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2017-02-24 09:15:15
China Names Guo Shuqing, a Rapid-Fire Regulator, to Oversee Troubled Banks

SHANGHAI — Less than four years ago, Guo Shuqing seemed like yet another economic reformer who had tried to bring market-oriented changes to China’s fraud-ridden and heavily politicized financial system only to see his career sidetracked.

During just 17 months as the chairman of China’s top stock market regulator, he issued 80 major directives, trying to stop chronic insider trading, curb market manipulation and remove barriers for foreign investors, earning him the occasional nickname Whirlwind Guo. Then just as suddenly, he was gone, sent south to coastal Shandong Province as the acting governor.

Now Mr. Guo has returned to Beijing to tackle an even bigger problem: the murky, debt-laden Chinese banking system.

On Friday the state news media said that he was named chairman of the China Banking Regulatory Commission, succeeding Shang Fulin, who had reached the mandatory retirement age of 65. The Chinese commercial news media widely reported and filmed Mr. Guo’s arrival at that agency on Friday morning, where he was greeted by Mr. Shang. Mr. Guo’s assistants declined interview requests on Wednesday and Thursday but said on Friday that he no longer worked in Shandong.

Mr. Guo’s appointment offers a sign that China is taking a financial overhaul seriously, though it was made among other moves that could send mixed signals about that commitment. The stakes are high: Experts widely believe that China’s weak financial system is holding back its economy, the world’s second largest.

China is trying to broaden its economy beyond its traditional dependence on manufacturing, but its financial system still operates on a state-directed lend-and-spend model that has generated alarming amounts of debt even as it hinders money from reaching entrepreneurs.

Bad loans are widely expected to soar as the economy continues to slow. At the same time, banks have become increasingly dependent on raising money through often speculative investment products that they keep off their balance sheets, making it hard to assess the risks they pose to financial stability.

Yet other appointments suggested a commitment to the status quo. The state news media on Friday said the No. 2 officials at the National Development and Reform Commission, China’s top economic planning body, and the Ministry of Commerce, which oversees trade, among other things, were named to succeed their retiring bosses, who were also 65.

The choice to run the National Development and Reform Commission, He Lifeng, served from 2009 to 2012 as the deputy secretary of Tianjin. He helped oversee the construction of a forest of office and residential skyscrapers at the city’s fringes that have barely been occupied and have become one of the many symbols of China’s dependence on investment-led growth that is often wasteful.

China could signal its commitment to a financial overhaul with any changes at the top of its central bank, the People’s Bank of China. Zhou Xiaochuan, widely considered a reformist voice in China, is more than two years past retirement age, so predicting his departure has become a popular parlor game in China’s financial world. Appointing Yi Gang, Mr. Zhou’s deputy, to the top could be seen as an endorsement of Mr. Zhou’s gentle advocacy of reform, though elevating Mr. Yi could also reflect Beijing’s lack of interest in rocking the boat.

The shuffle comes at a delicate time for China’s financial leadership. Its competence was called into question in 2015, when conflicting signals contributed to a stock market crash and increased government controls. Experts say either the banking commission or the central bank could get added responsibilities should China try to streamline financial regulation.

Mr. Guo faces an immediate challenge in reasserting the authority of the banking commission, also known as the C.B.R.C. Like the Federal Reserve in the United States, the Chinese central bank has clawed away from banking regulators a considerable part of their authority to oversee whether banks are lending prudently. The Chinese central bank has also played an increasingly critical role in fighting money laundering and capital flight.

“An appointment as the head of the C.B.R.C. today is not as significant as the same appointment five years ago because the People’s Bank of China has taken over many of the regulatory oversight tasks,” said Victor Shih, a specialist in Chinese finance and factional politics at the University of California at San Diego.

China could tip its hand on that matter after the annual gathering of the National People’s Congress, its top lawmaking body, which begins March 5. It may then hold a top-level financial work conference in April on reorganization that was originally planned for January or February.

Some experts viewed the recall of Mr. Guo to Beijing as a sign that policy changes are coming. “It’s probably a signal for fundamental reforms in China’s financial regulatory framework,” said Zhu Ning, a Tsinghua University economist.

Mr. Guo could be in a good position to argue that the China Banking Regulatory Commission should have greater authority.

He missed the spectacular plunge of the Chinese stock markets in 2015, the blame for which fell in part on his successor.

In a country where officials tend to either have political experience in running provinces, or economic and financial experience in working at regulatory agencies and state-controlled banks in Beijing, Mr. Guo is a rare example of someone who has done both. He served as a deputy governor of impoverished Guizhou Province in the late 1990s, then as director of the State Administration of Foreign Exchange. He then became the chairman of the China Construction Bank, one of China’s four main banks, from 2005 until he took the top job at the China Securities Regulatory Commission, the top stock market regulator, in late 2011.

Some political analysts had foreseen a different track for Mr. Guo, who rose to become the governor of Shandong Province several months after he arrived and then proceeded to earn a reputation for cleaning up the financial sector there. Political analysts had said that Mr. Guo might stay in Shandong and be promoted to Communist Party secretary, the top job, above even the governor.

Previous party secretaries of Shandong, a large and economically important province, have sometimes joined the Politburo, a top Communist Party leadership group, and gone on to become vice premiers with broad economic powers. Vice premiers are much more important in China than the governor of the central bank, because the central bank has no political independence in China and answers to the cabinet.

Time may be running out for Mr. Guo, who will turn 61 this year. The ministers who run the central bank and the main regulatory commissions typically retire at 65, making it harder for Mr. Guo to do a stint at the banking commission and then move on to another senior position.