not strong.”

The PBOC has taken a moderate approach to monetary easing since the pandemic first erupted in 2020, refraining from cutting interest rates too much, and instead encouraging banks to lend more. It’s also made greater use of structural tools to funnel credit into targeted sectors of the economy like small businesses.

A change in the central bank’s top leadership also comes ahead of a possible trip by US Treasury Secretary Janet Yellen in early July. Details of her visit haven’t been officially announced but people familiar with the scheduling said she plans to have the first high-level economic talks with her new Chinese counterpart.

Yellen has said she hopes to establish contact with “a new group of leaders” to minimise misunderstandings betwen the world’s two largest economies.

Pan has held a deputy governor role at the central bank since 2012 and became the Administrator of the State Administration of Foreign Exchange in 2016, managing the country’s $3 trillion in foreign reserves.

Prior to joining the PBOC, he held positions at the Agricultural Bank of China Ltd. and the Industrial and Commercial Bank of China Ltd.

Pan holds a PhD in economics from the Renmin University of China, and has published dozens of papers and several books on banking, finance and the economy. His overseas experience includes post-doctoral research at Cambridge University and a research fellowship at Harvard University.

--With assistance from Zheng Li.

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