People's Bank of China

Template:Short description Template:Use mdy dates Template:About Template:Infobox central bank Template:Infobox Chinese Template:Politics of China

The People's Bank of China (officially PBC<ref>Template:Cite web</ref> and unofficially PBOC<ref>Template:Cite news</ref>) is the central bank of the People's Republic of China.<ref name="BellFeng" /> It is responsible for carrying out monetary policy as determined by the PRC People's Bank Law and the PRC Commercial Bank Law.

The PBC was established in 1948 as the bank serving areas of mainland China under Chinese Communist Party (CCP) control and became China's sole central bank after the founding of the People's Republic of China in 1949. From 1969 to 1978, the PBC was demoted to a bureau of the Ministry of Finance. The PBC was extensively reformed during the 1990s, when its provincial and local branches were abolished, instead opening nine regional branches. In 2023, these reforms were reversed as when the regional branches were abolished and the provincial branches restored, and new arrangements essentially ended the PBC's longstanding role in financial supervision.

The PBC is the 25th-ranked of 26 ministerial-level departments of the State Council. The PBC lacks central bank independence and is required to implement the policies of the Chinese Communist Party (CCP) under the direction of the party's Central Financial Commission. The PBC is led by a governor assisted by several deputy governors and a CCP Committee Secretary. Since 2023, the roles of governor and CCP Committee Secretary have been held jointly by Pan Gongsheng.

History

Mao era

The bank was established on December 1, 1948, based on the consolidation of the Huabei Bank, the Beihai Bank and Northwestern Farmers' Bank.<ref name=":32">Template:Cite book</ref>Template:Rp The headquarters was first located in Shijiazhuang, Hebei, and then moved to Beijing in 1949. Between 1950 and 1978 the PBC was the only bank in the People's Republic of China and was responsible for both central banking and commercial banking operations.<ref name=":0232">Template:Cite book</ref>Template:Rp All other banks within mainland China such as the Bank of China were either organized as divisions of the PBC<ref>"History of Bank of China" Template:Webarchive, Boc.cn, Retrieved 2015-11-23.</ref> or were non-deposit taking agencies.<ref>"History" Template:Webarchive, China Construction Bank webpage. Retrieved 2015-11-23.</ref><ref name=":0">Template:Cite book</ref>Template:Rp

From 1952 to 1955 government shares were added to private banks to make state-private banks, until under the first Five Year plan from 1955 to 1959 the PBC had complete control of the private banks, making them branches of the PBC, closely resembling the vision of Vladimir Lenin.Template:Citation needed With aid from the Soviet Union, the shares of private enterprises and with them industrial output followed a similar path, forming a Soviet-style planned economy.

During the Cultural Revolution, the PBC suspended its commercial banking service.<ref name=":32" />Template:Rp In June 1969, the State Council approved the consolidation of PBC's headquarters as a bureau within the Ministry of Finance.<ref name=":32" />Template:Rp In that context, the PBC's head office was downsized to no more than eighty staff.<ref name=BellFeng>Template:Cite book</ref>Template:Rp Local PBC branches were correspondingly merged into local government finance departments.<ref name=":32" />Template:Rp

Early reform era

The institutional demotion of the PBC was reversed in March 1978 as it was separated from the Finance Ministry and granted ministerial ranking.Template:R

By then and with the exception of special allocations for rural development, the monolithic PBC dominated all business transactions and credit. In 1979, China initiated a transition from that single-tier banking system to a two-tier system, which was largely completed by 1984.<ref name=":1" />Template:Rp In March 1979, as part of the Chinese economic reforms, the State Council split off state-owned banks from the PBC, first the Agricultural Bank of China (ABC) and the Bank of China (BOC). The People's Construction Bank of China, which had been run separately under the Ministry of Finance, was also made autonomous (and later renamed China Construction Bank in 1986). In January 1984, the PBC's own commercial banking operations were spun off as the Industrial and Commercial Bank of China (ICBC).Template:R<ref name=":0" />Template:Rp In September 1983, the State Council had promulgated that the PBC would function exclusively as the central bank of China and no longer undertake commercial banking activities.<ref name=":32" />Template:Rp

Modernization efforts continued in the late 1980s and early 1990s. In 1990, the PBC moved into its new head office building, prominently located on West Chang'an Avenue.<ref name=Yu>Template:Cite book</ref>Template:Rp In 1991, Vice Governor Chen Yuan spearheaded the creation of the Electronic Interbank System (EIS), the PBC's first state-of-the-art financial market infrastructure.Template:R In 1992, however, the PBC had to reluctantly concede the spinning off of its securities regulatory duties to the newly established China Securities Regulatory Commission,Template:R whose first chair was former PBC vice governor Liu Hongru.

