It isn't every day that a career bureaucrat in China, even one who heads Beijing's equivalent of the Federal Reserve Board, rattles the cages of traders in international markets the world over. Even with China's growing international economic clout, the mandarins who run the rapidly growing economy tend be faceless and cautious to the extreme. That's why when Zhou Xiaochuan publicly called in March for the U.S. dollar to be eventually replaced as the globe's reserve currency, the world took note. The world's reserve currency, he noted archly, "should first be anchored to a stable benchmark, and issued according to a clear set of rules." The implied rebuke: by those standards, the dollar was 0 for 2.
Zhou, 61, was simply saying what many Chinese officials privately feel: that Beijing, as the largest international holder of Treasury debt, has been unnerved by U.S. budget deficits and an apparent willingness to allow the dollar to decline against other currencies (which effectively devalues China's holdings of Treasuries.) That he spoke out, colleagues at the People's Bank of China say, was not necessarily a surprise. Zhou, says a former PBOC economist, "is intelligent, intellectually curious, and has always been willing to speak his mind."