Western-trained banker in line to lead China’s central bank

China has tapped a western-trained risk firefighter to lead the country’s central bank, a move that is expected to provide some market certainty as Xi Jinping overhauls oversight of the financial sector.

The People’s Bank of China announced on Saturday that Pan Gongsheng, the central bank’s vice-governor, had been appointed to the role of Communist party chief, replacing Guo Shuqing.

The party chief is the most powerful political position at the bank and can hold more sway than the governor. Pan is also expected to be announced as the next bank governor, replacing Yi Gang, who has served in the role for more than five years.

“The appointment will inject some reassurance to the market on continuity for the picks of China’s top central bankers,” said Chen Long, co-founder of Beijing-based research company Plenum. “Among all possible candidates, [Pan] is the person who knows the market best, and who the market knows best.” 

According to a person familiar with the matter, Pan’s appointment as the PBoC governor is under an expedited review as he will turn 60 next week, the unofficial retirement age for many Chinese officials.

On Saturday, the bank said Guo and Yi had stepped down from their party roles.

The central bank reshuffle comes as the world’s second-biggest economy’s recovery from three years of pandemic lockdowns hangs in the balance.

After an initial rebound in the first quarter was undercut by disappointing economic data in the second quarter and a weakening outlook, expectations are building that Beijing will unleash additional monetary or fiscal stimulus to shore up growth. The renminbi, China’s currency, has been trading near seven-month lows against the dollar.

Pan is a familiar name in the international finance sector. He has served as deputy governor of the PBoC since 2012, a role that has seen him interact with media and western financiers and regulatory counterparts. Since 2016, he has simultaneously led China’s foreign exchange watchdog.

Pan completed his postdoctoral research at the Cambridge university and was a senior research fellow at Harvard. He also undertook training at UK-headquartered Standard Chartered, according to an online profile from the National Center for Financial Research at Peking University, where he sits as a research expert.

Pan received a doctoral degree in economics from Renmin University of China.

Over the past three decades, his experience has spanned foreign exchange, bond and property financing regulations, cryptocurrency rules and state banking reforms.

Pan’s appointment to governor was first reported on Saturday by the Wall Street Journal.

His reputation as a financial risk firefighter was forged when he helped curb capital flight that had destabilised the financial system during the mid-2010s.

However, Pan’s appointment comes amid some market fears of reduced PBoC influence.

Chen, of Plenum, said the appointment was unlikely to lead to a significant shift in China’s monetary policy, as the central bank has been weakened after Beijing revamped its financial regulatory structure in March.

Xi, who is embarking on his third five-year term as president, established a new national watchdog to oversee all financial activities, except the securities industry.

Under the new regulatory regime, the PBoC will lose some powers over financial holding companies, including Jack Ma’s Ant Group.

A new Communist party-led committee — the central financial commission — was also created, tightening Xi’s direct control over the sector, experts said.