What has changed in China? Many if not most in the West haven’t yet caught on because they can’t conceive of where all this might be heading. One literal change was the appointment of Yi Gang as head of the People’s Bank of China. Not only did he replace longtime chief Zhou Xiaochuan, but Yi’s elevation also broke an even lengthier unwritten Communist rule.
Officials with overseas experience aren’t given the top spot in key government divisions. The PBOC certainly counts as one of those. Yet, Yi was appointed, and confirmed, anyway despite his lengthy American sojourn.
After graduating from Peking University in 1980, he then moved to St. Paul, Minnesota, obtaining an undergraduate degree from Hamline University. Yi then moved on to the University of Illinois, receiving his Ph.D. in Economics in 1986. While there, he apparently attended a lecture by Milton Friedman. Whatever your thoughts on Friedman, he wouldn’t have been a popular choice of Chinese Communists for future Chinese Communists.
If there is a reason any of us including China’s government officials should be concerned about Yi Gang, it is the same one he shares with all the rest of the world’s central bankers. It is spelled out right in his University of Illinois Ph.D. dissertation. I’ll just quote the first few lines of its abstract, more than enough for you to get the picture.
This thesis attempts to use Stein type estimators for statistical model selection purposes. First, a parameter truncation criterion developed in conjunction with the new Stein estimator (Stein, 1981) is used in an orthonormal linear statistical model setting, as a basis for simultaneously selecting the model and estimating the unknown parameters. Using a mean squared error of prediction (MSEP) loss measure, the sampling performance of the extended Stein procedure (ESP) is analyzed for two alternative structures of the parameter space and under normal and non-normal errors.
