Liu He's economic thinking will shape China's policy in the coming years —As Vice Premier, Liu will also head the Financial Stability and Development Commission (FSDC), the super regulator established late last year. Given President Xi's trust and the FSDC's powerful position, we believe Liu will have a unique opportunity to implement his ideas. We tracked down his important works to search for future policy clues in a previous report. Based on that, we believe: (1) Strong financial regulation will likely be a new normal; (2) Policy stimuli may gradually phase out, especially when the risk of a sharp slowdown diminishes; (3) The supplyside reforms will continue, with an increasing focus on new growth drivers. We also think Liu will play a key role in dealing with US-China economic relations, given his study experience in the US and his network in US policy and business circles.
【机器翻译+小编智能】刘鹤的经济思想将在未来几年塑造中国的政策 - 作为副总理，刘还将领导金融稳定与发展（FSDC）这一去年年底成立的超级监管机构。我们相信刘将有有举世无双的机会实施他的想法。 我们追查他的重要作品进行搜索为以前的报告未来的政策线索。 基于此，我们认为：（1）强金融监管可能会成为一种新常态; （2）政策刺激可能会逐渐显现逐步淘汰，特别是当急剧放缓的风险减少时; （3）供应侧改革将继续下去，对新的增长驱动因素的关注日益增加。以其在美国学习经验以及他在美国的政商关系，我们也认为刘在处理美中经济关系方面将发挥关键作用。
Yi Gang's governor appointment should be received positively by markets — His combination of a strong academic background (educated in Peking University and University of Illinois) and rich policy experience (worked in the PBoC for over 20 years) should reduce policy uncertainty. He has been Governor Zhou Xiaochuan's deputy for a decade, and we would expect continuity of monetary and FX policies.
On a longer perspective, he is a supporter of structural reforms, especially environmental protection and sustainable growth. This should also allow him to work well with Liu He, the mastermind of China's supply-side reforms. In addition, as a good English and policy speaker, Yi can communicate with the markets clearly and effectively, which would help better guide market expectations.
市场对易纲的行长任命应有积极的态度 - 他融合了强大的学术背景（在北大受过教育和伊利诺伊大学）以及丰富的政策经验（在中国人民银行工作超过20年）应该会减少政策的不确定性。 他曾担任周小川助手十年，我们期望货币政策和外汇政策的连续性。
从更长远的角度来看，他尤其是结构改革的支持者环境保护和可持续增长。 这也应该允许他与中国供给侧改革的主脑刘和很好地合作。 此外，作为一名优秀的英语和政策演讲者，易明可以清楚地与市场进行交流并有效地帮助更好地引导市场预期。
Having said that, the team's performance during the transition remains to be seen — While China's policy tone is set at the very top level, the implementation during the team transition could still drive some volatility. For example, Liu He's moving from an advisory role to an implementation role may not necessarily be smooth sailing, especially given his lack of experience in running a financial institution, regulatory agency or even province. His communications with the public could be over-interpreted: He was widely believed to be the "authoritative person" who wrote in the People's Daily in May 2016 warning about risks from the country's debt-driven growth model, an article that triggered strong equity market sell-offs at the time. We expect policy continuity in general while watching out for possible shocks during the transition.
话虽如此，团队在转型期间的表现依然留待观察 - 虽然中国的政策基调是在最高层次上实施的团队转型期间仍可能会造成一些波动。 例如，刘鹤的从咨询角色转变为实施角色可能不一定一帆风顺，特别是鉴于他缺乏运营一家金融机构，监管机构甚至一个省的经验。 他与公众的沟通可能会被过度解释：他被普认为是“权威人士”他在2016年5月的人民日报上撰文警告该国的风险债务驱动的增长模式，这篇文章引发了当时股市大幅抛售。 我们期待普遍的政策连续性，同时注意过渡期间冲击可能性。
Who is Mr Yi? Most investors are familiar with Yi, who has been the No.2 to Zhou Xiaochuan over the past five years. He was born in 1958, 10 years younger than Zhou. What makes him unique is that he spent 14 years in the US and earned a Ph.D. in economics from UIUC. He returned to China in 1994 as a professor at the Peking University and joined the PBoC in 1997. Such an overseas experience is highly uncommon among the senior government officials in China today and has been viewed as a drag to his career. Against this background, most believed, even a few months ago, that Yi would unlikely head the PBoC.
谁是易先生？ 大多数投资者都熟悉易，过去五年他一直是周小川的No2.。 他出生于1958年，比周年轻10岁。 让他独一无二的是他在美国待了14年
并获得博士学位。 来自UIUC的经济学。 他于1994年回到中国任北京大学教授，1997年加入中国人民银行。他海外经验在高级政府官员中非常罕见
What Mr Yi can’t do? The first thing to understand about Governor Yi’s role is not to overstate it. The new economic Czar would be Vice Premier Liu He, who is a close friend of President Xi. Media used to call Liu as “China’s Larry Summers” and the PBoC’s Governor as “China’s Greenspan”. While the former is a bit understatement, the latter is a vast exaggeration. The PBoC, which functions under the State Council, simply lacks the freedom enjoyed by most central banks around the world and acts more like an advisor and operator, but not a maker, of monetary policy. That said, the importance of the PBoC has risen substantially over the past nine months and we expect Governor Yi, as the successor to the legendary Zhou, to focus on five areas during his tenure.
