One of China's biggest official supporters of a free market has returned to Beijing to head the country's banking industry watchdog to oversee a huge industry plagued by rising bad loans and thinning profits.
Guo Shuqing's comeback – he headed the stock market regulator before being posted to the coastal province of Shandong – has triggered speculation that he might have been promised a higher role in a future reshuffle in the financial regulatory system.
Guo, 60, has been governor of Shandong for the past four years and was at the China Banking Regulatory Commission on Friday to take up his new role, state media reported.
The regulator's present head, Shang Fulin, 66, will take up a post at the country's main political advisory body, according to Caixin.
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Guo's job will give him a central role in implementing the government's plans to shake up the financial industry.
Securities and insurance regulators have already pledged to take action against "big crocodiles" – speculators accused of manipulating financial markets.
John Wong, professorial fellow at the East Asian Institute at the National University of Singapore, described Guo as "experienced and strict", saying he was one of the mainland's few outstanding financial technocrats.
"He is also open and internationally minded," Wong said.
"He should play a positive role in stepping up the much-needed financial sector reform for China's next phase of development."
Chen Zhiwu, director of the Asia Global Institute at the University of Hong Kong, said Guo's appointment might be part of preparations to merge the three regulators overseeing banking, securities and insurance into one to cover the whole of the financial sector.
"Guo is a scholar and a senior official. He's a quick learner. He'll be the key person to solve China's financial problems," Chen said.
There has been speculation for some time that Guo could go on to replace Zhou Xiaochuan, who has headed the central bank for more than 14 years and is close to retirement.
Guo has extensive experience to prepare him for a top position overseeing the economy.
He designed economic reform plans in the 1980s, helped in the management of the foreign exchange market and the People's Bank of China, and is a former chairman of China Construction Bank. He spearheaded the lender's restructuring and listing before heading the securities regulator in 2011.
Earlier rumours that he might get the top job at the central bank were scotched in 2013 after Zhou's term was extended and Guo took over as governor in Shandong.
He has largely shied away from commenting publicly on financial regulatory issues since then, but has appointed many financial officials working in Beijing to posts within his province.
Yi Xianrong, a professor of finance at Qingdao University and a former researcher at the Chinese Academy of Social Sciences, said: "It's a pity for Shandong that such a capable official is being shifted away. It could be a transitional role before his eventual promotion as central bank governor."
Guo will have to deal with a series of problems in the banking sector, particularly with the explosive growth of shadow banking.
Financial regulators have pledged tough action against "barbarian" insurers and stock market "crocodiles", promised to unify standards for asset management businesses and vowed to properly regulate peer-to-peer lending platforms.
"His appointment will be a great help for China to push forward reform of the financial regulatory systems, especially the establishment of a macro prudential assessment framework," said Guo Tianyong, director of the Research Centre of the Chinese Banking Industry at Central University of Finance and Economics.