The bank's profile was greatly raised by the appointment of Zhu Rongji as its governor in 1993, simultaneously as his role as Vice Premier in charge of economic and financial affairs.Template:R. Its central bank status was legally confirmed on March 18, 1995, by the 3rd Plenum of the 8th National People's Congress, and was granted a higher degree of autonomy than other State Council ministries by an act that year.<ref name=":1">Template:Cite book</ref>Template:Rp In 1996 and 1996, the PBC established fundamental regulations on loans and consumer credit.<ref name=":44">Template:Cite book</ref>Template:Rp

In 1998, the PBC underwent a major restructuring. All provincial and local branches were abolished, and the PBC opened nine regional branches, whose boundaries did not correspond to local administrative boundaries.<ref name=":3">Template:Cite news</ref> The nine branches were located in Chengdu, Guangzhou, Jinan, Nanjing, Shanghai, Shenyang, Tianjin, Wuhan, and Xi'an, complemented by a sub-provincial network of city-level and county-level sub-branches.Template:R That same year, the so-called credit plan, a key feature of China's former state planning process, was finally abandoned, allowing the PBC to play a genuine role as monetary policy authority.Template:R

21st century

In 2003, the Standing Committee of the National People's Congress approved an amendment law for strengthening the role of PBC in the making and implementation of monetary policy for safeguarding the overall financial stability and provision of financial services.Template:Citation needed That year, the long overdue restructuring of China's banking sector made major progress with the creation of Central Huijin Investment, a PBC-managed fund that allowed the PBC to take the lead from the Ministry of Finance on the restructuring process and from the CCP Central Organization Department on the appointment of senior bank executives.Template:R That same year, however, the PBC reluctantly lost its direct authority over banking supervision with the creation of the China Banking Regulatory Commission.Template:R

In 2005, the PBC elevated its branch in Shanghai to the status of "second head office", in a move intended to mirror the prominent market-facing role of the Federal Reserve Bank of New York within the US Federal Reserve System.Template:R In 2006, the PBC established the Credit Reference Centre to provide financial credit reporting.<ref name=":44" />Template:Rp In 2008, the PBC lost the direct ownership stakes it had built up in much of China's financial sector as the ownership of Central Huijin was transferred to the China Investment Corporation (CIC), a newly created sovereign wealth fund.Template:R

During the Great Recession, the PBC helped address bank liquidity crisis by signing swap agreements with numerous other countries to provide them with liquidity based on the renminbi.<ref name=":024">Template:Cite book</ref>Template:Rp Template:As of, China has swap agreements with 40 countries.<ref name=":024" />Template:Rp

In 2010, the PBC issued administrative measures regarding online non-financial payment services.<ref name=":Zhang">Template:Cite book</ref>Template:Rp These measures retroactively recognized the legal status of online third-party payment platforms like Alipay.<ref name=":Zhang" />Template:Rp Prior to the 2010 measures, these services existed in a legal grey area.<ref name=":Zhang" />Template:Rp

In 2015, the PBC hosted China's first formal deposit insurance scheme.<ref>Template:Cite web</ref> In 2019, this scheme was reorganized as a subsidiary of the PBC, the Deposit Insurance Fund Management Company.<ref>Template:Cite web</ref> Meanwhile, in 2017, the PBC was tasked with the secretariat of China's newly established Financial Stability and Development Committee chaired by Vice Premier Liu He. In 2020, the PBC initiated supervision of significant financial holding companies.<ref>Template:Citation</ref>Template:Rp

