For the past 30 years one of the relatively easiest jobs was the head of the Central Bank of China because there was only one concern – how to handle the growth in the economy. China emerged as the manufacturing hub of the world, the country invested billions in infrastructure and the economy was a seemingly dominate player in the global economy. Then the world begin to change, companies moved operations out of China to southeast Asia including Vietnam and India. The movement became a tidal wave during COVID and many do not expect the return of continuous growth in China. Years ago, manufacturing moved from the US to China and those states were stagnate for decades, will China do better?

In an article by Kevin Yao of Reuters, the People’s Bank of China (PBOC) appointed Pan Gonsheng to the top political post at the central bank points to growing concerns in the country’s leadership over systemic risks in its sprawling financial sector.

Mr. Pan will be in a position to takeover the top spot with Governor Yi Gang steps down at the end of his term.

In the financial world, the challenge to financial stability is debt, local governments have about $9 trillion of local government debt backed by the property sector. The sector accounts for about 25% of economic activity.

Mr. Pan took on the role of China’s top foreign exchange regulator, managing the world’s largest foreign exchange reserves of $3.2 trillion. He is known for being tough on currency speculators and was involved with state banking reforms, tightening property market and fintech regulations and in banning cryptocurrencies.

Mr. Pan has been appointed as the central bank’s party secretary. Mr. Pan studied at Cambridge and Harvard Universities.

Linking to dividend paying stocks, for many years growth in the Chinese market was a given, but times change, world conditions change and something in China will need to change. Hopefully Mr. Pan can work well with President Xi Jinping who has surrounded himself with yes men, but that is a different story. There are always good people trying to do their best, and as investors you want to give them the latitude to help solve the problems but reality matters, debt matters. As an investor, you might look to other countries besides China for better opportunities.

There are more questions than answers, till the next time – to raising questions.