After 15 years of service, Zhou Xiaochuan stepped down as governor of the central bank

Zhou Xiaochuan, who is the same age as Chinese Min min bank, has been in charge of the central bank for 15 years, and has embarked on a path of financial reform and opening up with Chinese characteristics that is both in line with international standards and independent; persistent and patient, integrating reform in development, painstakingly creating reform opportunities; in his term of office, the People's Bank of China has become internationally renowned and the renminbi has stepped onto the international stage

Caijing reporter Zhang Wei/Wen Yuan Man/Editor

From March 17 to 18, the Bank for International Settlements (BIS) held a regular meeting of its presidents in Buenos Aires, Argentina, and Zhou Xiaochuan, President of minzu Bank of Chinese, attended the Board of Directors, the Economic Advisory Committee, the Presidents' Meeting and the Global Economic Situation Meeting.

For Zhou Xiaochuan, 70, this should be his last international official event as governor of China's central bank, after which he will step down as president of Chinese Bank to end his longest term as president. At the first session of the 13th National People's Congress held on the morning of March 19, the list of heads of various ministries and commissions of the State Council nominated by Premier Li Keqiang of the State Council was approved, and Yi Gang, currently vice president of the Chinese Bank, officially took over Zhou Xiaochuan as the president of the Chinese Bank.

Ten days before that, at the press conference of the first session of the 13th National People's Congress on March 9, Zhou Xiaochuan's speech had been regarded by the outside world as a farewell to him on a formal occasion. Looking back on his career as governor of the past 15 years, he summed it up in one sentence: "I feel fortunate to work with you on financial reform and opening up, and to move forward, which is a very fortunate thing." When asked about the successor, Ogawa smiled and replied, "You guessed it! ”

Born in 1948, Zhou Xiaochuan turned 70 this year, and five years ago, he reached the retirement age of ministerial officials, and was elected vice chairman of the National Committee of the Chinese People's Political Consultative Conference that year, becoming a vice-state leader, thus breaking the age limit on continuing to run the central bank. This personnel arrangement highlights his important role in the field of China's economy and finance.

Zhou Xiaochuan's relationship with the People's Bank of China did not begin with his 15 years in power. At the end of 1948 Chinese, on the basis of the merger of North China Bank, Beihai Bank and Northwest Farmers Bank, Chinese Min Bank was established in Shijiazhuang City, Hebei Province.

As of the end of this year, the 70th anniversary of the establishment of Chinese Min min bank, Ogawa is the same age as him.

Zhou Xiaochuan's ancestral home is Yixing City, Jiangsu Province, and his father, Zhou Jiannan, was the Minister of Machinery Industry of the People's Republic of China. Before Zhou Xiaochuan became the president of the People's Bank of China, his experience was quite rich. From 1972 to 1975, he studied instrument automation in the fourth department of Beijing Institute of Chemical Technology, and then worked as a technician in the fourth research room of Beijing Institute of Automation Technology, and obtained a doctorate degree in 1985.

After 1985, Zhou Xiaochuan had a strong connection with the reform of China's economic system. From 1985 to 1986, he was a member of the Leading Group for the Study of the Structural Reform Plan of the State Council; from 1986 to 1986, he was the deputy director of the Institute of Chinese Economic System Reform of the State Economic System Reform Commission; and from 1986 to 1991, he was a member of the State Economic System Reform Commission (during which time, he was appointed assistant minister of foreign economic relations and trade from 1986 to 1989).

These experiences laid a solid foundation for him to become a "reformer".

Ogawa entered the financial field in the early 1990s, serving as vice president and party group member of bank of China from 1991 to 1995; director and party secretary of the state administration of foreign exchange from 1995 to 1996, member of the party group of Chinese min bank; vice president and party group member of Chinese Bank from 1996 to 1998, director of the state administration of foreign exchange and secretary of the party group; from 1998 to 2000, he was the president and secretary of the party group (party committee secretary) of China Construction Bank, and the secretary of the party committee of China Cinda Asset Management Company From 2000 to 2002, he served as the chairman of the China Securities Regulatory Commission and the secretary of the party committee.

In 2002, Zhou Xiaochuan returned from the CSRC to the People's Bank of China as president, a term he held for 15 years.

