BEIJING -- The choice to succeed China's central bank chief seems to be down to three men after a leading candidate failed to enter the Communist Party's inner circle this month.
Zhou Xiaochuan, governor of the People's Bank of China, will enter his 15th year in office in December. It probably will be his last: Zhou is expected to leave his post by next March, when his term as vice chairman of the national committee of the People's Political Consultative Conference expires.
His deputy governor, Yi Gang, was thought to be a strong contender for the position. According to the website of the party mouthpiece People's Daily, he received an MBA from Hamline University in Minnesota and a doctorate in economics from the University of Illinois in the 1980s. Later, he taught and got a tenure at Indiana University, before returning to China in 1994. Yi joined the PBOC in 1997. His strong expertise in the practicalities of monetary policy, as well as his English ability, would serve him well were he to take up the role of governor.
Rank trumps all
But politics could stand in the way. Before the Communist Party's twice-a-decade National Congress this month, Yi had served neither in the party's 200-member Central Committee nor as one of the 150 or so alternates for that powerful group. And while he is now on the latter list, he is still not a full member of the inner party, having failed to make the two-rung jump some expected.
This in itself is not enough to rule Yi out entirely. Dai Xianglong, Zhou's predecessor as governor, was a Central Committee alternate when he took the post in 1995. But recent history suggests that a full committee member would be preferable: Zhou joined the committee in November 2002, a month before becoming bank governor.
Other leading candidates for central bank governor were awarded entry to the party's inner circle at the congress. Guo Shuqing, chairman of the China Banking Regulatory Commission; Liu Shiyu, chairman of the China Securities Regulatory Commission; and Jiang Chaoliang, Hubei Province's party secretary, are said to be the top three.
Unlike central banks in advanced nations, which enjoy a high degree of autonomy and political independence, the People's Bank of China is firmly a part of the government as a unit of the State Council. Even raising interest rates requires approval from that body. The role of the governor is less to take the lead on important monetary policy decisions than to implement policy handed down from above.
Since taking office nearly five years ago, President Xi Jinping has often said a stable financial sector makes for a stable nation. During his second five-year term, the state's grip on financial institutions could grow even tighter.
This scenario could involve raising China's interest rates when the U.S. raises its own -- a step intended to ward off further capital outflows. But a tightening could also leave small and midsize businesses, as well as independent operators such as farmers, struggling to get the funds they need. A high-stakes political balancing act awaits whoever next takes charge of the central bank.