Ding Xuedong serves as the Party Secretary of the Social Security Fund Council, a heavyweight in the financial industry! Pan Gong is competent as Party Secretary of the Central Bank of China | Reform | Central Bank of China

Pan Gongsheng, who has been deeply involved in the stock reform and listing of two state-owned banks, and has been immersed in the wave of China's financial market reform and opening up, has ushered in a new mission with a career of 30 years.

On the afternoon of July 1st, the People's Bank of China held a leadership meeting. The relevant officials of the Central Organization Department announced the central decision: Comrade Pan Gongsheng will be appointed as the Secretary of the Party Committee of the People's Bank of China, and Comrade Guo Shuqing will be relieved of his position as Secretary of the Party Committee of the People's Bank of China and Comrade Yi Gang will be removed from his position as Deputy Secretary of the Party Committee of the People's Bank of China.

▲Pan Gongsheng Before the official announcement of the new party secretary of the People's Bank of China, Pan Gongsheng was not a popular candidate for speculation for a long time. Although his appointment was somewhat unexpected in terms of market speculation, it was reasonable in terms of his work history. Some analysts also predict that after becoming the party secretary, Pan Gongsheng is expected to become the governor of the central bank. If this is the case, the central bank will restore the party secretary and the governor to be the same person.

Looking back on Pan Gongsheng's career, he has accompanied China's financial system reform along the way, being both a witness and a witness. Whether it is the share reform and listing of Industrial and Commercial Bank of China and Agricultural Bank of China, or the market-oriented reform of the RMB exchange rate formation mechanism, the introduction of the deposit insurance system, the opening up of China's bond market, the reform of cross-border capital flow management, the regulation of real estate finance, and the exploration of Internet financial supervision Pan Gongsheng was deeply involved in it. Several interviewees revealed to reporters that Pan Gongsheng is very rigorous and meticulous in his approach to work, and he is hands-on in every aspect. He once compared the tortuous path of Dahang's stock reform and listing to the process of breaking through a cocoon and turning into a butterfly, while his own career was also a journey of stepping on the waves, facing numerous tests and challenges along the way.

For the head of the central bank of any country, their words and actions have always been the focus of attention in the economic and financial field. This position with huge traffic is both important and difficult. For the People's Bank of China, facing the challenging international environment and the arduous task of domestic reform, development, and stability, after Pan Gongsheng takes over, establishing a modern central banking system will be the main focus of his work.

In addition, on the afternoon of July 1st, officials from the Central Organization Department attended the cadre meeting of the National Social Security Fund Council and announced the latest personnel appointment, with Ding Xuedong serving as the Secretary of the Party Group of the National Social Security Fund Council. Ding Xuedong was transferred from the Executive Deputy Secretary General of the State Council to the Social Security Fund Council. At present, the members of the National Social Security Fund Council also include Chairman Liu Wei and Vice Chairmen Wang Wenling, Wu Jianli, and Jin Luo.

Pan Gongsheng's "Butterfly Transformation"

Pan Gongsheng, who is now 60 years old, graduated with a PhD in Economics from Renmin University of China in 1993 and joined Industrial and Commercial Bank of China. He grew from Deputy Director of the Real Estate Credit Department of ICBC to later Secretary of the ICBC Board of Directors. During his 15 years working at ICBC, he held key positions in various departments including the Planning and Finance Department, Human Resources Department, Shenzhen Branch, Joint Stock Reform Office, and Strategic Management and Investor Relations Department.

From 1997 to 1998, Pan Gongsheng went to the University of Cambridge in the UK as a visiting scholar. Shortly after returning to China from his studies, Pan Gongsheng successively served as the Director of the Planning and Finance Department and the Deputy General Manager of the Human Resources Department of ICBC.

Since then, his work has been preparing and laying the groundwork for ICBC's stock reform and listing. At the end of the last century, state-owned banks had high non-performing loan ratios. The first step in the stock reform of large banks was to strip off bad debts and inject capital to carry out financial restructuring of commercial banks.

In 2003, the major decision of the Central Committee of the Communist Party of China and the State Council on the reform of state-owned commercial banks was implemented; At the end of the same year, the People's Bank of China injected $79 billion into four state-owned banks by establishing the Central Huijin Company. This means that the stock reform process of state-owned banks has begun to take substantial action.

