2015-08-15ft.com

The People's Bank of China's announcement on Tuesday that it had devalued the renminbi against the dollar by nearly 2 per cent overnight -- the biggest fall since 1994 -- caught markets by surprise and raised the prospect of a so-called currency war. Mr Zhou presented the move internally to President Xi Jinping as a matter of national interest, necessary to boost the economy at a time when growth is slowing sharply. To the outside world, the PBOC portrayed the devaluation as a step toward a more market-oriented and freely tradable Chinese currency. He hoped this would prevent competitive devaluations while also convincing the International Monetary Fund to include the renminbi in a basket of reserve currencies.

The ability to make his reforms palatable to both global markets and Communist party stalwarts marks him as a brilliant technocrat at the height of his political powers, even as he prepares to retire. Although he is often referred to as China's Alan Greenspan, the position of central bank governor is far less influential in the People's Republic than in the US. Big decisions such as raising or lowering interest rates are decided by party leaders. But, as with most posts, it is the person who bestows power on the position rather than the other way round.

Mr Zhou, like Mr Xi and many other senior leaders, is a "princeling", as the children of senior party members are known, and this gives him influence that goes well beyond his official title. He was born in 1948, one year before the establishment of the People's Republic. His father was an early member of the Communist party and its secret service in the second world war, and later vice-minister of machinery.

... "It is clear he sometimes pisses people off, including President Xi," says Christopher Johnson, a former senior China analyst at the CIA now at the Center for Strategic and International Studies in Washington. "But he has never been so important or so powerful. He is going to retire soon so has nothing to lose and he is absolutely determined to achieve the market reforms he has committed most of his life to."



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