“2010 is a crucial year in strengthening the stabilization and recovery of the economy and defeating the international financial crisis”
— Zhou Xiaochuan, from his New Year message 12/31/09
He sits on the world’s largest stockpile of reserves, a $2 trillion cache held primarily in U.S. treasuries, and holds the reins on the largest bundle of U.S. debt. Zhou Xiaochuan, the Governor of the People’s Bank of China, has also called for a gradual replacement of the U.S. dollar as the world’s preferred currency. So it is to no one’s surprise that Zhou has seized the attention of the world, catapulting him to one of the top slots of TIME Magazine’s list of Most Influential People of 2009.
Born in Yixing, Jiangsu Province in 1948, the son of a former Minister for Machinery Industry, Zhou cut his political teeth early. Within a year of earning his Phd in economic systems engineering from Tsinghua University, Zhou went on to become Deputy Director of the Institute of Chinese Economic Reform Research. He soon earned a reputation as an economic reformist, dispensing advice to the State Council. After serving as Assistant Minister of Foreign Trade for the next few years, Zhou became Vice President of the Bank of China in 1991.
Zhou’s calm demeanor first received appreciation during the 1997-98 Asian financial crisis, as he juggled between intense pressure to stabilize the yuan and aid struggling exporters. Becoming the President of the China Construction Bank in 1998, he supervised the establishment of various asset management firms to battle the challenge of bad debts in his country’s banking system.
After two years, Zhou was appointed to the chairman’s post of the China Securities Regulatory Commission. While there, he created a buzz when he drove to wipe out core corruption in several listed companies, his actions receiving applause from progressive economists. With his pro-reform record established, Zhou Xiaochuan later filled the position of the Governor of the People’s Bank of China (PBOC) in 2002, and one year later, was named as the Chairman of the Monetary Policy Committee of the PBOC.
Plain spoken and forthright, Zhou advocates shoring up the regulatory buttresses in the world financial system, especially on Wall Street. And in March 2009, Zhou became the face behind the questioning of the dollar’s supremacy. He has boldly suggested that the IMF expand the use of Special Drawing Rights (SDRs) and adopt a “super-sovereign reserve currency”, a basket of currencies consisting of the euro, pound, dollar and yen.
In his July 2009 address at the Global Think Tank Summit in Beijing, Zhou called for stricter financial regulation and an adjustment of global trade imbalances, warning against trade protectionism. According to Zhou, a perfect world scenario would exist, if “the household savings rate and overall savings rate in the U.S. keeps going up, and Chinese household consumption keeps rising, leading to a correction of the global imbalances.”
Zhou’s recommendations do not surprise most of his colleagues who are familiar with his outspoken and often unorthodox ways. Indeed, a former economist at the PBOC describes Zhou as someone who, “is intelligent, intellectually curious, and has always been willing to speak his mind.”
At his side is Zhou’s wife, Li Ling, who holds her own as the manager of the Treaty and Laws department of China’s Ministry Of Commerce. Aptly termed as “China’s new power couple” by Forbes magazine, Zhou and Li are two political celebrities who play a pivotal role in China’s complex machinery.
Zhou has been criticized for being too “Westernized”, a slap in the face for most traditionalists. Thinking outside of the box, he also has been chastised for harnessing Chinese economists educated and trained abroad and installing them in plum financial positions.
But Zhou is not your typical Chinese politician. He is the only one among the high-ranking Chinese politicos to be published in a Western academic journal. And he has no qualms in talking to the press, a rarity among his ilk. For Zhou Xiaochuan, a man who favors harvesting multiple perspectives to solve challenges, this is exactly how he likes it. And for China, he is a breath of fresh air.
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© Thomas White International, Ltd. 2018