China: The Economy and the Next Xi Jinping Era

Published on September 8, 2017

Two critical developments in China, one economic and the other political, are of note in recent days:

*** China’s economic performance in August appears to have strengthened from July, and if that momentum continues through September, economic officials expect Q3 GDP to be 6.7% and possibly 6.8%. And despite some market speculation, the economy is unlikely to slow in Q4 once the politically critical 19th Communist Party of China National Congress concludes. To the contrary, expectations are for Q4 GDP to match third quarter strength.

*** And on the political front, all eyes are on the upcoming 19th National Congress of the Communist Part of China, and for any signs of political tensions or challenges to the leadership of President Xi Jinping. On the contrary, all signs in the run up to the Congress are of a further consolidation of power in the hands of Xi, and of a new politburo roster that will leave the Politburo Standing Committee, and Central Military Commission, even more firmly in his control.

The New Xi Jinping Era

Since mid-July, China’s Politburo has been conducting discreet and behind the scenes comprehensive review and performance evaluations of candidates for the Political Bureau (Politburo) of the 19th CPC Central Committee, and especially of its powerful Standing Committee.

From what we understand, on Thursday, August 31, the Politburo submitted its formal recommendations for positions.

With everything proceeding on plan, Xi then proposed the 19th CPC meet on October 18 in Beijing, and all members of the Politburo unanimously agreed.

In addition to rosters for alternate and standing members of the CPC, Politburo, Standing Committee of the Politburo (PSC), and Central Military Commission (CMC), the Politburo submitted for approval a telling and unusual proposal – that Xi’s thoughts be formally written into the constitution of the Communist Party of China.

“Xi Thought”

In an echo of ages past, the Thursday meeting proposed “Xi Jinping Thought,” or more specifically, “Xi Jinping Thought on the Governance of China” be written into the CPC constitution (“Xi Jinping Zhiguo Lizheng”). While not entirely unprecedented, this has been done on two occasions only before – in the era of Deng Xiaoping, and of Mao Zedong.

Political sources indicate this action would symbolize the ascendance of Xi to a status even higher than that held by Deng, although still behind the legendary Mao Zedong – the founder of the Communist Party of China, the People’s Liberation Army, and the People’s Republic of China itself.

The Next Standing Committee

The meeting also formally recommended nine candidates for what is expected to be eight slots for the top decision making body of China, the Politburo Standing Committee.

The biggest decision will be which of two candidates will take the slot expected to succeed Xi Jinping to the Presidency, but not until the 21st CPC National Congress slated for the end of 2027. Those two candidates are Chen Miner, and Wang Qishan.

Chen Miner is current Secretary of the CPC Chongqing Municipal Committee, and is said to be one of Xi’s most trusted confidantes. The more internationally well-known Wang Qishan is a current member of the inner PSC and one of the most powerful figures in China, noted for his efforts at attacking corruption and reform.

While political sources maintain Wang is perhaps Xi’s most trusted, respected, and closest confidante of all, they also hint he may choose the 19th Congress as the best time to retire, with great honor for his accomplishments, outside the party, and inside. That leaves Chen as most likely to succeed Xi.

The candidate we understand expected to eventually succeed Li Keqiang as Premier is Hu Chunhua, who is a current Politburo member, and Secretary of the province of Guangdong.

As to the other five candidates expected to fill out the Standing Committee, two are the current President and Premier themselves, Xi Jinping and Li Keqiang. The final three candidates are led by the current PSC member and Vice Premier Wang Yang, rounded out by Li Zhanshu (current Politburo member and Director of the General Office of the CPC Central Committee), and Han Zheng (current Politburo member and Secretary of the CPC Shanghai Municipal Committee).

Including the Standing Committee, Xi’s confidantes are expected to make up more than half of the 25 members of the next Politburo.

Bolstering the Military Commission

President Xi Jinping is also taking steps to even further bolster his already solid power base in the military.

At the Thursday meeting, the Politburo endorsed the candidates recommended by Xi for the CMC, the Central Military Commission of the Communist Party of China.

Furthermore, the decision was made to expand the number of Vice-Chairmen in the CMC assisting Xi in his work from the current two to four. This move is seen to consolidate Xi’s military power even more.

In addition to the incumbent Vice Chairman Xu Qiliang, the other three candidates for Vice Chairmen are all hardened veterans who are all extremely close personally to Xi.

First, we are told, is Zhang Youxia, current CMC member and Director of the Equipment Development Department, a childhood friend of Xi who headed a regiment participating in the 1979 Sino-Vietnamese War.

Second is Wei Fenghe, current CMC member and Commander of the PLA Rocket Force, personally promoted to that position four and a half years ago by Xi.

The final Vice Chairman position will be given to Li Zuocheng, current Chief of the Joint Staff Department. Li was also personally promoted by Xi, from Commander of the Chengdu Military Region to Inaugural Commander of the PLA Ground Force two years ago, and was a Company Commander participating in the Sino-Vietnam War, awarded the title of “Combat Hero.”

In a nod to his military leanings Xi has vowed to turn the PLA (People’s Liberation Army) into a “real iron army,” meaning one that can fight anywhere, at any time.

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