Like oxygen or gravity, you rarely notice the impact that Zhou Xiaochuan has on China — and the world. Hired to run the People’s Bank of China in 2002, he has seen changes and overcome challenges that would have daunted and discouraged a less able man.
He has steered the mainland through waters smooth and rough, keeping inflation low and growth reasonably stable while staving off — always for a little longer — the crisis that has long threatened to engulf the world’s second largest economy.
The past year hasn’t been an easy one either for Zhou or his homeland. Growth rates continue to inch downward even while levels of national, corporate, bank and retail debts soar. Twice in the last 12 months, China’s currency, the renminbi (Rmb), has slumped sharply in value, rattling markets and raising concerns that the economy faced a stark and sudden economic decline.
During the late 2000s, Zhou seemed, if not banished from having his voice heard in the public realm, then at least severely sidelined. Yet in recent years, under the aegis of current president Xi Jinping, Zhou has returned, his calm demeanour and range of expressions, which vary from deadpan to beatific to mischievous, a source of calm for fretful global investors.
Zhou it was who, on September 5, 2015 following the sharpest fall in onshore stock prices in nine years, said the worst of the correction was “already mostly over”. Luck or extraordinary prescience? Either way, investors listened. After losing more than 40% of its value in the previous three months, the Shanghai Composite index paused for breath before regaining some of its lost ground. (It should be noted that the central bank chief was also one of the many senior officials to lay the groundwork for the stock market bubble in the first place, by trumpeting the pain and consequence-free benefits of share ownership.)
Zhou it was too who noted in March 2016 that corporate lending in China as a share of gross domestic product was a little “on the high side”. International policymakers had long warned that corporate debt, currently 160% of GDP, had become a pressing issue having grown at a faster pace since the global financial crisis in China than in any other major economy. No other policymaker or politician in Beijing would have had the gumption — or the gravitas — to make such a direct and revelatory admission about the state of the nation’s indebtedness.
Greater challenges almost certainly lie ahead. China’s foreign reserves fell by a record $513bn in 2015 as capital fled the country in the wake of an unexpected, unsignalled Rmb devaluation. As China slowly lifts domestic capital controls in the years ahead, more money is likely to head toward the exit. Never has Zhou’s droll wit, pragmatism, placid demeanour and willingness to state that which his colleagues in Beijing dare not been more in need. China is lucky to have him. So are we all.