In June 2004, Pan Gongsheng was appointed as the General Manager of the Planning and Finance Department and Director of the Shareholding Reform Office of ICBC, becoming a frontline participant and main person in charge of ICBC's stock reform and listing. In October 2006, ICBC went public, becoming the first enterprise to achieve synchronous issuance, pricing, and listing of A-shares and H-shares.

Shortly after its successful listing, Pan Gongsheng, then Secretary of the Board and General Manager of Strategic Management and Investor Relations at ICBC, also organized ICBC to acquire a 20% stake in Standard Bank of South Africa, the largest bank in Africa, through mergers and acquisitions, becoming the largest shareholder of Standard Bank of South Africa. This acquisition is of great significance to ICBC. Jiang Jianqing, former chairman of ICBC, once commented, "ICBC's goal is to gradually transform from a leading local bank to an influential bank in Asia, laying a solid network foundation for ultimately becoming a global bank."

In the past two years, Pan Gongsheng has personally experienced many aspects of ICBC's IPO plan design, organizational implementation, financial restructuring, corporate governance, audit evaluation, and strategic investment attraction, and is known as the "operator" of ICBC's stock reform and listing. With this heavy practical experience, Pan Gongsheng was promoted to the position of Vice President of Agricultural Bank of China by Huoxian in 2008. His "parachute" goal was very clear - to promote the smooth listing of Agricultural Bank of China.

As the last state-owned large bank to go public through stock reform, Agricultural Bank of China was considered the most difficult to reform among large banks at that time. This is due to both the internal reasons why Agricultural Bank of China's business model was questioned and not understood by the outside world at that time, as well as the external unfavorable factors of the global financial crisis and the sluggish and turbulent capital market at that time.

"It's a bit more difficult than the Industrial and Commercial Bank of China's IPO, with greater market volatility," Pan Gongsheng said in a media interview after the successful listing of Agricultural Bank of China.

He once recalled that during the 2010 Agricultural Bank of China listing roadshow, he faced many difficult choices, and the global capital market experienced significant fluctuations. Investors generally lacked confidence, which brought great pressure to Agricultural Bank of China's listing. Meanwhile, the international public opinion environment is not very friendly. Faced with such a complex situation, Agricultural Bank of China even prepared to stop roadshows at one point.

However, as Jiang Jianqing, who is also involved in the reform and listing of state-owned banks, said, the shareholding system reform of China's state-owned banks can be seen as a "battle on the back" with no way out. Despite the widespread public concern at that time that Agricultural Bank of China would "break through" on its first day of listing, Pan Gongsheng repeatedly publicly and firmly responded that he would not "break through" and expressed confidence in the stock price performance.

In the end, in July 2010, Agricultural Bank of China overcame many difficulties and successfully went public, becoming the largest IPO in the world at that time. At this point, the stock reform and listing of China's large commercial banks have come to a perfect end.

In March 2012, Pan Gongsheng's book "The Great Bank's Butterfly Transformation - The Road to the Revival of China's Large Banks" was published and distributed. This book is regarded as the first true record of the stock reform process of China's large banks and won the Sun Yefang Financial Innovation Award in 2014. The material comes from his firsthand experience and practical insights in the entire process of financial restructuring, stock reform, and listing of Industrial and Commercial Bank of China and Agricultural Bank of China.

But the "butterfly transformation" was not only carried out by state-owned large banks, but also by the reform "operators" who participated in the stock reform and listing of large banks and overcame difficult challenges at that time, and Pan Gongsheng was one of them.

The valuable experience of two major stock market reforms and listings, especially the multiple roadshows led by Pan Gongsheng, has given him a more unique understanding of how to strengthen communication with the market in the face of doubts from international investors and market concerns. This also provides valuable experience for his "next stop" work after leaving Agricultural Bank of China.

His next stop is the People's Bank of China. He has been working here for 11 years, and from now on, he will continue to work here as a new helmsman.

Reform requires determination and strategy

"For those forces that attempted to short the renminbi, we had all dealt with each other a few years ago and were very familiar with each other. I think we should all remember vividly. We have the foundation, ability, and confidence to maintain the basic stability of the renminbi exchange rate at a reasonable and balanced level."

