China confirms Zhou as PBOC Governor

Signals China will implement more market-oriented changes to the financial system.

Zhou Xiaochuan also becomes China’s longest serving head of the People’s Bank of China. His reappointment was made at the National People’s Congress last week.

Among the key challenges facing Zhou are loosening interest rate controls; further internationalization of the renminbi and facing down the risks posed by China’s massive shadow banking system.

Observers said Zhou’s rich experiences should be valuable for China’s new leaders who might not be so familiar with conducting monetary policy. The NPC confirmed Xi Jinping as President and Li Keqiang as Premier.

Sources said Zhou is also a reformer is acceptable to reform-minded new leaders like Xi and Li.

Zhou last March 11 was named as one of 23 vice chairmen of China’s top government advisory body, the Chinese People’s Political Consultative Conference. The position allows him to serve beyond retirement age.

The governor led the central bank during the global financial crisis and oversaw exchange-rate reforms in July 2005; expanded the bond market gave banks more freedom to set lending and deposit rates and loosened controls over the renminbi’s use for international trade and investment purposes.