Less than a week after naming Yi Gang as the governor of China’s central bank, leaders in Beijing have unexpectedly put a different man above him as the Communist Party secretary at the central bank, five people similar with the decision said on Sunday.
Guo Shuqing, already the country’s top banking and insurance regulator, has been selected as the new party secretary, said the five people who were not authorized to discuss the decision publicly. While Mr. Guo and Mr. Yi both have reputations as avid financial reformers who want to address China’s addiction to debt-fueled economic growth, Mr. Guo has much better political connections.
By adding the role of party secretary of the central bank, Mr. Guo emerges with even broader responsibilities over the country’s financial system. Mr. Guo has already run the China Banking Regulatory Commission for the past year, and a week ago, the National People’s Congress voted to fold the country’s insurance regulatory agency into the commission.
Mr. Yi’s predecessor, Zhou Xiaochuan, has been the central bank’s governor and also its party secretary for the past 16 years. In China’s system, the governor is responsible for running the central bank, but the party secretary has the final say on the strategic direction.
In splitting the two jobs, China is essentially acting like some big American corporations that have at times separated the position of chairman of the board from the job of the chief executive who actually runs the company. General Motors has repeatedly tried this approach, most recently when Mary T. Barra became the chief executive in 2014 but did not add the role of chairman until 2016.
In that analogy, Mr. Guo will essentially become the chairman of China’s central bank while Mr. Yi, as governor, will act like a chief executive. Both men will answer to Liu He, a longtime economic adviser to President Xi Jinping who advocates a greater reliance on market forces in the Chinese economy.
Mr. Liu joined the Politburo last October and last Monday became China’s vice premier for financial and industrial policy.
Jan Svejnar, the director of the Center on Global Economic Governance at Columbia University, said that China’s rapid shake-up in top financial regulatory jobs indicated that the country’s leaders were determined to act on weaknesses in the financial system. “They are interested because they want to contain any problems that will arise,” he said.
Word of Mr. Guo’s new role spread rapidly on Sunday morning at the China Development Forum, one of the country’s premier annual gatherings for economic policy experts from around the world. The People’s Bank of China declined to provide any immediate comment.
Mr. Yi gave a speech and took questions from the audience at the conference in the early afternoon but did not mention Mr. Guo. In his speech, Mr. Yi said that China would act resolutely against anyone who engaged in illegal financial activities without a license — a reference to a continuing campaign against so-called shadow banking.
China said last November that it would open its financial sector to greater international competition, in an unsuccessful move to tamp down President Trump’s demands for a narrowing of the United States trade deficit with China. Mr. Yi, explaining himself clearly in terms that frequently hinted at his background as an economics professor, said that the opening would continue.
“The more a sector opens, the more competitive it will become,” he said.
After a quarter-century of rapid growth, the Chinese economy stalled momentarily at the start of 2009 during the global financial crisis. China’s leaders responded by flooding the economy with credit, in a massive monetary stimulus program that exceeded those of the Federal Reserve and the European Central Bank in terms of the increase in broadly measured money supply.
That stimulus program allowed the Chinese economy to resume rapid growth almost immediately. But China has been adding debt ever since, building a national grid of high-speed train lines and forests of city skyscrapers as leaders have been reluctant to let growth slow.
Two credit rating agencies, Standard & Poor’s and Moody’s, downgraded China’s sovereign debt last year on concerns about the buildup of domestic debt. Chinese officials have publicly acknowledged that they need to address rising leverage but contend that the country’s minimal foreign debt, strong economic growth and increasingly stringent financial regulation mean that they have ample time to defuse the problem without a sharp slowdown in economic growth.
Mr. Guo has previously served as the chairman of the China Securities Regulatory Commission and as the governor of Shandong Province — two posts that gave him considerable clout and status in the Communist Party, which oversees all agencies of the government.
By contrast, Mr. Yi is a former economics professor in Indiana who then taught in Beijing and spent the past two decades working his way up the ranks of the civil service at the central bank.
Angel Gurría, the secretary general of the Paris-based Organization for Economic Cooperation and Development, said that the clear trend in recent weeks in China had been for the top jobs to be filled by technocrats with extensive financial expertise and with strong political credentials. He also cited Liu Kun, a longtime budget expert who became China’s finance minister last Monday.
“The trend is very clear — you strengthen the political level with people who are very knowledgeable in their expertise,” Mr. Gurría said.
Other experts in Chinese policymaking said that the real contrast right now was between Liu He and his predecessor as vice premier for financial and industrial policy, Ma Kai. Mr. Ma was an influential advocate of the country’s state-owned enterprises and was wary of policy changes that might result in bankruptcies at these enterprises leading to job losses.
That concern for state-owned enterprises comes to have faded as debt has become a bigger worry. But while Mr. Xi, the president, and Premier Li Keqiang and other leaders have all talked lately about addressing debt, the question remains whether they will keep tightening the brakes on China’s credit system if the economy slows noticeably this year.
One of the dilemmas for China’s leaders in choosing a successor for Mr. Zhou at the central bank was that whoever holds the title of governor is expected these days to travel extensively to meetings with other central bank governors to coordinate policy. That makes the governor somewhat less able to participate in the continuous debate in Beijing over exactly which domestic financial policies to adopt.
Mr. Yi speaks excellent English and will now play the role of China’s monetary policy statesman to the world. But adding Mr. Guo as party secretary means that an influential and strongly pro-reform voice will represent the central bank in interagency debates in Beijing, even when Mr. Yi is out of the country.