Zhou Xiaochuan
Zhou Xiaochuan is a Chinese economist, banker, reformist and bureaucrat. Zhou was best known for his term as the Governor of the People's Bank of China, a position in which he served from 2002 to 2018. He was longest-serving central bank chief since the establishment of the People's Republic of China, steering the monetary policy of an economy amid structural transformation.
During his tenure, China became the second largest economy in the world and a consequential player in global financial markets. As such, Zhou was consistently ranked among the most influential global policy makers of his generation.
Zhou has previously held leading posts in trade and financial organizations, serving as Vice-Governor of the People's Bank of China, Director of the State Administration of Foreign Exchange, Governor of China Construction Bank, and Chairman of the China Securities Regulatory Commission. He retired in 2018 after serving for several years past the typical retirement age for officials of his rank.
Early life and education
Born in Yixing, Jiangsu province, he was the son of Zhou Jiannan and Yang Weizhe. The elder Zhou was the head of Electric and Industrial Bureau of the North East district in 1949. He later became Vice Minister of First Department of Machinery Development in 1961. During the Cultural Revolution, Zhou Xiaochuan joined the Production and Construction Corps in Heilongjiang province while his father was persecuted. The family's fate changed when the elder Zhou returned to power, in 1973.Zhou Xiaochuan graduated from Beijing Institute of Chemical Technology in 1975 and received a PhD degree in Automation and System Engineering from Tsinghua University in 1985. From 1987 to 1988, he was a visiting scholar at the University of California, Santa Cruz.
Family background
He is the second son of Zhou Jiannan, an early member of Chinese Communist Party and its secret service. The elder Zhou was the head of Electric and Industrial Bureau of the North East district in 1949 and Vice Minister of the First Department of Machinery Development in 1961. After the Cultural Revolution, the father served as Minister of Machine Industry, Vice Chairman of National Commission of Import and Export, and adviser to the Commission of Financial and Economic Affairs. Zhou's father was also one of the promoters of Jiang Zemin in his early career was and said to be one of Jiang's mentors.Career
During the early days of the Cultural Revolution, he worked at a Production and Construction Corps in Heilongjiang province from 1968 to 1972. He was sent to the Beijing Institute of Chemical Technology as a Gong Nong Bing Student in 1972. After graduating from college in 1976, he was assigned to Beijing Research Center of Automation as an engineer studying large automation systems.Between 1978 and 1985, he was studying for a master's degree in Industrial Application of System Engineering in China Academy of Machinery Science and Technology and PhD in Science at Tsinghua University.
In 1986, he started working in the State Council of the People's Republic of China on economic restructuring as a member of the Economic Policy Group of the State Council and Deputy Director of the Institute of Chinese Economic Reform Research. He served as Assistant Minister of Foreign Trade from 1986 to 1989 and between 1986 and 1991, he was also a member of the National Committee of Economic Reform. Before the Tiananmen Square protests of 1989, Zhou was an associate and protégé of Zhao Ziyang, General Secretary of the Communist Party of China. In Pillbury's book, Zhou was one of the conservatives that rejected the Russian model of privatization and political reforms and opted for maintaining CPC political control while allowing state owned enterprises to be subjected to market reforms. This led to development of state owned enterprises that were floated on the stock market, influenced with western corporate governance standards as well as transformed into national champions of the Chinese economy. Flipside of this decision was China avoided SOE sold on the cheap to a select few who undoubtedly could become powerful Oligarchs like in the Russian economy.
Between 1991 and 1995, he was executive director and vice president of Bank of China. From 1995, he assumed the position of Administrator of State Administration of Foreign Exchange. From 1996 to 1998, he served both as Deputy Governor of the People's Bank of China and Administrator of the State Administration of Foreign Exchange.
During 1998 to 2000, he served as president of the China Construction Bank and oversaw the creation of asset-management companies charged with working out the banking system's bad debt. He also played a part in managing China's vast foreign exchange reserves.
