All change in Beijing signals a president in preparation

Several of the country's key financial chiefs have been replaced recently.

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As part of a shake-up of the economy, China has replaced five top financial officials including the commerce minister in the central government.

The country’s banking and securities regulators, and the powerful National Development and Reforms Commission (NDRC), the main planning body, have new chiefs since last week.

Analysts see this as a sign that the Chinese president Xi Jinping is determined to revive the economy and apply the breaks to the continuing slide in the country’s foreign currency reserves.

The new commerce minister is Zhong Shan, who replaced Gao Hucheng at the end of last month. The state council, or cabinet, also announced replacements last week. Scott Kennedy, a director at the Washington-based Centre for Strategic and International Studies, said the decision to replace the commerce minister “suggests [he had] reached retirement age and Xi is starting to consider the composition of the cabinet for his second term. Zhong Shan [the new commerce minister] may or may not stay on”.

Meanwhile, the NDRC is now being headed by He Lifeng, who was previously the deputy director of the organisation. He replaced Xu Shaoshi who stepped down this month at the age of 65 after five years at the helm.

The new chairman of China Securities Regulatory Commission is Liu Shiyu, replacing Xiao Gang who presided over the markets regulator through some difficult times including a controversy over the use of circuit breakers that led to sudden sharp fall in stock prices. A circuit breaker, or trading curb, is a financial regulatory instrument that is supposed to prevent stock market crashes from occurring.

Elsewhere, the head of the China Banking Regulatory Commission (CBRC), Shang Fulin, has been replaced by Guo Shuqing, previously the governor of Shandong province. Mr Shang, 65, had headed the CBRC since 2011. Official state media said Mr Guo’s appointment would benefit the financial services sector in its reform, and boost risk control and coordination efforts with regulators of related industries.

Finally, Tang Jun has replaced Liu Yuting as the deputy head of China’s state administration for industry and commerce.

Even the finance minister has only been in post for four months. Xiao Jie replaced Lou Jiwei. The markets have high hopes of tax cuts from Mr Xiao, who was previously the deputy secretary general of the state council.

The changes have been made ahead of the Communist Party’s congress, which meets once every five years. The next meeting, expected in October, is likely to confirm a second term for Mr Xi, who wants to work with his preferred set of financial officials in his next term to counter overseas threats, such as those emanating from the US president Donald Trump.

Mr Trump recently revived Beijing’s fears by once again accusing China of it a currency manipulation. “Well they, I think they’re grand champions at manipulation of currency. So I haven’t held back,” Mr Trump told Reuters, adding, “We’ll see what happens.”

This was despite his treasury secretary Steven Mnuchin saying that the Chinese currency would not be judged differently from others. The treasury is expected to take a call on the issue on April 15. But Mr Mnuchin may have to disclose the administration’s plans earlier, at the G20 finance ministers’ meeting in Bonn on March 17-18.

Most economists do not believe the yuan is being deliberately devalued as in the past. The IMF said last year the Chinese currency’s value was broadly in line with its economic fundamentals.

Professor Kaushik Basu at Cornell University, a former chief economist of the World Bank, agrees: “There is no evidence of currency manipulation in recent times, beyond the occasional buying and selling of foreign exchange to stabilise volatilities, which all countries, rich and poor, do,” he tells The National. He says Mr Trump’s branding of China as a currency manipulator, is not correct and risks “unleashing destabilising forces in foreign exchange markets the world over”.

Guo Shuqing, the new CBRC chairman, has been widely praised for his work in shaping the government’s economic reforms programme in the 1980s and 1990s. He is also a former vice-president of the People’s Bank of China, the central bank, as well as an administrator of the state administration of foreign exchange. He also served as chairman of China Construction Bank in 2005 and as the chairman of the China Securities Regulatory Commission in 2011.

“China still has a long way to go in terms of financial reform, which requires a leader such as Guo, who has the courage and insight to make tough decisions based on his knowledge and experience,” state media quoted Wu Qing, a banking research fellow at the Development Research Centre of the State Council, as saying.

It remains to be seen whether Beijing’s reshuffle can produce the reversal of fortunes the president hopes for.

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