In the past 15 years, Ogawa has promoted a number of financial reforms such as interest rate marketization reform, capital account convertibility, RMB internationalization reform, RMB exchange rate mechanism reform, financial market reform, state-owned bank stock reform and listing, policy-oriented financial reform, rural financial reform, and the establishment of the deposit insurance system, and also played a crucial role in the RMB's accession to the SDR in 2015.

He has always been called a marketist and a reformer.

A person at the bureau level of the central bank commented on Xiaochuan as follows: In the past 15 years, it has embarked on a path of financial reform and opening up with Chinese characteristics that is both in line with international standards and maintains independence, and the reform of state-owned banks has preempted the big wave of the financial crisis, leaving emerging countries and even developed countries around Japan and South Korea behind; mobile payment has seized the wave of technology and walked in the forefront of the world; persistence and patience, reform in development, painstakingly creating reform opportunities.

Ogawa only downplayed a sentence: "I feel fortunate to work with you in the financial reform and opening up, and to move forward, it is a very fortunate thing." This is the answer that Ogawa was asked at the press conference about the most memorable moment of his 15 years at the helm of the central bank.

For a detailed report on Ogawa's push for financial reform, see (Caijing, No. 24, 2017, "Zhou Xiaochuan the Reformer").

Everyone does their own thing in the trend of the times and plays their due role, and Ogawa is the same. In addition to the reforms, the changes that Ogawa has brought to China's central bank in his 15 years as the governor of the central bank are also enormous.

A number of people who have direct contact with Xiaochuan told caijing that as the governor of the Central Bank of China, the biggest contribution made by Governor Ogawa is to improve the status and influence of the Central Bank of China in the international central bank, and it is won by professional strength.

Ogawa's 15 years in office are also the 15 years of the People's Bank of China under the supervision of separate industries, and under the supervision of separate industries, Ogawa, who pays attention to academic research, has also played a lot of contributions to the central bank at his helm, including the stability of the financial system, the rectification of Internet finance, and the formulation of penetrating regulations such as new regulations on asset management.

At present, a new round of adjustment of China's financial regulatory system is about to begin, in this regard, Ogawa said at the press conference that the central bank should take the lead in enhancing the efficiency of coordination among various institutions, but whether to use the "double-peak" regulatory system, it is still necessary to observe for a period of time. The establishment of the State Council's Financial Stability and Development Committee and its office at the People's Bank of China indicates that the People's Bank of China will play a more important role in the new financial regulatory framework.

In the future reform, where will Ogawa's figure be, with its inherent enthusiasm for reform, the industry is quite expected.

Internationalization of central banks

"Governor Ogawa is a very good banker with a high international vision and a spirit of reform, and during his tenure, the status of the People's Bank of China in the world has been significantly improved." The former president of a state-owned large bank told the "Finance" reporter.

The improvement of the international status of the central bank is reflected in the daily work. According to the chief economist of a securities company who introduced to the "Finance" reporter, the original international conference, china-related topics do not need to speak, now will ask China's opinions, even if China does not have financial products and financial services, will also ask what China's future development into such views will be.

The reason for the central bank's international status is that the above-mentioned chief economist believes that Governor Ogawa has put forward many views that have convinced the international central bank at many international conferences. "For example, france writes a financial stability report and directly makes a column with Governor Ogawa, and it is still difficult for a country's financial stability report to be a column for another country's governor." He added.

An authoritative expert on monetary policy believes that it is because Ogawa is very humble and thoughtful, and can communicate with them in language and concepts that people (international central banks) can understand, so that the Central Bank of China and the central bank of the international community are very well integrated.

The authoritative expert went on to describe that before Governor Ogawa, China was somewhat outside of international exchanges, and this phenomenon changed after Ogawa. "In the international financial system, the world's central bank should maintain a very close relationship, as a member of the international elite circle with a sense of identity, it can be a good way to transmit and receive views, and it can also be a good way to promote coordination between the Chinese central bank and the world's major central banks, and Zhou's role in this regard is very large."

Ogawa's international fame also stems from his ability to propose very innovative and advanced concepts, some of which have had a major impact on the world, especially the reform of the international monetary system that was raised at that time.

After the global financial crisis in 2008, Zhou Xiaochuan published an article saying that the outbreak of the financial crisis and its rapid spread around the world reflect the inherent defects and systemic risks of the current international monetary system, and the current sovereign credit currency as the main international reserve currency is a rare exception in history.