In October 2018, coinciding with multiple interest rate hikes by the Federal Reserve and the pressure on the Chinese yuan exchange rate, Pan Gongsheng, then Vice Governor of the Central Bank and Director of the State Administration of Foreign Exchange, arrogantly called for empty talk, leaving a deep impression on the market to this day.

The reform of the mechanism for the marketization of the RMB exchange rate has gone through several obstacles, and promoting the convertibility of capital accounts is more like a policy "walking on a tightrope". The external environment faced by Pan Gongsheng in charge of foreign exchange management is even more complex. The distinctive feature of Pan Gongsheng's promotion of foreign exchange market reform during his tenure was to maintain a focus on reform and artistic communication with the market.

As he himself once said, "Any form of reform, any country's reform, should not only have goals, but also strategies to achieve them; it should not only have determination, but also require reform strategies."

Looking back to the first half of 2011, Pan Gongsheng, who had just pushed Agricultural Bank of China to complete its IPO, was no longer as anxious as when preparing for the IPO. He went to study at the Kennedy School of Government Management at Harvard University in the United States for nearly half a year. Only about a year after returning to China, Pan Gongsheng was appointed as the Vice Governor of the Central Bank in June 2012, and for a period of time thereafter, he was in charge of departments such as the General Office, Financial Markets Department, and Financial Stability Bureau.

At the end of 2015, Pan Gongsheng began to concurrently serve as the Director of the State Administration of Foreign Exchange, which made him "take over" like he did when he went to the Agricultural Bank of China, with a sense of accepting orders in the face of danger. At that time, China's foreign exchange market was facing a huge impact in the first round since the "811 exchange rate reform". The expectation of RMB depreciation was unprecedentedly high, and official foreign exchange reserves recorded the highest decline in a single month. There were concerns about whether the market's foreign exchange reserves would fall short of the $3 trillion mark

At the beginning of taking office, facing negative expectations that continue to ferment in the market, a "shouting" style expectation guidance is necessary and useful. China Monetary Network has published two special commentator articles within a day, emphasizing that the RMB exchange rate has conditions to continue to remain stable and there is no basis for sustained depreciation. There is his overall arrangement behind this.

However, when the game between monetary authorities and the market intensifies, the former needs to both speak and act if they want to "control" the situation. In this context, the central bank has introduced multiple deterrent measures, including a 20% reserve requirement for forward foreign exchange purchases, comprehensive management of cross-border financing for enterprises, and increased crackdowns on underground banks. These measures will gradually take shape in the future as a macro prudential management and micro market supervision system for cross-border capital flows in China, which is the foundation and ability for the central bank to engage with the market. To this day, although the RMB exchange rate is facing depreciation pressure again, the mentality of the market and the central bank is much more calm compared to 8 years ago. The effectiveness of the market-oriented reform of the RMB exchange rate is evident to all.

In early June 2023, Pan Gongsheng gave a keynote speech at the 14th Lujiazui Forum, stating that after years of reform and development, China's foreign exchange market has gradually shown new characteristics in recent years: strong resilience in market operation, more mature market entities, more rational trading behavior, more use of exchange rate hedging tools, and a significant increase in the level of cross-border use of the renminbi have also significantly reduced exchange rate risk exposure. Moreover, foreign exchange market regulators are more calm, composed, and mature in the face of market changes.

"Over the years, we have accumulated a lot of experience in dealing with external shocks, and the macroeconomic prudential policy tools in the foreign exchange market have become more diverse. We have the confidence, conditions, and ability to maintain the stable operation of the foreign exchange market," he said.

New roles, new missions

Pan Gongsheng has long been in charge of the Financial Market Department of the People's Bank of China. As one of the core business departments of the People's Bank of China, the Financial Market Department undertakes multiple important responsibilities, including formulating plans for financial market reform, opening up, and development. Supervise and manage the interbank bond market, currency market, foreign exchange market, bill market, gold market, and related over-the-counter derivative products in the aforementioned markets. Draft basic rules for the company's credit bond market and its derivative product market. Undertake the specific work of planning and coordinating the implementation of important financial infrastructure construction and supervision. Coordinate Internet financial supervision and evaluate financial technology innovation business. Formulate and organize the implementation of macro credit guidance policies, and undertake the specific coordination work of structural financial policies such as small and micro enterprises, agriculture, rural areas, and science and technology innovation assigned by the State Council.