易先生不能做什么？ 要理解易的角色，首先要了解的是不要夸大它。 新的经济沙皇将是副总理刘鹤。 媒体过去称刘为“中国拉里萨默斯“和中国央行行长称为”中国的格林斯潘“。 前者有点轻描淡写，后者夸大其辞。 中国人民银行，其在国务院的职能中，根本缺乏世界各地央行的自由，更像是一个顾问和操作者，但是不是货币政策的制定者。在过去的九个月里，中国人民银行的重要性已经上升，作为传奇人物周的继任者，我们期待着易在他任职期间专注于五个领域。
Monetary policy framework: Governor Zhou liberalised China’s interest rates, albeit only on paper. That’s why the financial market still looks at the monthly credit data. It is up to Yi to transform China’s monetary policy framework from quantity-based to quality-based, in our view.
1.货币政策框架：周放开中国的利率，尽管只在纸面上。 这就是为什么金融市场仍在看每月信用数据。 我们认为，易会改变中国的货币政策，从数量为基础的质量为基础的框架。
2、 RMB exchange rate: On 11 Aug 2015, the PBoC tried to liberalise the exchange rate but the effort had caused a huge market turbulence. As we commented on the same day (link), under the economic and political environment back then, the PBoC would be forced to retract and the depreciation would be less than 5% (actual: 4.4%). Indeed, Mr Yi held a press conference on Aug 13 to send a signal for stabilisation (link). Now it’s up to him to make the RMB a truly market-driven currency.
2.人民币汇率：2015年8月11日，中国人民银行试图放宽本币兑美元汇率却造成了巨大的市场动荡。 就如我们当天的评论说的，在当时的经济和政治环境下，中国人民银行将被迫回撤，贬值将低于5％（实际：4.4％）。 的确，伊先生8月13日举行了一次新闻发布会发送稳定信号。 现在已经到了他让人民币成为真正的市场驱动货币的时候。
3. Financial regulation: China’s financial regulatory system is highly fragmented. Regulatory arbitrage is rampant and top leaders are forced to take curbing financial risks as the top priority. This has to change and the PBoC has now a much more important role than before in this area. The new Financial Stability and Development Committee set up last Nov has its office in the PBoC. It implies that the PBoC will coordinate the entire financial regulatory framework. Moreover, during this NPC, the job of drafting regulatory framework has been shifted to the PBoC from the bank and insurance regulators, after the latter two were merged. Going forward, Governor Yi will play a pivotal role in financial regulation. To be precise, in this area, his role will be more like a coordinator instead of a decision maker.
3.金融监管：中国的金融监管体系非常重要支离破碎。 监管套利猖獗，高层领导被迫把遏制金融风险作为重中之重。 这必须改变，现在中国人民银行现在在这方面比以前更重要。 新的去年11月成立的金融稳定与发展委员会设有办事处在中国人民银行。 这意味着中国央行将协调整个金融监管框架。 此外，在这个NPC期间，起草工作监管框架已从银行转向中国人民银行保险监管机构，后两者合并后。 向前走，易将在金融监管中发挥举足轻重的作用。 确切地说，在这方面，他的角色将更像是一个协调员而不是决策者。
4. Financial opening-up: It is well known that Zhou Xiaochuan is a big
supporter of financial opening-up including the RMB internationalisation. Zhou also pushed hard for the inclusion of RMB in the SDR basket. Financial opening-up made rapid progress in 2010-14, but has backtracked since then due to the capital outflows and depreciation pressure.One could see it clearly through the rise and fall of the RMB deposits in HK. This Jan, Liu He made it clear in Davos that China would relaunch the financial opening-up (First overseas roadshow for Chief Economist of China, 25 Jan 2018). It is largely Governor Yi’s job to push things forward on this front.
4.金融开放：众所周知，周小川对包括人民币国际化在内的金融开放都是积极支持。 周也极力推动人民币进入SDR篮子。 金融开放在2010 - 14年取得了快速进展，但由于资金外流和贬值压力，自那时以来已经回撤。人们可以通过人民币存款在香港的兴衰来看清楚。 今年1月，刘鹤在达沃斯清楚地表明，中国将重新启动金融开放。 在这方面，主要是易的工作。
5. Financial development: With five years of rapid development, the size of China’s financial market has surged, too. For instance, China’s fixed income market has increased from Rmb24tn at end- 2012 to Rmb51tn now. However, it is far from being sophisticated. The bond market is also highly fragmented with at least five regulators: PBoC, CSRC, NDRC, CBRC and NDRC, though the PBoC plays an increasingly important role in the market. It is also Yi’s job to develop China’s financial market to help allocate capital more efficiently and meet demands of the financial opening-up. It’s also a step towards lowering the high leverage in China (A guide to China’s deleveraging Feb 2018).
None of the above is an easy job. But similar tasks were daunting when Zhou Xiaochuan took the charge in 2002. At that time, China’s GDP was No.6 in the world and lot of people believed that its banking system was on the brink of bankruptcy. However, 16 years later, China became the second largest economy in the world and bigger than the combination of No.3 to No.5. Today China is facing new challenges and the room for growth is smaller. Key is to unleash productivity by reforming the system albeit containing risks in the process. It’s much easier said than done. We wish Governor Yi all the best.
5.金融发展：随着五年的快速发展，中国金融市场的规模也激增了。例如，中国固定收益市场从最终收入的人民币24万亿 2012年至51万人民币。但是，它远没有成熟。债券市场也很高 至少与五家监管机构：中国人民银行，中国证监会，国家发改委，银监会和国家发改委，尽管中国人民银行在市场上扮演着越来越重要的角色。发展中国金融业也是易的工作市场，帮助更有效地分配资金并满足金融开放的需求。这也是降低中国高杠杆率的一个步骤（2018年2月中国去杠杆化指南）。