China’s markets and economy are moving ahead. Even though there is a new financial team, it doesn’t do much to fix the problems that make the economy look like a sinker. That’s according to Daniel Moss, Bloomberg analyst.

Management is changing hands for the $17 trillion economy. After the 20th Communist Party Congress, People’s Bank of China Governor Yi Gang, Vice Premier Liu He and banking regulator Guo Shuqing left the Party’s leadership group. 

People’s Bank of China (PBOC) Party Secretary Guo Yin Yong, a former PBOC deputy governor and vice party chief in Beijing, and Yi Huiman, the securities regulator head, are contenders for the top job at the central bank. 

These new banking leaders would face a sagging economy with no signs of optimism.

This year, the official goal for growth is 5.5%, but the reality would lag far behind. Even though GDP data released earlier this week showed a slight overall increase, consumer spending dragged down, and unemployment went up. This year, the benchmark stock index is down more than a quarter, and on Tuesday, October 25, the yuan hit its lowest level since 2007. 

The market also shows strong signals from the Party Congress conclusion, with Chinese leader Xi Jinping securing his unprecedented third term as Party chief. 

What would await the successor of economic planners Gang, Guo and Liu He is challenging. 

After the party convention ended on Monday, October 24, the markets lost almost $450 billion dollars in value. People didn’t like the way things were. Unease about China moving toward one-man rule, which was reaffirmed at the conclave, caused the country to fall apart. Beijing no longer has a collective leadership and has become even more authoritarian.

It comes with the inherent nature of decision-making at China’s central bank. The central bank has never been independent compared to its peers in the U.S. or E.U., and will probably be further worsened by Xi Jinping’s consolidation of personal power. Forward guidance would not be encouraged in this environment.

Zero-COVID policy is another big obstacle. The strict Zero-COVID plan, which shut down huge urban centers to limit cases, is China’s biggest short-to-medium term burden. There’s little China’s central bank governor Yi Gang or his successor can’t do about a policy that comes from Xi.

What’s the point of a bigger economic easing if nobody’s spending? Zero-COVID weakened the housing market. Developers are cash-strapped and late on critical projects. Disgruntled borrowers have halted mortgage payments in many provinces. 

Besides, major policy changes rarely occur early in a monetary chief’s tenure. For example, former Federal Reserve chairman Ben Bernanke’s efforts to drastically loosen policy and pull out the brakes to confront the 2008 crisis began slowly. It goes with Alan Greenspan’s policy of quarter-point nudges higher in the benchmark rate at every meeting. European Central Bank president Mario Draghi held his role for almost a year before launching a full-fledged campaign to settle the euro debt issue. The only exception is Bank of Japan Governor Haruhiko Kuroda. He expanded stimulus at his first chance in 2013.

So we might hope for any real change to China’s banking policy any time soon.

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