At that time, Ogawa proposed that special consideration should be given to giving full play to the role of SDR. SDR has the characteristics and potential of a super-sovereign reserve currency. At the same time, its expansion will help the IMF overcome the difficulties it faces in funding, discourse power, and representation reform.

As a follow-up, the Stiglitz Committee proposed in a subsequent report that the current reform of the international monetary system should solve three major problems: one is the need to provide an international store of value carrier that is more stable than the dollar; the other is that the accumulation of reserve assets should be separated from the trade deficit of the country that issued its currency; and the third is the constraint on countries with current account surpluses. One of the most realistic ways to address these problems is to significantly increase the issuance and use of SDRs (Special Educational Rights).

"The Stiglitz Committee, to a large extent, is influenced by his (Ogawa's) ideas and implements his ideas, which is very powerful. And in the process of discussing the international monetary system, his (Ogawa's) views are very weighty. Members of the Stiglitz Committee told The Finance.

During Ogawa's tenure, there was a very important point in time when the renminbi joined the SDR. On November 30, 2015 (around 1:00 a.m. Beijing time on December 1), the International Monetary Fund announced that the renminbi met the criteria for widespread use and included the renminbi in the special drawing rights (SDR) basket.

After the RMB joined the SDR, the SDR currency basket was expanded to the five currencies of the US dollar, the euro, the renminbi, the japanese yen and the british pound, with the proportion of 41.73%, 30.93%, 10.92%, 8.33% and 8.09% respectively.

Regarding the inclusion of the renminbi in the basket, Zhou Xiaochuan said in an exclusive interview with Caijing magazine at the end of last year that he himself was more willing to systematically expound and analyze this from a macro perspective from the perspective of reviewing the historical process of China's reform and opening up. (For a detailed report, please refer to Caijing," No. 24, 2017, "Interview with Zhou Xiaochuan, President of Chinese Min min bank — Renminbi's Basket SDR: Historic Progress in the Process of Opening Up to the Outside World").

The president of the above-mentioned bank said that during President Ogawa's tenure, the voice of Chinese regulators in the international community has increased, and the influence of China's financial policy and monetary policy on the world has gradually increased; in addition, Ogawa's accurate understanding of international currency, economic structure and international monetary policy is also of great significance.

During Ogawa's tenure as governor of the central bank, there was another international appointment that had to be mentioned.

In July 2011, Zhu Min was appointed Vice President of the International Monetary Fund, becoming the first Chinese of the IMF's more than seven-decade-old international organization to enter management.

According to Zhu Min's later interview recollection, the appointment was over before it even started. Behind China's struggle for the management of international financial organizations is a game of discourse between emerging economies and developed countries in the post-financial crisis era. At that time, Japan said it wanted to succeed him and was reluctant to give up the position of vice president.

When Zhu Min himself felt that the door to the IMF was about to close, "Governor Ogawa was keenly aware that the 'general trend' of the upward development of the emerging economy could not be ignored, and 'things have not been done' was the judgment made by Governor Ogawa at a critical moment." Zhu Min recalled.

At the time, Ogawa's logic was that after the 2008 financial crisis, China contributed more than 50 percent of the world's economic growth for the first time. The center of gravity of global growth is quietly shifting to emerging markets, especially China.

After months of communication and gaming, the IMF agreed that China's participation in the IMF's management was needed by the world. Zhu Min became a special adviser to the IMF's president. A year later, the IMF welcomed its first Chinese executive, zhu Min as vice president of the IMF.

After Zhu Min's tenure expired, Zhang Tao, deputy governor of the central bank, served as vice president of the IMF

Academic standing

The financial circle's evaluation of Ogawa also has a word "expert, scholar", and Ogawa, which is presented in front of everyone, has a strong cultural atmosphere. A senior economist who has direct contact with Xiaochuan told the "Caijing" reporter that his personal style is very good, there is no bureaucracy, and scholars can do a good job of communication, and everyone respects him.

Ogawa, who has a Ph.D., has great respect for the advice of scholars, and in his view, economists (scholars) are the bridge between policy and markets.

Zhou Xiaochuan once said that the model used in monetary policy decision-making is multi-variable and dynamic, and there is a complex interaction between each variable and its lagging variables. But most people's way of thinking and textbook descriptions of tradition are usually univariate, linguistic logic. Therefore, the central bank has always faced a dilemma in communication: if communication is too simple, although it can ensure public understanding, it cannot reflect the complexity of the thing itself; if communication is too technical and complex, only a few economists and market people can understand. This dilemma is something that every central bank faces in the process of communication.