From 2000 to 2002, Zhou was the chairman of the China Securities Regulatory Commission. Whilst there, he earned the nickname Zhou "Bapi", Zhou "the flayer". He targeted corruption in listed companies, angering many small shareholders, who saw their shares fall. In July 2001, Zhou declared his intention to reduce state ownership in the stock market. The stock market quickly went into freefall, forcing him to abandon his plans that October. He emphasized the role of market mechanisms, worked to reduce red tape and aimed to protect retail investors.
People's Bank of China
In December 2002, he was appointed to his present position by Premier Zhu Rongji as governor of the People's Bank of China and also took over the position of chairman of monetary policy committee of the People's Bank of China from January 2003. In 2010, he was serving his second five-year term.As leading banking authority, Zhou is in charge of clearing up some $865 billion of bad loans in the Chinese banking system. He is been under pressure from the finance ministers and central bankers of the G7 countries to revalue the renminbi and change its mechanism of setting exchange rate.
Zhou has published a dozen monographs and over one hundred academic articles in Chinese and international journals. His articles "Rebuilding the Relationship between the Enterprise and the Bank" and "Social Security: Reform and Policy Recommendations" and his book Marching toward an Open Economic System have all won awards in China.
He is generally considered the most academically capable of the current Chinese leadership and is praised for his intellect and diplomacy. He has been called "China's most able technocrat" and is the only highly ranked Chinese politician to have been published in a Western academic journal. Although he has yet to reach the highest rungs of decision making within the State Council, he is considered a strong and vocal advocate of further liberalization in the financial sector. He has increasingly displayed an openness to the press, rare for a senior Chinese official, and is most famous for this motto: "If the market can solve the problem, let the market do it. I am just a referee. I am neither a sportsman nor a coach."
His career has been devoted to economic reform. To that end, Zhou has had a preference for recruiting overseas educated and trained Chinese, who have experience of capitalist markets.
Zhou had been suggested as a future premier, but some consider that he did not have the political experience. On January 15, 2006, however, the Financial Times of London called him "a rising political star and widely expected to be promoted to vice-premier in the next major reshuffle of top party and government posts, due in late 2007 and early 2008." That did not materialize, however, with the post instead going to Vice-premier Li Keqiang.
International monetary system reform
On March 24, 2009, Zhou gave a speech, "Reform the International Monetary System". He argued that the ongoing financial crisis was made more severe by inherent weaknesses of the current international monetary system and called for a gradual move towards using IMF special drawing rights as a centrally managed global reserve currency. He argued that it would address the inadequacies of using a national currency as a global reserve currency, particularly the Triffin dilemma, the dilemma faced by issuing countries in trying to simultaneously achieve their domestic monetary policy goals and meet other countries' demand for reserve currency. Zhou explained global currency diversification was needed because an over concentration of foreign assets denominated in the dollar may bring about undesired consequences. Zhou argued that it was regrettable that John Maynard Keynes's "farsighted" bancor proposal was not adopted at Bretton Woods in the 1940s.Zhou also asserted China's increasing confidence in its own financial governance philosophies. He criticized Western leaders for letting their banking sectors go astray by loose regulations.
Third term
In March 2013, Zhou was reappointed as the governor of People's Bank of China, making him the longest-serving central bank chief since the establishment of the People's Republic of China. His reappointment came as "China's newly installed political chiefs - headed by Communist Party general secretary Xi Jinping and Premier Li Keqiang... seen as a bid to burnish the pro-reform credentials". Earlier in Zhou's career, "as a protege of former Premier Zhu Rongji, helped draw up the blueprint to wean the economy off central planning."During a March 5, 2013 meeting of the National People’s Congress and the Chinese People's Political Consultative Conference, Zhou announced the People's Bank of China would deal with the "ramifications of the excessive money supply and will gradually control the new money supply" because of the 2008 fourth quarter financial crisis.
In September 2015, Zhou addressed the G-20 finance meeting in Ankara about the sharp, sustained drop in the Chinese stock market in 2015 and said that the "correction in the stock market is almost done."
In October 2017, Zhou named three reforms he believed were crucial for China's economic future: scrapping capital account controls, letting the market freely decide the yuan's value, and embracing free trade and investment.