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The Canary in China’s Central Bank

Oct 24 , 2014

How quickly will China follow through on the ambitious package of economic reforms its government adopted last November? With quarterly growth in the country's output at a five-year low, at least according to official statistics, it's the trillion-dollar question. That's how much economic activity might be unleashed by breaking open state-dominated industries and taking the brakes off capital markets. And the first part of the answer may come down to a choice between two men.

One of the most eager reformers in Beijing is Zhou Xiaochuan, the longtime governor of the People's Bank of China, the country's central bank. He wants to remove controls on interest rates and allow the renminbi to float freely on international markets, with the goal of giving China a convertible currency — money that traders and investors can buy and sell as often as they want and will accept as they would dollars or euros. At times, his rhetoric has even pushed beyond the comfort level of the Politburo, China's 25-member leadership council.

Zhou has been in his job since 2002, and his term ends in 2018. His goals for the modernization of China's monetary policy are in sight, albeit on the horizon. But already there is talk of replacing him — and not for the first time. His tenure predates Xi Jinping's regime, which began in 2012, and Xi may want a closer ally at the helm of China's monetary policy. So if Beijing replaces Zhou before 2018, who might his successor be?

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