After China experienced market fluctuations since the 8/11 reform last year, the world has put forward new expectations and requirements for the communication of the Chinese central bank.

Zhou Xiaochuan once said that the central bank of China's approach is to emphasize the communication with the expert level to maintain the accuracy of information transmission as much as possible, and to analyze and explain to the general public through experts; at the same time, the central bank will also provide a simplified version of communication to the public.

Ogawa studied in the United States in the 1980s. "President Ogawa's English level is very good, and he rarely travels with an interpreter, and our department-level entourage is even more embarrassed to bring an interpreter." A bureau-level leader of the central bank once confessed to the "Finance" reporter.

After becoming the governor of the central bank at the end of 2002, Ogawa began to pay attention to absorbing talents with overseas study backgrounds.

A group of people with the same experience of studying in Britain and the United States and familiar with Western economic theory began to be used. For example, in 2003, Yi Gang, a doctor of economics at the University of Illinois and a professor at the Center for Economic Research at Peking University, was promoted from deputy secretary general of the Monetary Policy Committee and deputy director of the Monetary Policy Department to director of the Monetary Policy Department, and in July 2004 he was promoted to assistant to the president, and Chinese three years later he was promoted to vice president and director of the Safe Management Bureau.

In May 2004, Zhang Xin, Ph.D. in Finance at Columbia University Business School and Professor at the Center for Chinese Economic Research of Peking University, Li Bo, Ph.D. in Economics in the United States, and Zhang Tao, Ph.D. in International Finance at the University of California, Santa Cruz, were appointed deputy directors of the Financial Stability Bureau, deputy director of the Department of Articles and Law of the People's Bank of China, and deputy director of the Research Bureau, respectively.

"During Ogawa's tenure, the overall quality of the People's Bank of China has improved, and he (Ogawa) has played a great role, and the entire system of the staff of the People's Bank of China is quite high in various departments in China, which has also been recognized worldwide." The economists said frankly.

Ogawa, who has an open international vision, is more willing to accept new things. During his tenure, many of the research results of the People's Bank of China were more forward-looking. Taking fiat digital currency as an example, under his impetus, the central bank has set up a special digital currency research team since 2014, and the fiat digital currency issued by the study has been tried first in the world, and blockchain patents are at the forefront.

Ogawa has published several influential articles at home and abroad, and has twice won the Sun Zhifang Economics Prize. Internationally, it has also won many awards. In 2009, Ogawa was the 9th of the 100 thinkers selected by Foreign Policy for the year; in 2011, Euromoney awarded Ogawa the world's best central bank governor of the year; and in 2012, Zhou Xiaochuan was named in Bloomberg Markets' list of the 50 most influential people in global finance.

People in the financial circle like to call him Ogawa, which seems to be a representative of the financial era. From 2002 to 2017, Ogawa led the central bank through 15 spring, summer, autumn and winter.

At the 2017 Two Sessions, Ogawa walked through the passage surrounded by the media wearing a brown trench coat, and the reporters shouted "Governor Ogawa said two words", and he smiled and waved two numbers at the reporter with his fingers, one is 1, one is 0, and the combination is 10 words, which means to tell the media reporter that March 10 is a press conference.

The humorous gestures seem to have become Ogawa's patent, and his smile as always left a deep impression on the media. Subsequently, at the press conference, he was concerned by the media for wearing a Nike sports watch, and was known as a fashion sports master.

Ogawa is also called "the most difficult minister to follow" by the media because of his very agile skills, but every time he meets with the media, there is no official shelf; every time he faces questions from the media, he is a calm and unfazed face, and for many media reporters, he is also an affinity and wise scholar.

Supervision of "division" for 15 years

In the second year of Ogawa's tenure as governor of the central bank, the CBRC separated from the central bank. China's financial regulatory system has formed a "one bank, three meetings" sub-industry supervision situation, with the central bank, the Banking Regulatory Commission, the Securities Regulatory Commission, and the Insurance Regulatory Commission each managing one piece. The three associations mainly manage business, while the central bank, in addition to managing some business, is mainly responsible for macro-control and overall financial stability.

