Zhu protege gets top banking post

A PROTEGE of Executive Vice-Premier Zhu Rongji, Dai Xianglong, has been appointed governor of China's central bank, replacing the economic tsar in the post.

The new governor faces a tough job in speeding up banking reforms, which include getting rid of state control over banks, establishment of commercial banks and the liberalisation of the sector to foreign players.

He is expected to stick to his predecessor's path, although analysts believe the departure of Mr Zhu, 66, indicates moves to give the bank more independence from the central Government.

Mr Dai, 51, was transferred to Beijing as a vice-governor of the People's Bank of China soon after Mr Zhu took over the reins from Li Guixian in June 1993.

Mr Li took the blame for loose bank credit that sparked a frenzy and sent inflation to its highest level since economic reforms were launched in 1979.

'I think the direction of major economic policy will not be altered, especially the credit squeeze policy,' said Smith New Court Far East economist, Qu Hongbin.

As inflation control had become a political issue, Mr Qu added, Mr Dai was unlikely to change the policy - despite pressure from cash-starved state enterprises.

Analysts in Beijing yesterday said Mr Zhu's political standing would not be weakened by the removal of his bank position.

Premier Li Peng, in proposing to relieve Mr Zhu of his role in the central bank, said the personnel changes were done 'in accordance with the needs of the Vice-Premier's work'.

Mr Zhu's resignation was approved by the Standing Committee of the National People's Congress at the closing meeting of its 14th session yesterday, which led to the formal appointment of Mr Dai by President Jiang Zemin, Xinhua (the New China News Agency) said.

'That just reflected that Mr Zhu can now concentrate more on overseeing the control of the macro-economic situation as the banking reforms are on track,' said Xiao Zhuoji, an economics professor at Beijing University.

Mr Zhu is expected to focus on transforming the state sector which has been a drag on the state's coffers, making it difficult for China to proceed with the reforms.

It has also been widely forecast that Mr Zhu will also soon give up his leadership of the State Council Securities Commission, the policy-making body of the securities industry.

Usually considered as a reformist, Mr Zhu remains No 2 in the party's policy-making Central Finance and Economic Leading Group.

Tao Liming, deputy director of the Institute of International Finance of the Bank of China in Beijing, said Mr Zhu's resignation indicated he had largely accomplished rectifying the irregular financial sector he inherited.

During Mr Zhu's two-year tenure, China has established a legal framework for state banks, with the passage of the Central Banking Law and the Commercial Banking Law.

Although inflation remained at a stubbornly high level, Mr Tao blamed the price rises more on excess fixed asset investment and property speculation and rising consumption power, than loose monetary policy.

A native of Yizheng in Jiangsu and an accounting graduate, Mr Dai was with the Agricultural Bank of China and the Bank of Communications of China.

He is described as 'experienced, young, and capable of holding leading posts'.

Mr Tao said Mr Dai, with his previous stint as vice-governor of the Bank of Communications, the fastest-growing commercial bank headquartered in Beijing, would speed up the commercialisation of four specialist banks.