From The Far Eastern Economic Review:
Zhou Xiaochuan, governor of China’s central bank, is an influential figure. But he is not as important as Alan Greenspan. His successors will be though. Global financial markets will hang on their words”once they’ve been translated. This is because monetary policy will soon work as effectively in China as it does in the United States, and that will give the people who influence rates enormous power.
Mr. Zhou’s limited influence is easy to understand. China’s monetary policy still does not work as it might”bank-interest rates are mostly administered and many state firms do not worry about the cost of funds when they borrow. That means the People’s Bank of China does not have anywhere near as much leverage over its economy as the Federal Reserve does.
