Zhou Xiaochuan has been at the helm during a testing time for the Chinese currency and has instigated many reforms most of them not before time. However, I suspect that there is a feeling that he may have gone too far too quickly.
Moreover, the continued inflation of the stock market bubble hints at mismanagement of expectations although it is hard to see what else the bank could have done. There has been some revaluation and interest rate changes but with little effect.
The FT discuss this issue in more detail. What is remarkable about this article is the complete absence of any facts - this is all merely speculation and conjecture. Good to see even the FT resorting to such journalistic licence.
China central bank governor to be replaced [FT]
Zhou Xiaochuan, China’s central bank governor, is expected to be replaced in the wake of this month’s Communist party congress – with his chances of a promotion fading, say Chinese officials and diplomats.
An unusually activist central bank governor, Mr Zhou has presided over extensive reform of the state-owned banks and the de-pegging of China’s currency, the renminbi, against the US dollar in 2005. But his activism has attracted many critics within rival bureaucracies, most recently over a PBoC-backed plan to allow Chinese citizens to buy shares overseas, which has been wound back after the initial announcement.
The decision by the International Monetary Fund to establish a “currency surveillance mechanism”, a move that Beijing sees as directed at the renminbi, prompted internal criticism as well, Chinese economists said.
Mr Zhou may also have been caught up in political turmoil surrounding the recent abrupt departure of Jin Renqing, the finance minister, and a number of other senior officials, economists said.
Mr Zhou could have been expected to step down soon in any case, as he will have served five years as PBoC chief by December.
But his supporters had been pushing for him to be elevated into the state council, the cabinet, or even to one of the jobs as vice-premier, in charge of the financial sector.
The opaque nature of Chinese politics makes it difficult to say with any certainty what will happen to Mr Zhou, and some analysts suggested on Thursday it was too early to write off his chances of promotion.
The new cabinet, along with the vice-premiers, would usually not be formally named until next year, in the annual session of the National People’s Congress.
A decision by China to push ahead with further reform of the financial sector may play in Mr Zhou’s favour because of his deep experience in the sector and the respect that he has generated in the global investment community.
“China needs someone who is a recognised professional, not someone who doesn’t understand banking,” said a Beijing-based analyst.
The party congress, held once every five years is expected to last about a week. Nearly all of its deliberations are held in secret.