China to replace Central Bank Head

Chinese central bank Governor Zhou Xiaochuan, an advocate of pro-market financial reforms, may lose his job in a reshuffling that follows internal battles over overhauling the economy, the Wall Street Journal reported on Wednesday.

President Xi Jinping is considering replacing Zhou, the paper reported, quoting officials with knowledge of the plans. The top contender to head the People’s Bank of China (PBOC) is Guo

Shuqing, a former banker and securities regulator who is currently governor of eastern Shandong province, the paper said. Xi wants more allies in top government, military and Communist Party positions, and personnel changes were expected around a major party meeting next month, the newspaper said. It added that no final decision has been made about the central bank post. In a statement to the Wall Street Journal, the PBOC said Zhou, 66,

would not be stepping down soon. When asked by Reuters on Thursday whether Zhou was leaving the central bank, the PBOC said: “There is no such thing.” In response, a spokeswoman for Dow Jones & Co., which publishes the Wall Street Journal, said it stood by its story. Zhou, who has led the central bank for the world’s second-largest economy since 2002, has been the architect of broad financial reforms that have spawned fledgling capital markets, liberalized some interest rates and broken the peg between China’s yuan and the U.S. dollar.

Christian Lundblad, professor of finance at the University of North Carolina at Chapel Hill, said if Zhou left it would increase uncertainty about whether China wanted to slow the pace of reforms designed to open the economy.

“If this means they are going to be moving away from that in the face of concerns about a slowdown (in economic growth), I’m disappointed,” he said.

Zhou was reappointed as the PBOC chief in March 2013, although he had already reached the normal retirement age of 65 for cabinet-ranked Chinese officials. (Reuters)