People’s Bank of China: “Central Bank of the Year”

Published on Author helvey

1005OPEDsavage-popup has awarded the PBOC the title of “Central Bank of the Year.”  According to Deutsche Bank economist Jun Ma, “China’s overall macro condition today is one of the best in history.” In my mind, this is an especially impressive accomplishment considering where China’s economy has been within the past century. Specifically, enduring such economic struggles as KMT-induced hyperinflation, the failed Great Leap Forward (which misguidedly emphasized steel production, even to the degree of encouraging backyard steel furnaces which were a total waste of resources, and disregarded agriculture, which led to massive starvation), and the de-stabilizing effects of the Cultural Revolution.

However, not everybody agrees that the PBOC is deserving of the award. Alex Frangos, of the WSJ’s “Money Beat”, feels that the PBOC really didn’t accomplish much this year. He writes, “What did the PBOC oversee? Three credit crunches and possibly the slowest growth in 23 years…It’s a bit like Barack Obama winning the Nobel Peace Prize in 2009 before he had a chance to make his mark.”  Regardless, the PBOC and the Chinese economy are certainly in good shape these days. We will just have to wait and see if the good times are here to stay.

Further reading: WSJ Moneybeat, WSJ China Realtime

3 Responses to People’s Bank of China: “Central Bank of the Year”

  1. I understand why some would disagree with the award given to the PBOC. The true test of character is how someone responds to adversity and I think the same thing can be applied to the PBOC. The test will be when China goes a worse economic time. Their growth has slowed but they hadn’t even responded before being given the award. I have to agree with Mr. Frangos.

  2. I am not exactly sure what PBOC has done for the economy. Do they think PBOC is the main reason why their economy is doing better? I am really curious about what judges and experts will say about this question (well they are the one who gave out the award but still…).
    I believe China is still in the process of development. This is why I agree Mr. Frango’s comment about the award.

  3. To frame this more precisely, we need to ask what the goal of a central bank ought to be, or at least what the goal of the PBOC actually is. Can monetary policy bring growth, or can it merely serve to restrain inflation? If it’s the latter, then credit crunches are not necessarily an indictment of bad policy, but potentially an indication that it was active in trying to slow demand and keep inflation at bay.