Few people attract as much media attention as he does in China. Whenever he appeared at public conferences, reporters would flock in and fire questions that they believed would lead to a front page story. "Chairman Zhou, QFII...," one reporter burst out as he quickly walked past the cameras to the platform at a financial conference in Beijing in early December. With an innocent smile, he shook his head and then sighed: "How can I answer that? Not in one or two sentences." Working on complicated economic issues is his talent. In a developing country with a population of 1.3 billion and more than 8 trillion yuan (US$967 billion) in savings, the securities market has great potential for growth. To boost such growth, Zhou Xiaochuan - outgoing chairman of the China Securities Regulatory Commission (CSRC) and future governor of the central bank - worked hard on reforms to ensure the smooth transition of the Chinese bourses towards a mature market and set up more market driven rules. At that point in the market reform, the Chinese economy underwent drastic changes: many old rules were abolished and amended, and more foreign investors were welcomed in. Shortly after taking his position as chairman of the CSRC in February 2000, Zhou asked that the commission's website display the slogan he felt was most representative - "Protecting the interest of investors is our top priority". To honour this pledge, Zhou launched a series of campaigns to clear up irregularities amongst listed companies, fund managers, brokerages and other intermediaries, and encouraged more supervision by the media and the general public. He also introduced the de-listing system of heavy loss-makers in 2001, which for the first time forced listed companies to realize that only the fittest would survive. And sets of new standards for accounting, auditing and information disclosure were released gradually to make them comply more with their international equivalents. For his efforts, Zhou was elected a "Star of Asia" in 2001 by BusinessWeek. In 2002, with China's entry to the World Trade Organization (WTO), the stock market helped accelerate the opening-up process as the government fulfilled its WTO promises. In the second half of the year, a number of Sino-foreign joint venture securities houses and fund management companies received approval to conduct business. And this month, as the year came to a close, the long-awaited QFII (qualified foreign institutional investors) scheme was introduced to allow foreigners to trade renminbi-denominated A shares through special accounts and foreign exchange arrangements. But still to be solved is the liquidity problem in the bourses as the majority of the shares held by the State are still non-tradeable - a consequence of the planned economy and a major obstacle for the future growth of the stock market. That also reflects a twisted role of the government, which Zhou has been trying to reverse. In a financial conference recently, Zhou again stressed that the CSRC's role should not be as a player but as a referee in the game. "A referee should maintain his independence and should not come from any of the teams," he said. "The CSRC does not represent the interests of the listed company and should withdraw from the position of a State owner," he said.

Scholarly background In the eyes of an ordinary stock trader, Zhou is someone whose every word has meaning that could affect stock prices. But for those close to him, he is more like a scholar than a bureaucrat. The 54-year-old Jiangsu native graduated from Tsinghua University where he earned a doctorate degree, an academic background rare among senior Chinese officials. Before he chaired the CSRC, he was governor of China Construction Bank, one of the Big Four State-owned banks. And even earlier, he headed the State Administration of Foreign Exchange. His rich and comprehensive financial experience made him an ideal candidate for governor of the central bank, a position that carries even more prestige in the financial sector. Just a few days ago, Zhou was approved by the Standing Committee of the National People's Congress to become the new governor of the People's Bank of China and is expected to formally take office soon. The present central bank governor, Dai Xianglong, meanwhile will become mayor of Tianjin. And Shang Fuling, the governor of the Agricultural Bank of China, will succeed Zhou at the CSRC. The central bank is a familiar place for Zhou because he was once a vice-governor there. But this time, as top man, Zhou will face a challenge similar to that which he encountered in the securities industry - how to strike a balance between innovation and risk prevention. In other words, his task is to ensure the current pace of opening-up and reform while keeping crises and instability at bay. It might take several years yet for the renminbi to become fully convertible under the capital account. But the need for liberalized interest rates and foreign exchange rates is pressing policymakers like Zhou to come up with more effective transitional measures to deal with new problems in the fast-changing economic environment.

(China Daily HongKong Edition SUN MIN 31-12-2002)