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 President Xi Jinping is considering replacing Zhou, the paper
reported, quoting officials with knowledge of the plans. (http://on.wsj.com/1uZtmyj)
The top contender to head the People's Bank of China (PBOC) is Guo
Shuqing, a former banker and securities regulator who is currently
governor of eastern Shandong province, the paper said.
Xi wants more allies in top government, military and Communist Party
positions, and personnel changes were expected around a major party
meeting next month, the newspaper said.
It added that no final decision has been made about the central bank
post.
In a statement to the Wall Street Journal, the PBOC said Zhou, 66,
would not be stepping down soon.
When asked by Reuters on Thursday whether Zhou was leaving the
central bank, the PBOC said: "There is no such thing." In response,
a spokeswoman for Dow Jones & Co., which publishes the Wall Street
Journal, said it stood by its story.
Zhou, who has led the central bank for the world's second-largest
economy since 2002, has been the architect of broad financial
reforms that have spawned fledgling capital markets, liberalized
some interest rates and broken the peg between China's yuan and the
U.S. dollar.
Christian Lundblad, professor of finance at the University of North
Carolina at Chapel Hill, said if Zhou left it would increase
uncertainty about whether China wanted to slow the pace of reforms
designed to open the economy.
"If this means they are going to be moving away from that in the
face of concerns about a slowdown (in economic growth), I'm
disappointed," he said.
Zhou was reappointed as the PBOC chief in March 2013, although he
had already reached the normal retirement age of 65 for
cabinet-ranked Chinese officials.
ECONOMY STUMBLES
China's economy has stumbled in recent months and is at risk of
falling short of the government's 7.5 percent growth target, raising
investor expectations that policymakers would further loosen fiscal
and monetary policy to stoke growth.
However, senior leaders, including Premier Li Keqiang, have publicly
ruled out any dramatic policy easing, saying China cannot always
depend on easy credit to lift its economy. Instead, he said
authorities would only make "targeted" adjustments in the economy as
needed.
The central bank, which unlike its peers in the developed world does
not have autonomy over monetary policy, has refrained from steering
public expectations about its next move.
"We do not think a change in leadership at the central bank would
suggest anything about a switch in the orientation of macro-economic
or monetary policy," Nicholas Consonery, director for Asia at the
Eurasia Group, said in a note.
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"If anything the rumors circulating about sharp divisions over
monetary policy more reflect the government's inability to manage
its own message than about Zhou's retirement."
A trained engineer, Zhou has been known for close ties to Western
officials, and has been the object of ire from conservatives within
the Communist Party.
Talk that he was set to retire and would be replaced by Guo, the
former head of China's securities regulator, has been circulating in
Beijing for weeks. When asked by Reuters, the central bank and a
person close to Guo have denied the rumors.
When the news broke in March 2013 that Zhou would not be retiring,
financial markets took it as a sign China was serious about pushing
through sweeping reforms. But more than a year later, a handful of
anticipated changes have yet to materialize.
An insurance system for deposits that is seen as a precursor for a
further liberalization of interest rates has yet to be unveiled.
Senior central bank officials have said repeatedly that one would be
rolled out as soon as possible.
The lack of a deposit insurance system has, in turn, clouded the
timetable for freeing interest rates. To protect bank margins, China
imposes a ceiling on the rates that banks pay savers. Analysts say
that artificially lowers credit costs and encourages wasteful
investment.
Zhou said in March that China would liberalize deposit rates in one
to two years, but a month later, he was publicly contradicted by his
deputy, who said China wasn't ready.
By July, Zhou was further dialing back expectations. He said whether
China can meet its "internal timetable" on rates liberalization
depended on external conditions, and that he believed it could be
done within two years.
(Reporting by Gui Qing Kohn and Jason Subler in Beijing; Writing by
Rodney Joyce and Tim Ahmann; Editing by Jeffrey Benkoe, Cynthia
Osterman & Kim Coghill)
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