China owes its transformation to many visionaries: Deng Xiaoping, who opened China up to the world; former premier Zhu Rongji, who restructured the state, championed private industry, and got the country into the WTO; Guo Shuqing, the current banking and insurance regulator known for his reforming zeal; and Zhou Xiaochuan.
Technocrat, data wizard, inscrutable stay-the-courser, Zhou was at the helm of the People’s Bank of China (PBoC) for so long, it sometimes seemed that he had always been there.
Of course, he hadn’t. Zhou was chosen by then-premier Zhu to head up the central bank in 2002. He was viewed as a safe pair of hands, having put in long stints at the State Administration of Foreign Exchange and Bank of China.
Belying his affable demeanour, he was a staunch conservative, who had learned to reject the Russian model of post-Soviet privatization, instead arguing that China should reform its state-owned enterprises and, where possible, float them on local or foreign stock markets.
In an era when most bureaucrats gave stony-faced speeches bordering on the bellicose, Zhou was disarming and engaging. He let his hair grow grey (most senior party officials in China still dye theirs boot-polish black, even into their 80s), was happy to be interviewed on television and to ham it up on stage with the likes of IMF chief Christine Lagarde.
For 16 years, until he stepped down in 2018, he played a weak hand well. China’s central bank is not an independent institution, but Zhou gave the impression it was, carefully negotiating his way around presidents and premiers – and through crises. It was Zhou who oversaw reform of the big state lenders, bailing them out in 2004 and overseeing their listings in Hong Kong and Shanghai. He presided over the de-pegging of the renminbi against the US dollar in 2005.
When the global financial crisis began, it was the central bank that oversaw a deluge of stimulus cash that cascaded through the provinces and cities, and which worked tirelessly to deal with the after-effects, including an overleveraged banking sector and an economy addicted to debt-fuelled growth. Keen to sow the seeds of future growth, he opted for a light-touch approach to financial technology, allowing the likes of Tencent and Alibaba to become leaders in payments technology.
Perhaps his greatest legacy will prove to be the renminbi. China’s currency was a minor player on the world stage when he came to office; by the time he left, it was well on track to reserve status.
Zhou let yuan accumulate offshore and agreed currency swaps with central banks from Mongolia to Malaysia. When the IMF said in 2016 it would include the renminbi in the basket of currencies that make up its special drawing rights – a key moment in China’s financial and monetary evolution – it was the result of Zhou’s quiet but assiduous hard work.
He was not universally loved by his peers in Beijing. Some felt he stayed on too long. His power waxed and waned, and, more than once, he was widely tipped either to be sacked or promoted to the position of vice-premier, but the rumours always proved to be wide of the mark.
When the end came, he handed over the reins to Yi Gang, a US-educated economist who will continue Zhou’s reformist agenda. The new man at the helm faces myriad challenges, from taking the renminbi global, to how fast to open up the bond market and liberalize the exchange rate. If, when Yi retires, he has achieved half as much as Zhou, and earned half the amount of respect and admiration, he will have done well.