China: Rumors of the Central Bank Chief's Defection

Vatic Note:  How can we make our bankers afraid of us sufficiently that they would leave the country?   Hmmm,   China has a way with words, huh?  hehehe  Keep a few things in mind while reading this:   1.  Goldman Sachs was China's exclusive Wall street brokerage house for the past 8 to 10 years, it could have been longer but that is what we Know today.   2.  The Central Bank of China worked hand in hand with Goldman Sachs, but under the watchful eye of the communist central committee and its intel services.   3.  The battle between Goldman and the Chinese Gov has always been about the treatment of China's currency in the market place.  Remember Paulson making numerous trips to china to get them to float their currency along with the rest of the globes nations, and they continually refused, but negotiated accommodations such as changing their currency pegging from tying it to the US Dollar, which mean they would always sell cheaper, to a basket of asian currencies, which also did the same thing, so they compromised but the net result was the same thing.   So, for me the question is,  "What reason would Goldman have for ridding themselves of this guy who was pretty much in their pocket but unable to control their agenda, due to the governments tight control and monitoring of their financial condition???? "   You know that somehow Goldman has a hand in this.  We will try to follow this for future information and confirmation. 

China: Rumors of the Central Bank Chief's Defection
http://app.response.stratfor.com/e/es.aspx?s=1483&e=97254&elq=8ebb46dc74c947a08459b4d3f0688818
August 30, 2010, Stratford Global Intelligence Report, Admin

Rumors have circulated in China that People’s Bank of China (PBC) Gov. Zhou Xiaochuan may have left the country. The rumors appear to have started following reports on Aug. 28 which cited Ming Pao, a Hong Kong-based news agency, saying that because of an approximately $430 billion loss on U.S. Treasury bonds, the Chinese government may punish some individuals within PBC, including Zhou. Although Ming Pao on Aug. 30 published a report on its website indicating that the prior report was fabricated by a mainland news site that had attributed the false information to Ming Pao, rumors of Zhou’s defection have spread around China intensively, and Zhou’s name has been blocked from Internet search engines in China.



STRATFOR has received no confirmation of the rumor, and reports by state-run Chinese media appeared to send strong indications that Zhou is in no trouble at the moment. However, the release of this rumor and its dispersion throughout the public is significant, particularly as the Communist Party of China (CPC) is preparing for a leadership transition in 2012.

Chinese state-run media and official government websites have run several high-profile reports about Zhou, which should be seen as a move to refute the rumors. The PBC website published two articles on its homepage reporting on Zhou’s meeting with visiting Japanese Financial Services Minister Shozaburo Jimi during the third China-Japan high-level economic dialogue as well as a meeting with an Italian delegation. Xinhua news agency reported that Zhou told the PBC Party Committee Enlargement Meeting on Aug. 30 it should “continue to implement justice, and strengthen legislative work in financial system.”

Prior to this news, Zhou appeared at the 2nd annual conference of the heads of the Chinese, Japanese and Korean central banks held on Aug. 3, and his most recent public appearance was Aug. 10 for China’s Financial System Anti-corruption Construction Exhibition.

Zhou is known to have lofty political ambitions and is believed to be a close ally to former Chinese President Jiang Zemin, as well as a core figure for Jiang’s “Shanghai Gang.” There has been no shortage of rumors about Zhou’s possible dismissal in the past five years, as he is believed to be associated with several high-level financial scandals. For example, Zhou was rumored to be under “shuanggui,” a form of house arrest administered by the CPC, during the massive crackdown of Shanghai Party Secretary Chen Liangyu in 2006, which was perceived in the country as a crackdown of the Shanghai Gang and part of Hu’s effort to consolidate power ahead of the 2007 power transition.

There was also a rumor that he might have been detained following the investigation and arrest of Wang Yi, the vice governor of the China Development Bank, along with several other officials in the financial circle. Currently, several financial scandals are still under investigation, and it is likely that Zhou, as PBC governor and one of the most powerful economic players in the country, could be associated with some cases. Therefore, whether or not the rumor is true at this time, the leaking of this news is very likely to be associated with a power struggle within the Communist Party’s economic hierarchy.

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