Wednesday, September 22, 2004
(This week, Zhou Xiaochuan, governor of PBOC attended the restructuring ceremony for the China Construction Bank, but not Liu Mingkang, the head of the China Banking Regulatory Committee) I think Zhou's attendance but not Liu at this week's ceremony should not be read into too much. After all, everyone knew that Liu is slated to leave, and Shang Fulin is currently receiving training at the Central Party School, so Zhou is standing in. However, the earlier events you mentioned, the PBOC announcements on investment funds and on banking restructuring, are significant.
When the CBRC was formed, although the general division of labor was known, there was considerable grey area. For example, who would be in charge of restructuring the Big Four banks? Is this an issue of monetary policy or an issue of financial regulation? Over time, the PBOC has skillfully expanded their jurisdiction over this grey area such that its mission now includes all monetary policy, as well as other policies vital to the financial stability of China. Meanwhile, the CBRC's mission is increasingly confined to monitoring financial institutions to make sure they comply with existing financial regulations and laws. So, over time, PBOC has staked the role of a policy innovator, while CBRC took on the role of a policy enforcer. The memorandum of understanding reached between the CBRC, CSRC, and CIRC supports this point (this is on the CBRC website). Although the PBOC was not party to this memorandum, this document gave CBRC the mission "to make regulations and methods pertaining to the monitoring of financial institutions." Just monitoring regulations, not general financial regulations. I think Zhou Xiaochuan's greater political clout and connections in the capital certainly has much to do with this.
On the April crackdown, there might be elements of elite politics playing into this. Essentially, though a technocrat, Zhou has much better ties with the Jiang faction than Liu, who, along with CBRC party secretary Yan Haiwang, has much closer ties with Wen. Throughout much of last fall and this spring, Zhou toed a softer line on monetary policy than Wen did. Wen was perhaps frustrated with Zhou's soft stance and thus ordered the CBRC, which he could rely on, to carry out the crackdown.