By his early twenties, Pan Gongsheng’s ambition had already propelled him from a farming village in eastern China to a prestigious Beijing graduate school, where he translated books from English — despite never having been abroad.
“Among our classmates, we all thought Pan was impressive because he didn’t have a great college degree,” remembers Liu Xin, a Renmin University professor who studied with China’s new central banker in the 1980s. “But he had English skills outstanding enough to translate a book. We all thought it wasn’t an easy feat.”
Pan has since made a career out of exceeding expectations. In the 21st century’s first decade, as a state bank executive he twice captained initial public offerings that set a world record, boosting global investor confidence in China and earning himself a reputation as a “financial rock star.”
He later managed the nation’s $3 trillion pile of foreign reserves and helped oversee efforts to rein in debt-laden property firms — designing the “three red lines” policy that fueled a wave of financial distress at developers including China Evergrande Group.
Then his career seemed to near an end. At a major leadership congress last year the technocrat was removed from the Communist Party’s elite Central Committee, an inner web that’s included every central bank governor since at least the 1990s. Analysts took that as a sign the bookish Pan, who has few known political connections, had been sidelined during President Xi Jinping’s reshuffle.
This month, he proved them wrong. Pan, now 60, was appointed governor of the People’s Bank of China, uniting that role with the party chief title for the first time since Zhou Xiaochuan held both in 2018. He’s now firmly in charge of the institution tasked with steering the world’s second-largest economy through a growth slowdown and safeguarding the $60 trillion domestic financial system — although his lack of Central Committee membership could diminish his political sway.
Pan’s mission comes as China confronts fears its growth miracle is ending. The nation is teetering on the brink of deflation, its vast property market is shrinking and business confidence is waning. All that’s happening as the population shrinks and geopolitical tensions with top trade partners sizzle.
Three or six months ago Beijing’s rumor mill would tell you maybe he was not the frontrunner
“Three or six months ago Beijing’s rumor mill would tell you maybe he was not the frontrunner,” said Fred Hu, founder of Chinese investment firm Primavera Capital, who worked with Pan during the IPOs. “But in the end, the top leadership made the right decision to pick a guy who clearly has all the qualifications at a critical juncture for our country.”
He added: “Pan has the knowledge, expertise, skillset, experience, and proven track record to do that job.”
Read more on Pan Gongsheng and the PBOC:
- China Central Bank Governor Comes With Hawkish Track Record
- China Names Pan as Central Bank Governor to Revive Economy
- Yi Gang Ends PBOC Governor Tenure Marked by Restrained Policy
Dark Horse
Pan was born to farmers in a remote nook of Anhui province, in eastern China, according to Hu. After studying and teaching economics at a junior college in neighboring Zhejiang, in 1987 he enrolled at Renmin University, whose alumni include China’s former economic czar, Liu He, and current ambassador to the US, Xie Feng.
After graduating in 1993 with a PhD in economics, he landed a job in the Industrial & Commercial Bank of China’s real estate credit department. Pan also joined another organization that year: the China Democratic League, one of eight non-Communist political groups that work alongside the ruling party. Known for attracting intellectuals, mostly drawn from the education, cultural and science sectors, Pan’s memberships suggests a desire to connect with like-minded academics over networking in the ruling party.
By 1999, that had seemingly shifted. Pan signed up to the Communist Party, considered a prerequisite for any big career in the state sector, and began to climb the ladder. By 2006, he was playing a leading role in restructuring the state lender and taking it public in Hong Kong and Shanghai for nearly $22 billion — then a world record.
During that period, Pan was a “task master,” says Hu, a former Greater China head of Goldman Sachs Group Inc., who worked with him at ICBC. The trained economist took daily logs of investment bankers’ office hours and pored over the ICBC deal prospectus picking out spelling errors, according to media reports.
His dedication paid off: Four years later, he helped the Agricultural Bank of China top ICBC’s offering, nudging it over the $22 billion mark — another world record for a public offering. The successful IPOs, and the structural reforms they required to reassure global investors, showcased Pan’s flair for navigating international markets.
More than that, the deals boosted global confidence in China’s banking sector, helping it stand up to global competition in the critical test years after China joined the World Trade Organization in 2001.
As China’s economy liberalized and global connections deepened, Pan broadened his own horizons. In 2011, he spent a semester at the Harvard Kennedy School as a New World Fellow, a program designed to encourage collaboration between the US and Chinese leaders. Anthony Saich, an international affairs professor at Harvard University who oversaw the fellowship during Pan’s time, said he was smart, engaged and “very interested in questions related to global affairs and finance.”
“One thing I was concerned about with Yi Gang stepping down was there would be limited global expertise and knowledge of the financial world outside of China” in the PBOC, Saich said. “Pan’s appointment should address that concern.”
Pan’s Policy
Pan’s return from America brought more success. In 2012, he joined the PBOC as a deputy governor, and then in 2016 became head of the State Administration of Foreign Exchange, the nation’s foreign exchange regulator. But those roles came with some of China’s thorniest economic issues.
His first year at SAFE brought a major crisis. The central bank’s shock devaluation of the yuan in 2015, as a result of exchange rate fixing reform, had caused panic in the markets and heavy outflows. Pan responded by imposing capital controls, a move that defied China’s previous years of financial opening and risked isolating the domestic economy, but has since been credited with stabilizing crucial reserves.
Pan’s next big challenge recalled his early years at ICBC, as he became a dominant player in the campaign to rein in highly indebted property developers. For decades, Chinese developers had borrowed aggressively as housing demand boomed, turning the sector into a major pillar of the economy, even though speculation surged and prices soared to unfordable levels.
Once again, Pan pushed a tough stance set by senior officials, in 2020 designing the so-called “three red lines” policy, according to people familiar with the matter. Those stringent curbs on developers’ financing contributed to the default of firms including China Evergrande Group, and a persistent slump of the property industry that’s still weighing on the economy.
Three or six months ago Beijing’s rumor mill would tell you maybe he was not the frontrunner
During that period, Pan met Evergrande’s chairman Hui Ka Yan at least twice, according to people familiar with the matter, as he tried to prevent the developer’s woes from bleeding across the financial system.
As things became more critical in 2022, Pan promoted a 16-point plan of financial support measures, showing he’s flexible at executing a constantly shifting policy stance set by senior officials. Those policies have yet to turn around the weakening market. An economic policy meeting of Xi’s top decision-making Politburo this month suggests that more decisive easing measures are coming, including from the PBOC.
With experiences contending with some of the toughest challenges in the economy under his belt, Pan will now be relied on to implement strategies identified by senior officials to address critical issues, as the world looks to China to reinvigorate the economic growth that powers global markets.
“The choice of Pan to lead the PBOC reflects his ability to address problems identified by top leaders without overstepping political boundaries,” said Neil Thomas, a fellow at the Asia Society Policy Institute’s Center for China Analysis.
“Pan is a proven problem-solver and Xi has more and more financial problems that he needs to solve.”
--With assistance from John Liu, Yujing Liu, Zheng Li and Rebecca Choong Wilkins.