The Man Charged With Steering the Yuan Through China’s Economic Turmoil

livemint.com:

A veteran economist and banker had been getting ready to retire in the weeks before Chinese leader Xi Jinping picked him to lead China’s central bank, according to officials familiar with the matter. Now, Pan Gongsheng is set to take the reins at the People’s Bank of China as it confronts an urgent challenge: whether and how to defend the Chinese yuan. The Chinese currency’s value has been sliding this year, as the world’s second-largest economy stagnates.

Economists and some Beijing officials worry the decline could turn into a rout, destabilizing China’s financial system. But propping up the currency brings its own risks, including slower growth for China and, potentially, the rest of the world, economists say. Xi elevated Pan, the 60-year-old, Western-trained deputy PBOC governor of the past decade, because of his reputation as an experienced technocrat who could work well with foreign officials, The Wall Street Journal has reported.

For now, Xi and his new leadership team have given little indication of Beijing’s preferences, giving the new PBOC chief some room to help shape the yuan policy. In Pan, Xi picked a man with a history of handling high-stakes tasks with global implications. But Pan has zigzagged over the years as a policy maker, depending on the top leadership’s priorities.

During the early years of Xi’s rule, which started in 2012, Pan promoted financial liberalization as part of the leader’s agenda to give market forces bigger sway over the economy. That sometimes led to a freer—but weaker—yuan. Other times, when there were sharp declines in the yuan’s value, Pan advocated harsh capital controls to suit the leadership’s demand to keep the currency stable, even as that contributed to weaker growth.