It is not difficult to see from these past resumes that Pan Gongsheng has long-term rich practical experience and profound understanding of how to better coordinate the development of the real economy and finance, as well as risk prevention in the financial system. This will provide valuable "wealth" for him to start his career as the head of the central bank.

For the head of the central bank of any country, their words and actions have always been the focus of attention in the economic and financial field. This position with huge traffic is both important and difficult. Under the multiple pursuit goals of stabilizing prices, supporting economic development, and preventing systemic financial risks, the game of multiple forces has made difficult policy choices a common occurrence. Former Federal Reserve Chairman Bernanke called for "courage to take action", while Bank of Japan's former governor, Yoshiaki Shirakawa, vividly likened the work of formulating monetary policy to "driving a car with a windshield shrouded in fog, a speedometer malfunctioning, and unfamiliar throttle and brake operation procedures!"

For China's central bank, facing the turbulent international environment and the arduous task of domestic reform, development, and stability, challenges will be endless. After taking office, establishing a modern central banking system will be the main focus of Pan Gongsheng's work during his tenure.

The modern central bank system has rich connotations, including improving the monetary policy system, maintaining currency stability and economic growth; It is also necessary to deepen the reform of the financial system and enhance the ability of financial services to serve the real economy; We need to strengthen the financial stability guarantee system and firmly guard against the bottom line of systemic risks. This is not only a perfect extension of the dual pillar regulatory framework of the central bank's monetary policy and macroprudential policy, but also an important component of promoting the modernization of the national governance system and governance capacity.

Guarding the people's money bags is the most fundamental and important task of the central bank, which cannot be achieved without precise grasp of monetary policy. The central bank has repeatedly emphasized that "China has the conditions to maintain a normal monetary policy for a long time, maintain positive interest rates, and maintain a normal, upward slope yield curve shape." How to improve the regulatory mechanism of monetary policy, especially by leveraging the dual functions of monetary policy in terms of quantity and structure, and accurately increasing support for key areas and weak links of the national economy, is the focus of the central bank's exploration and improvement work in recent years. After Pan Gongsheng takes office, this work will continue to deepen.

Finance is an industry with operational risks, and as the "lender of last resort", the central bank plays a leading role in preventing and resolving major financial risks. In recent years, in strengthening the overall coordination of financial work and preventing and resolving financial risks, the People's Bank of China has fulfilled the responsibilities of the Office of the State Council's Financial Commission, and has done a good job in setting major issues and supervising the implementation of agreed matters of the Financial Commission; Promote the construction of a long-term mechanism for financial stability, implement and improve the deposit insurance system, establish a financial stability guarantee fund, issue institutional documents to strengthen the supervision of financial holding companies and systemically important financial institutions, promote the formulation and revision of important laws and regulations such as the Financial Stability Law and the People's Bank of China Law, and strengthen the top-level design and overall coordination of the financial stability legal system

The law is fundamental, and the benefits lie in the long run. At present, a long-term mechanism for financial stability has been preliminarily established, with four beams and eight pillars guaranteed by the rule of law system. But firmly guarding the bottom line of preventing systemic financial risks not only requires the protection of the rule of law system, but also tests the political wisdom of practitioners.

From the experience of financial risk exposure and disposal in recent years, it can be seen that the outbreak of financial risks often begins with a crisis in a local individual institution. At this time, the disposal of risks requires more cooperation between the local branches of the financial regulatory department and the local government, which essentially involves how the central and local governments coordinate.

Although this year's State Council's institutional reform plan includes provisions to deepen the reform of the local financial regulatory system, emphasizing that "adhering to financial management is mainly a prerequisite for central authority", and there are currently relevant rules and regulations that provide operational guidance for resolving risks; However, the handling of many details in the practical process tests whether central and local departments can compromise and complement each other, which requires political wisdom and balanced art.

"Reform and development is an endless war." Many years ago, faced with the many thorny problems of state-owned large banks' stock reform and listing, Pan Gongsheng once overcame five hurdles and six generals, and expressed such a sigh. Today, many years later, after decades of cultivating financial reform, he is well prepared for the upcoming new journey. But looking at the position of head of central banks around the world, even after experiencing countless battles, there are still many challenges ahead.