IT’S WIDELY RUMOURED in China that the governor of the country’s central bank, Zhou Xiaochuan, may have defected out of the country.

Reports issued on Saturday by a Hong Kong news agency suggested that the Chinese government was planning on punishing a series of senior bankers within the People’s Bank of China (PBC), including the governor, for their role in advising the government to invest in US Treasury bonds.

The government has made a loss of about $430bn on the bonds.

Though the news agency in question, Ming Pao, issued a statement distancing itself from the story yesterday, rumours of the defection have gathered steam in the country – not helped by the fact that searches for Zhou’s name are now being blocked by China’s Golden Shield, better known as ‘the Great Firewall of China’.

State-run media have tried to quell the rumours and downplay any rumour that the senior PBC executives were to be sanctioned, and government websites are said to have run a series of high-profile reports on him to stop the rumours.

His most recent public appearance, though, was at an exhibition three weeks ago.

Even if the rumours prove to be untrue, the Communist Party will resent the public disquiet the rumour has caused, particularly with the party’s heads coming to the end of their current terms in 2012.