Xi Jinping retains China’s central bank head in boost to markets

Xi Jinping has kept the country’s central bank governor Yi Gang in his post and retained his finance and trade ministers as the Chinese president defied expectations of a large-scale cabinet overhaul at this year’s annual parliamentary meeting.

The reappointments, which analysts said were aimed at reassuring markets jittery about Beijing’s plans to reform the financial sector, were among a number of senior positions announced at the rubber-stamp National People’s Congress on Sunday.

Aside from the central bank governor, among the most important of these was the nomination of a senior Xi staffer He Lifeng, the former head of the planning bureau, as vice premier.

He Lifeng is expected to take over management of China’s economic team from Liu He, the Harvard-educated politician who helped steer the world’s second-largest economy through the past five years of turmoil, including the Covid-19 pandemic.

This NPC meeting is seen as one of the most important in years, with Xi pushing through sweeping reforms to the country’s financial regulators and Ministry of Science and Technology.

The Chinese president, who is embarking on an unprecedented third five-year term, is seeking to revive China’s slowing economic growth as he prepares for greater competition with the United States for advanced technology.

Xi had been expected to replace the People’s Bank of China chief, who had reached the retirement age of 65 for government ministers, with a corporate banker.

Analysts said the retention of Yi, a respected technocrat, was intended to send a positive signal to markets as Beijing prepares to transfer some of the central bank’s regulatory functions to the state’s Financial Regulatory Commission, a new financial watchdog that will be based on the current banking and insurance authority.

“The institutional reforms suggest that the PBoC will clearly come under tighter government supervision,” said Christopher Beddor, deputy director of China research at Gavekal Dragonomics. “There was a bit of concern in the markets about what that might mean. By choosing continuity, at least for now, it’s a bit of a confidence-boosting measure for the markets.”

Analysts warned that while Xi had retained Yi and most other ministerial and ministerial-level appointees at the NPC meeting, they could still be changed later.

“State Council ministers can be reshuffled at any time,” said Chen Long, co-founder of Beijing-based research firm Plenum, referring to China’s cabinet.

The nominations of China’s top officials were announced in Beijing’s Great Hall of the People in front of thousands of NPC delegates, who applauded enthusiastically as Xi cast his vote for the appointments.

Sunday’s appointments did not include the nominations of the party heads of ministries or regulatory agencies. In China’s system, party leaders often have more power over key decisions than those in official government positions.

The post of Communist Party leader of the PBoC, for example, has not yet been announced.

Appointments were also not announced for those to lead several powerful new bodies approved last week by parliament, indicating there could be a further shake-up of the leadership team after the annual meeting.

Apart from the new financial regulator, these include a national data agency to oversee the country’s data strategy.

On Saturday, the NPC confirmed Xi’s appointment of a close ally, Li Qiang, the former Shanghai party chief, as the president’s second in command. As Prime Minister and Head of the Council of State, Li’s main task will be to revitalize an economy that has been hit by Covid controls and a collapse of the technology industry.

He will also have to navigate growing geopolitical tensions with the West, which have dampened foreign investor confidence.

Among other appointments announced on Sunday, Xi retained Wang Wentao as commerce minister and Liu Kun as finance minister and nominated Zheng Shanjie to take over the powerful planning body, the National Development and Reform Commission.

Xi also retained Ma Xiaowei as minister of the National Health Commission, a critical post as China pursued its zero-Covid strategy last year.

With additional reporting by Ryan McMorrow and Nian Liu in Beijing

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