Yi Gang, the new governor of the People's Bank of China, faces some immense challenges at home and abroad. Yi, 60, takes over from a man who enjoys massive respect among fellow central bankers, Zhou Xiaochuan, who is retiring at age 70 after 15 years in the job. Although a long way from enjoying the independence of his Western counterparts, Zhou — softly spoken and persuasive — has been at the forefront of an unparalleled period of Chinese expansion and liberalization.

After 10 years as a vice-governor, with responsibility for international affairs, Yi takes the reins at a time when Beijing is placing far greater emphasis on controlling risk in a Chinese financial system that even leading officials admit contains dangers of self-implosion.

But there are plenty of opportunities, too. In view of a leadership vacuum in world politics and economics stemming from US unilateralism, as well as myriad possibilities for deploying abroad its financial and economic muscle, China can win extensive benefits from its own brand of targeted monetary internationalism. As a former head of the State Administration of Foreign Exchange, which manages China's $3 trillion-plus foreign currency reserves, Yi has often deputized for Zhou at meetings of the International Monetary Fund and other world bodies. He is well suited to take over Zhou's role on the global stage.

Domestic preoccupations will loom large. The government's control of currency and monetary policy is likely to strengthen further under the stewardship of Liu He, now given wider powers as the country’s supreme economic technocrat.

The task now for US-educated Yi — a vice-governor since 2008 — is to continue his predecessor's progress while assuring investors and policymakers that China is a safe place to deposit assets and build businesses. Beijing needs to intensify attempts to rein in mounting debt through strengthening watchdog activities — where the central bank has recently been given enhanced regulatory powers — and driving forward financial sector reform. Zhou and other officials have often highlighted asset bubbles, dangers from shadow banking activities, and high debt among corporates and households. Yi has to show he can preside over effective remedial action.

Yi would do well to make a special effort to curb hazards in public-private partnerships, a fast-growing area of the Chinese economy that has expanded partly because local authorities have been trying to offload debt toward private investors. PPPs are a hidden danger for Chinese borrowers, lenders and regulators that will snowball over time. Although this form of buttressing growth through new vehicles for debt and equity financing has its uses, Yi should show he is aware that it could become addictive and even lethal, with many PPP legal contracts poorly understood and unenforceable.

The new central bank governor will also take a central part in efforts to show the United States, Europe and the rest of Asia that Beijing can be entrusted with a rising share of world economic decision-making. He can be expected to enhance efforts for currency internationalization, continuing the renminbi's advance after it entered the IMF's special drawing rights in October 2016.

China's banks and asset management companies will continue to support a greater role for renminbi-denominated assets and investments on world markets. As the currency’s global position grows, Beijing must show it can shoulder additional responsibilities for assuring financial market stability in areas affected by the renminbi's expansion. This needs to be accompanied by firm moves to help strengthen global financial governance, in partnership with other leading economies. At the same time, China has to show that its pioneering actions in helping finance projects in other emerging economies, through initiatives such as the Asian Infrastructure Investment Bank, are not merely self-serving but take into account the needs of the international community.

Yi can show in other fields, too, that intensified two-way cooperation with other countries can satisfy many overriding domestic and international interests. Providing a framework for capital market inflows and outflows, within the constraints of China's continuing capital controls, could provide a bubble-mitigating safety valve for pent-up domestic investment demand for acceptable investments. And it would also allow a path for international investors, including central banks and sovereign funds, to diversify assets.

Linked to this, Yi may expand existing campaigns to reinforce international monetary cooperation. The sometimes mooted idea of building a currency swap network with the US Federal Reserve seems unlikely to materialize. However, partly because of worries about US unilateralism, Japan and China appear to be trying to improve cooperation as well as bilateral portfolio investment. In line with an increase in regional trade and Asian financial cooperation, Yi could step up similar efforts elsewhere in Asia.

Finally, Yi could strengthen initiatives on improving transparency and reliability of Chinese economic statistics. Under Zhou's tenure, China has made considerable strides — for example, in improving cooperation with the IMF, the Bank for International Settlements and other bodies over international economic statistics. More could be done to heighten the credibility of mainstream economic data. And Yi could give greater support to efforts to improve understanding of how central banks are holding a greater number of currencies in their reserves — including the renminbi — as well as gold, in line with the People's Bank of China's own considerable reserve diversification over the past decade.

The author is chairman of Official Monetary and Financial Institutions Forum. The views do not necessarily reflect those of China Watch.

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