18th Party Congress

Markets keen to know names of men who will be in charge of economy

Five names in the frame to be the economy's leaders over five difficult years have all served their time at the top financial institutions

PUBLISHED : Friday, 16 November, 2012, 12:00am
UPDATED : Friday, 16 November, 2012, 2:30pm

Markets are watching a handful of experienced bankers whose ascent though the party ranks this week makes them likely candidates for top jobs managing the world's second-largest economy for the next five years.

At least four cadres with stints at the helm of one of the Big Four state-owned banks - Shang Fulin , Guo Shuqing , Xiang Junbo and Xiao Gang - are widely seen as favourites for top economic posts after promotion to the Communist Party's Central Committee.

The four, along with the chairman of the China Investment Corporation, Lou Jiwei, are seen as leading contenders for top positions at the People's Bank of China and the Finance Ministry.

The governor of the Central Bank, Zhou Xiaochuan, is expected to retire after a decade. Finance Minister Xie Xuren is also on his way out.

Just as China watchers have been attempting to analyse the impact of changes to the country's top political body, the business world is eager to find out who will be responsible for reforms of the country's financial system, the internationalisation of the yuan and managing the country's vast overseas assets.

Shang, Guo and Xiang, now head the country's banking, securities and insurance regulators, respectively. Each previously led one of the country's big state-owned banks before their government appointments late last year in what analysts believed was preparation for more significant roles after the reshuffle.

The three regulators will be joined on the Central Committee by Xiao, the current Bank of China chairman. Analysts believe that Shang, Guo and Xiao are all contenders to fill Zhou's shoes at the PBOC.

The next central bank governor will be expected to take new steps in liberalising the interest rate mechanism, letting market forces decide deposit and lending rates. He may also be asked to oversee making the yuan fully convertible in the next five years.

Should Guo or Shang take the helm of the central bank, Xiao is expected to fill their posts at the banking or securities authorities. All four candidates are considered advocates of more market freedom and less control over banks' business operations.

The chief securities regulator will be under pressure to bail out the troubled stock market, among the world's worst-performing over the past three years. The top banking watchdog faces a worsening bad-loan problem and will have to help the banks better manage their assets in an uncertain economy.

The insurance regulator will be expected to accelerate liberalisations, widening insurers' access to properties, stocks and derivatives.

Meanwhile, Lou, a former deputy finance minister who now oversees China's sovereign wealth fund, is tipped to replace Xie at the Finance Ministry after his election to the Central Committee.

Lou is among those senior government officials who understand the Western financial systems and support the further opening of the mainland's financial markets.