China reappointed Yi Gang as head of the central bank in a surprise move on Sunday, as the country appointed a Cabinet focused on fighting economic headwinds.
The move aims to reassure entrepreneurs and financial markets by showing continuity at the top. At the same time, other economic officials change during a period of uncertainty in the world’s second-largest economy.
The reappointment of Yi, whose official title is governor of the People’s Bank of China (PBOC), came against expectations that retirement-age officials would step down.
Yi plays no role in making monetary policy, unlike his counterparts in other major economies.
His official duties lie in “implementing monetary policy” or carrying out decisions made by a policymaking body whose membership is a secret.
But the central bank governor acts as spokesperson for monetary policy, is the most prominent Chinese figure in global finance, and is in charge of reassuring bankers and investors at a time when China’s economy is emerging from drastically slower growth.
At the March 5 opening of the annual session of China’s rubber-stamp parliament, the National People’s Congress, China announced plans for a consumer-led revival of the struggling economy, setting this year’s growth target at “around 5%.”
Last year’s growth fell to 3%, the second-weakest level since at least the 1970s, putting the president and head of the ruling Communist Party, Xi Jinping, under unprecedented pressure to revitalize the economy.
A longtime veteran of monetary policy departments, Yi was first 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 getting his Ph.D. from the University of Illinois and working as a professor of economics at Indiana University from 1986 to 1994.
He is also a co-founder and professor at Peking University’s China Center for Economic Research.
The party decided to opt for continuity in 2013, when then-PBOC governor Zhou, who already had been in the job for a decade, stayed on as governor while all other economic regulators changed.
Yi’s reappointment came on the congress’s penultimate day, which also saw Xi loyalists appointed as finance minister and head of the Cabinet planning agency to carry out a program to tighten control over entrepreneurs, reduce debt risks and promote state-led technology development. In addition, incumbent Wang Wentao was reappointed minister of commerce.
The Congress also named four vice premiers who may be in line for higher office. They include the sixth-ranking member of the party’s all-powerful Politburo Standing Committee, Ding Xuexiang, as vice premier overseeing administrative matters. In addition, veteran bureaucrats He Lifeng, Zhang Guoqing, and Liu Guozhong were also named to the post. Liu and Zhang were incumbents.
Foreign Minister Qin Gang was also appointed to the position of state councilor, a position also held by Wang Yi, his predecessor and current superior, as director of the party’s Office of the Central Foreign Affairs Commission.
Defense Minister Li Shangfu, an aerospace engineer by training, was also named one of the five state councilors, along with Minister of Public Security Wang Xiaohong and Secretary General of China’s Cabinet, known as the State Council, Wu Zhenglong. Shen Yiqin was the only woman named to the position and was China’s highest-ranking female politician.
No women sit on the 24-member Politburo or its Standing Committee, and the party’s more-than-200-member Central Committee is 95% male.
Finance officials will prioritize managing corporate and household debt that Beijing worries have risen to dangerous levels. Tighter debt controls triggered a slump in China’s vast real estate industry in 2021, adding to the COVID-19 pandemic’s downward pressure on the economy.
At the same time, the ruling party is trying to shift money into technology development and other strategic plans. That has prompted warnings too much political control over emerging industries could waste money and hamper growth.
Xi has favored promoting officials who sometimes lack the experience of their predecessors and exposure to global industry and finance markets. That reflects Xi’s effort to purge the Chinese system of Western influence and promote homegrown strategies.
