China Plans to Appoint a New Central-Bank Governor

Pan is likely to first be appointed as the bank’s Communist Party chief before he is installed as the governor, which requires appointment by the government, they said.

Pan, 59 years old, has had a long career in China’s financial sector. He did his postdoctoral research at Cambridge University and was a research fellow at Harvard University. He joined the PBOC in 2012 as deputy governor, and in 2015 became the head of the State Administration of Foreign Exchange.

Pan heads the Leading Group of Internet Financial Risks Remediation, whose tasks include clamping down on the use of cryptocurrency and regulating financial-technology companies in China.

The surprise appointment only came to a conclusion last week, the people said. Previously, Zhu Hexin, chairman of the Chinese financial conglomerate Citic Group, was the leading candidate to succeed the U.S.-educated economist Yi Gang as governor of the PBOC, with He Lifeng, a longtime associate of Chinese leader Xi Jinping, to be appointed concurrently as the PBOC’s party chief, The Wall Street Journal has reported.

The leaders eventually leaned toward Pan for his international background and expectations that he would have an easier time working with global central-bank governors, the people said.

Spokespeople for the People’s Bank of China didn’t immediately respond to a faxed request for comment sent on Saturday in Beijing.

China’s economy, grappling with slowing growth, soaring debt levels and an aging population, is at a critical juncture. The appointment of Pan, an economist with extensive experience, appears to signal a cautious stance from Beijing, as officials turn their attention toward stabilizing the economy after years of Covid-19 restrictions.

The changing of the guard at the central bank is part of a broader reshuffling of the financial system as Xi shapes an economic team that now mostly consists of trusted allies. China has set up a financial watchdog run by the Communist Party, called the Central Financial Commission, as part of a broad reorganization of governing bodies set to give the ruling party direct control and supervision over financial affairs.

The creation of the Central Financial Commission has been seen as a sign that the Chinese government is becoming more concerned about the risks of financial instability. The Chinese leadership is determined to avoid another financial crisis and is giving the Communist Party direct control over the financial system to achieve this goal. In recent years, the PBOC has been increasingly reminded by the Chinese leadership that the central bank, akin to all government divisions, answers to the party. This lack of independence has arguably diminished the bank’s usefulness for investors and economists as a guide on interest-rate policy.

Write to Keith Zhai at keith.zhai@wsj.com