When China’s leadership reshuffle is finalised during the annual parliament session that starts next week, the man tipped to become the country’s leading financial official will face high expectations.
Bankers hope former Beijing mayor Wang Qishan, expected to be named vice premier in charge of financial affairs, a cabinet post, will inject new life into financial sector liberalisation after months of political jockeying that put some reforms on hold.
Wang will inherit a banking system that is a long way from being globally competitive, as well as insurance and securities industries that are finding their feet and have yet to be as fully opened to foreigners.
He will take over just at a time when Beijing is looking to step up integration among the three sectors and create a viable financial system to serve China’s 700 million rural residents.
“I wouldn’t hold my breath on the changes as a result of this in terms of policy, as the direction of policy is largely driven by consensus thinking,” said Qu Hongbin, China economist with HSBC in Hong Kong.
“But in terms of the process of policy-making and implementation, I hope that as a result of this change, problems can be dealt with faster, that they can be more productive and efficient,” Qu said.
Beijing has already made some headway in opening its banking sector in the past few years, recapitalising three of the four big state banks, which subsequently brought in foreign strategic investors and listed publicly.
Foreigners are now able to set up their own locally incorporated banks. Authorities have also cautiously started to open the brokerage sector again to foreigners, while giving select foreign institutional investors access to the country’s stock markets.
Wang will bring extensive experience to the post.
He served as a vice governor of the central bank from 1993-94, was president of big state lender China Construction Bank from 1996 to 1997 and later oversaw the clean-up of the troubled trust sector following the 1998 collapse of Guangdong International Trust and Investment Corp (GITIC).
After a stint heading the cabinet’s economic restructuring office from 2000 to 2002 and a brief sojourn as Party boss of the southern island province of Hainan, he was parachuted into Beijing during the 2003 SARS virus crisis to clean up the city’s image after his predecessor was sacked for covering up the crisis.
Along the way, he has earned a reputation as a no-nonsense troubleshooter.
“Wang’s experience shows that he is able to cope with complicated financial issues, is experienced in addressing financial risks and has the necessary international vision,” columnist Shui Pi wrote recently in the China Times.
“He has been directly involved in the capital markets, which is what Chinese regulators are in need of at present.”
Some media reports have said that Wang may also take over responsibility for high-level policy discussions with the United States and European Union from the charismatic and widely respected “Iron Lady” Wu Yi, who will be retiring.
Wang’s financial background marks him out from his immediate predecessor, Huang Ju, a mechanical engineer by training who died last year after an extended illness.
Wang, who turns 60 in July, is also nearly a decade younger.
“If you have someone who is basically close to the age of 70 and who is not very healthy, relative to someone who is in their early 60s, it sounds like a huge improvement,” said HSBC’s Qu.
“Wang Qishan has been known as very experienced and decisive, which should be helpful in terms of dealing with the issues of financial reform,” he said.
It is not yet clear whether the heads of the banking, insurance and securities regulators will change, but government sources told Reuters it was now likely that Zhou Xiaochuan would stay on as central bank governor. It had been expected before that Zhou might move from his post.
The personnel reshuffle takes place against the backdrop of efforts to streamline the government, approved by the Communist Party’s 204-member Central Committee earlier this week.
While details remain scant, sources said that it could lead to some form of heightened coordination among the banking, insurance and securities regulators, with Wang in charge.
Foreign firms, who have been chomping at the bit for greater access to the securities and insurance industries after banking was opened significantly in late 2006, could stand to benefit from the influx of fresh blood and increased coordination.
“We are hopeful that new leadership will help resolve some of the inter-agency disagreements that have impeded financial sector reform,” said David Loevinger, the U.S. Treasury’s attache in China.
(Reporting by Jason Subler; Additional reporting by Zhou Xin and Shen Yan; Editing by Alan Wheatley)
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