BEIJING – A U.S.-trained economist was appointed Monday to succeed the longtime governor of China's central bank, Zhou Xiaochuan, at a time when the ruling Communist Party is trying to reduce financial risks and surging debt.
The elevation of Yi Gang, a two-decade veteran of the central bank, to head the People's Bank of China was in a slate of promotions approved by China's ceremonial legislature of finance and economic officials as President Xi Jinping tightens control over government.
Also Monday, the National People's Congress endorsed the appointment of Liu He, Xi's economic adviser, to a post as vice premier, where he is expected to oversee economic reform.
The party is under pressure to control surging debt, defuse mounting trade tensions with Washington and Europe and make the cooling, state-dominated economy more productive. It has promised to open more industries to private and foreign competition but business groups and reform advocates complain Beijing is moving too slowly.
Monday's promotions give unusual prominence to U.S.-trained figures. Yi received his Ph.D. in economics from the University of Illinois, while Liu has a master's degree in public administration from Harvard University's Kennedy School of Government.
At the central bank, Yi's potential tasks include making interest rates and the exchange rate of China's tightly controlled yuan more market-oriented and improving financial regulation, according to Larry Hu of Macquarie Capital.
"China is facing new challenges and the room for growth is smaller," said Hu in a report. "Key is to unleash productivity by reforming the system, albeit containing risks in the process. It's much easier said than done."
The NPC endorsed the appointment of He Lifeng to a new term as chairman of the Cabinet's planning agency, the National Development and Reform Commission, and of Zhong Shan to a second term as commerce minister. Liu Kun was named finance minister.
Yi, 60, is well known to foreign investors and regulators as head of China's foreign exchange regulator. He already was overseeing efforts to make the mechanism that sets the yuan's exchange rate more flexible.
Before joining the People's Bank in 1997, Yi also taught at Indiana University. He also has a degree in business administration from Hamline University in Minnesota.
"Highly regarded in the international circles and seen as a pragmatic reformist, Yi Gang's appointment is set to ensure policy continuity and a smooth transition," said Mizuho Bank in a report.
Zhou, who is retiring after a record 15 years in the post, is the most prominent Chinese figure in global finance.
At 70, he is well beyond official retirement age but stayed on following the 2012 handover of power to a new generation of leaders under Xi in what was seen as an effort to reassure companies and financial markets of stability.
China's surging debt prompted international ratings agencies to cut its credit rating last year. The ruling party has declared controlling financial risk a priority this year.
Zhou warned in October that rising debt could have a "severe impact" on the economy but said last week regulators believed they had debt under control.
The central bank governor's formal powers are limited despite the post's high profile. Unlike central banks of other major economies, the People's Bank doesn't make monetary policy. Instead, its mission is to carry out policy made by an official body the identity of whose members is secret.
The People's Bank is widely seen as an advocate of conventional, market-oriented economics.
The bank "acts more like an advisor and operator, but not a maker, of monetary policy," said Hu of Macquarie Capital.