Pan Gongsheng Named Head of Chinese Central Bank

For nearly eight years, Mr. Pan has overseen China’s $3 trillion foreign exchange reserves, one of the world’s largest pots of money. He will now run the Central Bank of China and play an even stronger role in the Chinese economy.

The prominent economist was named governor of the central bank, the People’s Bank of China, on Tuesday. He had already been appointed as the Communist Party Secretary of the bank on July 1. It will be the first time in five years that one person has held both top positions, giving Mr. Pang greater policy influence over the financial system of the world’s second-largest economy.

Mr. Ban’s appointment comes at a sensitive time for China. The country’s post-pandemic recovery has stalled, its banking system bloated with bad debts to property developers and local governments, and the yuan swaying near a 15-year low. Year. These cross-currents are making foreign investors reconsider putting money into China and encouraging domestic investors to take their investments out of the country.

Foreign exchange reserves are effectively a national emergency fund to be used in times of financial crisis. As head of the People’s Bank of China’s State Administration of Foreign Exchange, Mr. Pan stabilized the yuan after a devaluation backfired in August 2015 to boost exports and expand global use of the yuan.

He stabilized the currency at the time by imposing severe police-enforced restrictions on the ability of Chinese households, businesses and even multinationals to move money out of the country. His actions prevented capital outflows, but severely undermined the international appeal of the yuan as a substitute for the dollar and set a precedent for ongoing plans in Washington to limit U.S. investment in China.

Earlier in his career, he held top posts at two of China’s four major banks, the Industrial and Commercial Bank of China and the Agricultural Bank of China, where he streamlined their operations.

Mr. Pan was one of the first officials to warn of the dangers posed by China’s property bubble, which is now deflating and causing widespread damage to the economy.

Andy Cheng, a senior analyst at Trivium China, a policy consulting firm in Beijing, said Mr. Pan’s promotion was “due to his ability and rare level of technical expertise, because he seems to have no political support from higher ups.”

But Mr. Pan’s lack of a power base within the Communist Party could be offset by his command of the top two central bank positions. Since 2018, the party secretary has been Guo Shuqing, a full member of the party’s powerful Central Committee. Li Gang was appointed as the governor of the central bank.

Economic policy continues to be led by Vice Premier He Lifeng, a longtime ally and close friend of Chinese Supreme Leader Xi Jinping. He has overseen industrial policy and economic planning for the past seven years. This spring, he will be given additional responsibilities for international trade and finance, and is expected to gain even more influence over the domestic financial system.

But in a time when many leaders have been ousted in a wave of corruption probes, just surviving as a senior financial official in China is a feat. Mr. Pang’s ability to avoid legal troubles while overseeing foreign exchange reserves is particularly noteworthy given the authority’s history of problems.

Zhu Xiaohua, director of the foreign exchange agency in the 1990s, was soon sentenced to 15 years in prison for corruption while working as a bank executive, but was later released on bail. Zhu’s successor, Li Fuxiang, was suddenly hospitalized in 2000 and died after falling from a seventh-floor window in the hospital.

Foreign exchange agencies were thrown into turmoil again in 2015 when the central bank devalued the Chinese currency with little initial explanation.

The Chinese government devalued its currency not because of financial difficulties, but because of technical reasons. But after the Shanghai stock market crashed two months ago, its devaluation alarmed investors so much that China spent nearly $1 trillion on currency stabilization in the months that followed.

Mr. Ban put a brake on the yuan’s depreciation with strict capital controls. He may be asked to work with currency again in his new job. China’s Politburo on Monday backed a continued focus on maintaining a stable value for the yuan.

Mr. Ban’s 2016 crackdown on outflows of funds from China reversed more than a decade of efforts by Chinese policymakers to make the yuan the globally traded currency that other central banks and big companies want to hold.

But some monetary policymakers say Mr. Pang had little choice at the time, as restrictions on outflows from China were part of a broader trend for Beijing to tighten regulation of the economy.

“He was a manager, definitely a key person, managing policy from the top,” said Mark Sobel, who served as the US Treasury’s assistant secretary for international monetary and monetary policy from 2000 to 2015.

Mr. Ban does not come from a Communist Party elite family like Zhou Xiaochuan, who served as central bank governor and Communist Party secretary from 2002 to 2018. Nor is he a former US university economics professor like Yi Gang, who served as president for the past five years. In fact, early in his career, Mr. Pang turned down admission to the Harvard Kennedy School of Government and instead stayed in China, helping the two banks he worked for prepare for their initial public offerings.

Those who know Mr. Pang, who turned 60 earlier this month, describe him as a meticulous workaholic. He is known to mark notes from his subordinates and correct his grammar.

He grew up in Anqing, a flood-prone city on the Yangtze River in central China’s Anhui province. In the 1980s, he received a bachelor’s degree in accounting from the Zhejiang Institute of Metallurgical Economics, where he taught.

His career began to accelerate, moving to Beijing in 1987, where he obtained a master’s degree in labor relations from Renmin University, followed by a PhD in economics, followed by a year at Cambridge University in 1997-1998.

And Harvard University? He finally visited there in 2011. But it was only a few months. A degree program would not have given him a better understanding of the United States, but it would have kept him far from Beijing, the center of power in China.

Lee Yu Contributed to research.

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