Reformist Guo Shuqing has been appointed as the Communist Party Chief and Vice-Governor of People’s Bank of China. Guo will great powers over one of the largest Central Bank in the world. PBOC is not completely independent and its decision-making powers come under the Communist Party of China and the government.
The appointment of Guo at two key financial posts is uncommon in China. He has bagged a higher rank than the Governor Yi Gang in political terms. Guo is also the party head of CBIRC or China Banking and Insurance Regulatory Commission which is also recently founded. Guo has been granted a peculiar role as he will establish a vital link between PBOC and CBIRC on policymaking and implementation. This coordination is highly significant for China’s economic reforms.
Guo as the Party Chief of PBOC will have to ensure the interests of both are streamlined. The removing of Presidential limits has brought the economy and the Communist Party closer. President Xi has reaffirmed that the importance of China’s economic security is vital to its national security and government will seek to control all economic risks with priority. There are increased pressures on China to open its economy to international investors and give up its unpopular trade practices. Chinese financial regulatory regime had been highly fragmented which had led to practices like shadow banking and excessive financial leverage.
China had thus established a Financial Stability and Development Committee (FSDC) and gave it a high political stature. It has the authority to monitor various financial regulators and other local governments.
Guo is known to take tough and aggressive policy actions which were popularly known as the “regulatory windstorm”. In his tenure as the stock market chief from 2011-13, he launched 80 new policies.