China’s long-time Central Bank head Zhou Xiaochuan may be pushed out of office, the WSJ reports. President Xi Jinping is considering replacing him with someone more in agreement with him over economic reforms, according to party officials.
Over the last few months there has been a distinct shift in Chinese policy. Xi has signaled that the country will no longer use economic stimulus — like infrastructural projects — and low interest rates to grow the economy. Some analysts estimate that the country’s debt-to-GDP ratio to be at around 250%. The government understands this is not sustainable.
However reform will be painful, and the economy is already showing signs of slow down. Earlier this month the country released a slew of dismal economic data, including the lowest industrial production since 2008. China may miss its 2014 GDP growth target of 7.5% for the firs time in years, and Xi signaling that he may be ok with that.
According to the WSJ the word is that Zhou may be replaced with Guo Shuqing, an ex-banker and securities regulator. Guo has been attending important meetings recently.
Replacing Zhou, however, sends a completely different signal. He’s a reformist and a well-known entity on the international scene. He goes to G20 meetings and plays tennis with Harvard Economist Larry Summers.