LEAVING the stage is not always easy for Zhou Xiaochuan, governor of China’s central bank, the People’s Bank of China (PBOC). At the Boao Forum (a pow-wow for the powerful) last year, journalists mobbed the platform after he spoke, anxious to catch any titbit that might fall from his lips. One reporter even fell off the stage in her eagerness.
Mr Zhou’s exit from the central-banking limelight has also been delayed. After over a decade as governor he recently turned 65, the mandatory retirement age for such posts. When he was squeezed out of the Communist Party’s 205-member central committee in November, his departure from the PBOC seemed imminent. But according to Reuters, a news agency, Mr Zhou will stay put for now. His presumed successor, Xiao Gang, currently the chairman of Bank of China, a state-owned lender, will remain in the background a little longer. Mr Xiao will head the central bank’s party committee, which ensures the PBOC toes the party line, before heading the institution itself.
Continent of dreams
The delay could be a good sign. Mr Zhou (pictured) is thoughtful, well-known abroad and reform-minded. Nor is 65 particularly old in central-banker years: Alan Greenspan remained at the Federal Reserve until he was almost 80.
In other countries, central bankers preside over monetary and financial systems. Mr Zhou has helped to build them. Even before he became central-bank chief, he spearheaded the reform of China’s bond market and the reinvention of its big state-owned banks. In 2005 he also presided over the de-pegging of the yuan from the dollar.
If China’s reforms have slowed since then, Mr Zhou is probably not to blame. In China the central bank has no independence and little clout. It does not even decide interest rates, let alone broader questions of currency policy or financial reform.
Momentum for reform did pick up in the past year. The exchange rate was given more room to float, curbs on capital flows eased and banks were given greater freedom to set interest rates. If Mr Zhou stays in office, that is a signal the reform drive will continue. But if this is the plan, why will he lose his leadership of the bank’s internal party committee to Mr Xiao? The division of roles can only weaken both men’s authority.
One explanation is that Mr Xiao needs a stint on the party committee to learn the ropes. But that does not seem credible. Before becoming head of Bank of China in 2003, Mr Xiao spent over 20 years at the central bank. It is hardly foreign to him. The untidy handover suggests, not support for Mr Zhou, but a lack of consensus about his successor. Perhaps there is still time for the new man to fall off the stage.