China’s post-COVID economic recovery is a high priority, and the job of navigating it has just been handed to Pan Gongsheng. He’s been named the central bank’s Communist Party Chief and could soon be named bank governor as well.
Pan’s appointment came as a surprise to many because he is not considered a Xi Jinping loyalist, and if he’s named governor as well, it’ll mean China is returning to a consolidated level of power in the central bank’s top job. But it doesn’t mean Pan will forge a fresh path. Instead, he is considered a respected technocrat within the CCP and is known as a risk-averse banker who supports tightening regulations, not monetary policy.
Pan’s appointment comes as China’s economy — still reeling from the wreckage of zero-COVID – is facing significant threats to its financial security, from lagging growth and consumer spending to $9 trillion of local government debt to the downturn in the property sector, which accounts for roughly 25% of all its economic activity.
And that’s just domestically. Foreign direct investment has fallen in response to concerns about doing business in China. Raids on US consulting firms in April raised fears about the safety of foreign employees. Shortly after, China broadened the reach of its already sweeping counterespionage law, adding to existing worries about data security.
Unlike in the US and the EU, which have dealt with post-COVID economic woes by introducing continuous rate hikes, China has been hesitant to employ drastic monetary policies. Instead, it is prioritizing stability and security, avoiding drastic monetary policy and unflinchingly curtailing the private sector when it is seen as a threat. But prioritizing short-term stability could come at the expense of long-term growth, which is raising skepticism that China’s leadership has a long-term plan for economic recovery.
