China forms new economic team as President Xi kicks off second term
China forms new economic team as President Xi kicks off second term
The endorsement of Liu He as a vice premier by the country’s largely rubber-stamp parliament also comes as the US presses China to cut its trade surplus by $100 billion. Harvard-educated Liu, 66, was the most prominent envoy to visit Washington recently to prevent the outbreak of a trade war.
While most of the personnel changes on the government’s economic team were widely anticipated, the choice of Yi Gang as the new head of the People’s Bank of China (PBOC) was unexpected.
Yi had been a vice governor of PBOC and a protege of outgoing chief Zhou Xiaochuan. His appointment was seen as pointing to continuity in monetary policy even as one of the world’s biggest central banks was gaining considerable new regulatory powers.
Yi will have a weighty first test — the US Federal Reserve is expected to raise interest rates on March 21, a day after China’s annual parliament ends, and markets are keen to see if the PBOC follows with a modest move of its own.
The head of a newly merged banking and insurance regulator is also expected to be announced soon. Reform-minded Guo Shuqing, 61, the current chair of the China Banking Regulatory Commission, is viewed as the leading candidate.
Liu He is expected to help improve supervision and coordination among regulators and the central bank to fend off financial risks, as head of the cabinet-level Financial Stability and Development Commission (FSDC).
That would put Liu on a similar standing with former economic tsar Zhu Rongji, known for his tough handling of hyperinflation and the economic chaos in the 1990s.
Zhu held both the posts of vice premier and central bank governor simultaneously from 1993 to 1995, and went on to become China’s premier in 1998-2003.
As Xi begins his second five-year term as president, Beijing is streamlining regulators and ministries to reduce inefficiencies while expanding the remit of others such as the central bank to boost their policymaking powers.
Xi has also promoted top graft-buster Wang Qishan, a major ally, to the post of vice president.
“China’s ministries are giant, nationwide silos and fiefdoms that never talk to one another,” Cliff Tan, east Asian head of global markets research at Bank of Tokyo-Mitsubishi UFJ, said in a note.
“Hence, in order to accomplish anything major, the command must come from the top down. Only they can get ministries to work together.”
Liu has a deep understanding of the country’s economic issues, and was elected last October into the 25-member Politburo, the second-highest tier in Beijing’s political power structure after the seven-member Politburo Standing Committee.
Liu won a top Chinese economics study award in 2015 for his research on the global financial crisis, and is widely seen as masterminding Xi’s supply-side reforms which are cutting excess factory capacity and pivoting the economy away from low-value industries.
Liu, who speaks fluent English, gained a master’s degree in public administration at Harvard’s Kennedy School of Government in 1995.
He had been the head of the General Office of the ruling Communist Party’s Central Leading Group for Financial and Economic Affairs and a vice minister of the National Development and Reform Commission (NDRC) — China’s top economic planner.
US-educated Yi Gang, 60, had been vice PBOC governor since 2008. He was seen as instrumental in steering monetary and currency policy, including the landmark devaluation of the yuan in 2015 and more recently a tightening in capital controls.
The PBOC and other regulators are trying to rein in risks from an increasingly complex financial system and a rapid build-up in debt without jolting markets or hurting economic growth.
“The main task right now is to implement prudent monetary policy, push forward financial sector reform and opening up, and keep the financial sector stable,” Yi told reporters on the sidelines of Monday’s parliament session.
Yi said PBOC would roll out policies and measures to reform and open up the financial sector between now and the next Boao Forum, known as Asia’s Davos, in April. He did not elaborate.
But Yi is not regarded as a heavyweight like his boss Zhou, and he may play a supportive role with Liu overseeing the economy and finance sector on the whole, some economists said.
Yi’s nomination is “a bit unexpected as he holds a relatively low political ranking as the alternative member of CPC Central Committee,” said Tommy Xie, China economist at OCBC Bank in Singapore. The committee is the largest of the party’s elite decision-making bodies.
“In terms of implication, we see policy continuation as Yi will support Liu He to drive economic reform. Both are the main driver to China’s reform in the past few years,” Xie said.
Yi, one of the highest-ranking “sea turtles” — a colloquialism for Chinese returning from overseas — has a PhD in economics from the University of Illinois. He was also the head of the State Administration of Foreign Exchange (SAFE) from 2009 to 2016.
With Yi’s background and his reputation of being pro-reform, his nomination would be good news for foreign investors, Xie said.
Zhou, 70, who is China’s longest-running central bank head, having taken the job in 2002, is expected to announce his retirement soon.
First Abu Dhabi Bank to start commercial banking in Saudi Arabia this year
- FAB is the latest foreign bank attracted by openings in Saudi Arabia
- It had already completed its first debt capital markets transaction in the kingdom through its investment banking business
DUBAI: First Abu Dhabi Bank (FAB), the largest lender in the UAE by assets, said on Monday it will launch commercial banking operations in Saudi Arabia by the end of this year.
The bank, which was granted a commercial banking license in Saudi Arabia earlier this year, has been expanding its staff in the kingdom as it seeks to benefit from the government’s drive to move the economy beyond oil revenues.
It appointed Abdullah Abubakr as head of private banking in Saudi Arabia as of this month, according to his LinkedIn page.
FAB did not respond to a request for comment on his appointment.
FAB is the latest foreign bank attracted by openings in Saudi Arabia. The bank said it had already completed its first debt capital markets transaction in the kingdom through its investment banking business. In February, it was granted a license to conduct arranging and advising activities in the securities business. The bank also on Monday reported a 16 percent rise in third quarter net profit as net interest income and fees and commissions edged higher.
FAB made a net profit of 3.02 billion dirhams ($822 million) in the three months ending Sept. 30, up from 2.61 billion dirhams in the prior-year period, it said in a statement. SICO Bahrain had forecast FAB’s quarterly profit at 2.87 billion dirhams.
FAB’s performance was helped by lower net impairment charges during the quarter, with impairments falling 23 percent to 435 million dirhams. Loans and advances rose to 354 billion dirhams as of Sept. 30, up 8 percent from the same period of last year. Deposits totaled 455 billion dirhams, up 20 percent from a year earlier.