The pattern of separate industry supervision will lead to two situations: first, regulatory overlap, such as banks involved in securities business (including fund custody, bond underwriting, asset securitization, etc.), to accept the supervision of the two departments, the two need to fully coordinate; second, the regulatory vacuum, some of the new finance, in the point of completely no one to manage. Some cross-trades that come from mixed industries require the coordination of two regulatory entities, and often the coordination is improper, resulting in regulatory blind spots.

After the "stock market crash" in 2015, the leadership and regulators began to reflect on the shortcomings of the regulatory pattern of separate industries; on the other hand, the central bank coordinated with the "three sessions" to start coordinated operations in related fields and strengthen penetrating supervision.

In April 2016, the nationwide special rectification of the field of Internet finance was launched, and the relevant documents led by the central bank and drafted with the participation of more than ten ministries and commissions were approved by the State Council and triggered an unprecedented special rectification of Internet finance, which made the Internet financial industry that had sprung up in previous years and was also chaotic have undergone major changes, and after the rectification from 2016 to 2017, Internet finance has entered a relatively stable and standardized state.

In addition, the opacity of bank investment products makes it difficult to assess the systemic leverage ratio, and in order to reduce the overall leverage ratio of the economy, the central bank has incorporated wealth management products into its macro-prudential assessment system in January 2017. At the same time, at the beginning of last year, the central bank also coordinated the draft unified regulatory document for large asset management (Guiding Opinions on Regulating the Asset Management Business of Financial Institutions (Draft for Comments).

"Under the supervision of separate industries, the central bank is responsible for the formulation of monetary policy on the one hand, and on the other hand, it has to supervise, and has assumed more responsibilities and obligations." The economists said.

In addition, in 2002, Ogawa became the governor of the central bank, and the broad money supply (M2) of the renminbi was 18.32 trillion yuan, and at the end of January this year, the balance of broad money (M2) was 172.08 trillion yuan, and in 15 years, the money supply increased to nearly ten times the original.

Due to the rapid growth of broad money, Ogawa also has a name "Mr. Renminbi".

In this regard, the above-mentioned authoritative experts on monetary policy said that the Chinese central bank does not have the independence of monetary policy at the level of foreign central banks, but must consider the requirements of all aspects.

"On the other hand, whether the rate of currency issuance has been high or low in the past decade or so, there are still many controversies, and it is difficult to make a final conclusion on this issue, because the actual situation is not yet finished, and many consequences are still unclear and difficult to judge." The above-mentioned expert added.

But in any case, in recent years, inflation control is relatively good, the traditional monetary policy indicators are relatively stable, from these two points, can not simply say that the currency is over-issued; however, on the other hand, the asset bubble is relatively serious, the relationship between currency issuance and asset bubbles needs further study.

"Ogawa repeatedly warned that the economy was overheating, and withdrew the wine glass in time before everyone was drunk, and with his efforts, the central bank gained a certain degree of independence and withstood the huge pressure of water release." the above-mentioned department-level person said.

At the press conference of the two sessions in 2018, Xiaochuan said in response to China's debt problem that the situation of rapid debt growth has now stabilized, so it has entered the stage of stabilizing leverage, and even said that the growth of our broad money has been lower than the growth of nominal GDP, which means that the total amount has entered the stage of stabilizing leverage and gradually reducing leverage.

During Ogawa's tenure as governor of the central bank, the independence of China's monetary policy has always been a hot topic of discussion.

The monetary policy of the People's Bank of China adopts a multi-objective system, which includes four major goals, such as price stability, promoting economic growth, promoting employment, and maintaining the general balance of payments, as well as the two dynamic goals of financial reform and opening up and the development of financial markets.

A central bank with a single-objective system is relatively easy to achieve independence. But if a central bank is multi-objective, it may be more difficult to transcend the influence of political reality. On the one hand, this is because multi-objective requires more coordination and cooperation with other government departments and regulators; on the other hand, the functions of macroprudential and financial supervision undertaken by the central bank are themselves more sensitive in terms of rights and responsibilities.

"Everyone does their own thing in the trend of the times, plays their due contribution, the economy is not always high-speed, there are some places of maneuver, not to mention the monetary authorities in the economy." Said the president of the above-mentioned commercial bank.

In the eyes of many economists, the difficulty of monetary policy in recent years is obvious, although there are some problems, but the overall stability, Ogawa is indispensable.

Ogawa's subordinates said: "The wind of the elderly will be remembered by the central bankers for a long time!" ”