Grab for talent: students at a job fair in Xian, Shaanxi province. People who have studied overseas are mostly employed in the private sector

When China elevated Yi Gang to head the body responsible for its foreign exchange reserves, most attention focused on the gargantuan $2,132bn pile of funds under his agency’s management.

But Mr Yi’s promotion within the People’s Bank of China, the central bank, was important for another reason. A former tenured professor from Indiana University, he is one of the government’s most senior “sea turtles” – the term used to describe returnees from overseas study.

The nickname comes from the Chinese word for returnees, haiguipai, a homonym for sea turtles.

Many of China’s best and brightest have left to study overseas since the late 1970s. To the consternation of the government, only a minority have returned, preferring to deploy their considerable talents in their adopted homelands.

Those who have come back have mostly worked in private business or for foreign companies. The government, the real locus of power in China, has not been nearly as welcoming.

For the ruling Communist party, the sea turtles’ foreign ties can make them potentially suspect. Often they are not party members, a prerequisite for senior government posts unless a specific exemption is made.

Above all, the sea turtles have no deep roots in the party system and its intricate, largely hidden webs of personal connections and patronage.

Every country has its elite networks symbolising the disproportionate power of insiders. The US has the Ivy League; Britain has the “old boy network”; France has les énarques, graduates of the Ecole Nationale d’Administration; Japan has the law department of Tokyo University.

None can hold a candle to the Chinese Communist party, with 75m members and an absolute veto over who gets which top jobs in government, universities, state businesses and media.

Li Yuanchao presides over this vast personnel system as head of the Central Organisation Department, the Communist party ministry responsible for all senior state appointments. This department is so secretive it has neither a listed phone number nor a sign outside its office in Beijing or its provincial affiliates.

The department appointed a spokesman this year but he has yet to utter a single word in public. The department, contacted through the state news office, declined to respond to questions for this article.

Mr Li, who is on the liberal wing of the party, has quietly tried to change the department’s culture since taking over in late 2007, and launched a project called the “Thousand Person Plan”, aimed at enticing sea turtles home to work in Chinese state companies, educational institutions and business parks.

“The introduction of talented, senior people from overseas is an urgent task to establish an innovative, national personnel system,” Mr Li said on the plan’s launch late last year.

To qualify, the applicants had to be under 55 and have a PhD from a foreign university. To top up their salaries, long a big concern of returnees, the government offered to throw in an annual tax-free bonus of $147,000.

“This programme is long overdue,” said Wang Huiyao, vice-chair of the China Western Returned Scholars Association.

But one sector was conspicuous by its absence from the plan: government departments.

The elevation of Yi Gang, a party member, is exhibit one for optimists about China’s ability to prise open this area.

Mr Yi lived in the US for 14 years before returning home in 1994. Since then he has established himself as an insider, with the ability and credentials to run one of the most important financial agencies in the country.

A handful of other sea turtles, all party members, occupy senior government positions. They include the mayor of Changsha, the capital of Hunan province, the president of China’s sovereign wealth fund and the head of Shanghai’s financial centre office.

“More and more positions in China need skilled people with international training and background,” said Mr Wang, “ . . . so China can cope with an increasingly globalised and complicated world.”

The main test for the system, though, is whether it can open its doors to skilled people whether or not they are party members. The reform camp is closely watching two cases, both involving the central bank.

The central bank has been in discussions to hire Ha Jiming, chief economist at China’s largest investment bank and formerly with the International Monetary Fund, to a senior position that must be cleared via the party apparatus.

Xuan Changneng, formerly of JPMorgan and JC Flowers, more recently in the central bank’s research department, has been under consideration to head the financial stability bureau of the People’s Bank of China.

So far both appointments have been held up for months, apparently through resistance in party bodies, such as the organisation department.

“Even Hu Jintao [president and Communist party chief] supports this plan for outside talent,” said one economist. “But I’m not sure even he can force it through.”