The PBC underwent through another major restructuring in 2023 as part of the plan on reforming Party and state institutions, with the abolition of the nine regional branches established in 1998, which had already seen their authority watered down by a change in 2004 that had returned authority to the PBC's branches at the provincial level and further changes in 2018.<ref>Template:Cite web</ref><ref name=":3" /> Additionally, the PBC's county-level branches were absorbed by city-level branches.<ref name=":4">Template:Cite news</ref> The new branches were inaugurated on August 18, 2023.<ref name=":5">Template:Cite news</ref> The oversight over financial holding companies and financial consumer protection was also transferred from the PBC to the newly established National Financial Regulatory Administration (NFRA).<ref name=":4" /> Around 1,600 county-level branches of the PBC are planned to be absorbed to the NFRA; the PBC had 1,761 such branches at the end of 2021.<ref name=":6">Template:Cite news</ref>

Operations

Template:See also

The PBC is a cabinet-level executive department of the State Council.<ref name=":1" />Template:Rp The top management of the PBC are composed of the governor and a certain number of deputy governors. The governor is nominated by the premier of the State Council, who is then approved by the National People's Congress or its Standing Committee and appointed by the president.The deputy governors of the PBC are appointed to or removed from office by the premier.<ref name=":0222">Template:Cite web</ref>

The PBC adopts the governor responsibility system under which the governor supervises the overall work of the PBC while the deputy governors provide assistance to the governor to fulfill his or her responsibility. The current governor is Pan Gongsheng. Deputy governors of the management team include: Zhu Hexin, Zhang Qingsong, Xuan Changneng, Lu Lei, and Tao Ling.<ref>Template:Cite web</ref>

The PBC does not have central bank independence and is required to implement the policies of the Chinese Communist Party (CCP).<ref name=":2">Template:Cite news</ref> It operates under the direction of the CCP's Central Financial Commission.<ref name=":6" /> The CCP committee secretary of the PBC is the most powerful position in the bank and can hold more sway than the governor. The current CCP committee secretary is Pan Gongsheng.<ref>Template:Cite news</ref>

The PBC Monetary Policy Committee is an advisory body chaired by the PBC governor. It typically includes the directors and deputy directors of other financial agencies, as well as a few influential academic economists.<ref name=":02">Template:Cite web</ref>

Central departments

File:People's Bank of China (2006-02-18).jpg

The PBC building in 2006

The head office building of the PBC, on West Chang'an Avenue, was constructed in 1987–1990 on a design by a team of architects led by Zhou Ru.Template:R While its materials are modern, its shape refers to two traditional Chinese motifs, namely yuanbao ingots and "wealth vases" (Template:Lang-zh) from Chinese folklore.Template:R

Template:As of, the PBC consisted of functional departments (bureaus) as below:<ref>Template:Cite web</ref> Template:Div-col

General Administration Department (General Office of the CCP PBC Committee)
Legal Affairs Department
Monetary Policy Department
Macroprudential Policy Bureau
Financial Market Department
Financial Stability Bureau
Statistics and Analysis Department
Accounting and Treasury Department
Payment System Department
Technology Department
Currency, Gold and Silver Bureau
State Treasury Bureau
International Department
Internal Auditing Department
Human Resources Department (Organization Division of the CCP PBC Committee)
Research Bureau
Credit Information System Bureau
Anti-Money Laundering Bureau (Security Bureau)
Financial Consumer Protection Bureau
Education Department of the CCP PBC Committee
CCP Committee of the PBC Head Office (Office of Inspections)
Retired Staff Management Bureau
Office of Senior Advisors
Staff Union Committee
Youth League

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Branches and offices

File:中央银行天津分行大楼.jpg

People's Bank of China Tianjin branch, formerly the Central Bank Tientsin Branch building until 1949, now a protected heritage site

The PBC has branches in each 31 provincial-level administrative divisions in China, branches in five cities (Shenzhen, Dalian, Ningbo, Qingdao, and Xiamen), and 317 branches in prefecture-level divisions.<ref name=":5" />

It has 6 overseas representative offices (PBC Representative Office for America, PBC Representative Office (London) for Europe, PBC Tokyo Representative Office, PBC Frankfurt Representative Office, PBC Representative Office for Africa, Liaison Office of the PBC in the Caribbean Development Bank).