New PBOC Research Head Is Rising Star in Field
Comment of the Day

February 24 2014

Commentary by Eoin Treacy

New PBOC Research Head Is Rising Star in Field

This is an interesting article from CaixinOnline highlighting some new additions to the PBoC’s research team. Here is a section: 

Shortly before Lu's appointment, the central bank named Ma Jun, chief China economist at Deutsche Bank AG, as its chief economist, a document seen by Caixin shows. Ma, 50, is considered one of the most bullish economists among analysts in China.

?Sources close to the situation said the two appointments were surprising in that the central bank often fills those positions by promoting insiders. Efforts have continued throughout recent years to bring in talents with more diversified backgrounds, but they were not always successful.

In 2009, for example, some central bankers wanted to invite Ha Jimin, then chief economist of investment bank China International Capital Corp., to head the bank's second department of monetary policy. The proposal fell through because of opposition, the sources say.

An attempt to make Goldman Sachs' ex-employee Fred Hu a deputy governor for the bank also failed, the sources said.

It remains an open question whether Lu's leadership can make the research bureau play a more significant role in deciding monetary policies, analysts say.

Compared with economists in Western central banks and international economic institutions such as the World Bank, research fellows in China's central bank have been largely reduced to a role of assisting their coworkers with policymaking, sources with knowledge of the situation say.

In practice, the research bureau can act on its own initiative and choose research topics, but it often needs to work on projects dictated by other departments, the sources say.

Eoin Treacy's view

Over the years subscribers have kindly forwarded a significant number of reports by Jun Ma, while we was at Deutsche Bank, which can be found in the archive. He was generally cautious of China from 2010 but adopted a more optimistic approach over the last year as valuations improved and the previous lows were approached.
The PBoC is treading a find path between reining in loan growth in the shadow banking sector while fostering growth in the consumer economy. What has become apparent over the last week is that it is not above using the currency as a policy tool, this time by allowing it to weaken somewhat. Considering the fact that the entire 1993 devaluation has now been unwound, the potential for significant additional appreciation looks limited. 


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