China’s President Xi Jinping is increasingly concerned that a dearth of economic and financial experience at key policymaking levels is exacerbating concerns among both market investors and global policymakers over Beijing’s management of the economy.
Those include examples such as the embarrassing flip flop at the start of the New Year by the China Securities Regulatory Commission (CSRC) on the decision to impose circuit breakers on equity markets – a measure that was rejected and scrapped personally by Xi himself.
*** We have indeed just learned there is now enough dis-satisfaction with the performance of economic policy makers that President Xi is considering a series of promotions and personnel changes that will be phased in over the coming years which are intended specifically to promote officials with successful track records and greater macroeconomic experience up into the most senior decision-making ranks, but which should also it is hoped galvanize improved performance until then. ***
*** Some of the criticism over the management of the economy has, truth be told, been quietly directed as high up as at Premier Li Keqiang himself who, while scholarly and highly intelligent, has proven to be an indecisive steward of the economy. Li’s position, however, is secure. We are told as things stand, despite some murmurings to the contrary, Li is likely to hold on to his position in the top leadership cadre even after 2018 for a second term as Premier. ***
*** The reshuffle that appears to be in the works is instead focused just one level below Li – promoting officials from various key municipal offices on up to the political bureau of the Communist Party of China (CPC), the State Council, and the ultimate likely replacement of two out of the four Deputy Premiers serving Li. The aim is to move in at least two Deputy Premiers with more experience and proven economic track records than the current team. Not surprisingly, these nominees will all also be loyal and handpicked by Xi himself. It is unclear if the head of the CSRC regulatory agency will be replaced or not. ***
Strong President, Weak Premier
There is little question that beside whatever concerns markets may have over the slowdown and fundamental economic conditions of the Chinese economy, a good deal of the financial market volatility since last summer, through the August mini-devaluation of the Renminbi and into the New Year, has been exacerbated by a lack of confidence if not transparency with the economic decision-making process in Beijing.
And while some of this lack of confidence has been expressed in the press as concerns over a politically driven micro-management of the economy by President Xi Jinping himself, sources in Beijing privately concede that much of the hard-nosed President’s outsize role has in fact been driven by the need to compensate for the cautiousness of the highly intelligent, yet indecisive, Premier Li Keqiang, whose remit traditionally covers economic policy.
Indeed, a number of eyebrows were raised, we are told, at the 5th Plenary Session of the 18th Communist Party of China meeting where Xi spent an unprecedented two and a half hours laying out his vision for the 2016-2020 Five-Year Plan, traditionally a remit of the Premier, while Li was relegated to a mere half hour “clean-up” talk at the end summarizing Xi’s main points.
But the precedent of a strong, politically-driven President overshadowing a weaker Premier on economic issues is not a new one in China – the preceding relationship between President Hu Jintao and the technocratic but weaker Premier Wen Jiabao being a case in point.
And there is no chance the current economic concerns or stress will be allowed to jeopardize stability or unity at the all-important, top leadership levels.
But we have learned that Xi is planning a reshuffle nevertheless, with the focus of the changes just one step below that, at the Deputy Premier level, where two of Li Keqiang’s four deputies are likely to be replaced by party officials with stronger economic and financial backgrounds and, perhaps even more importantly, a proven track record of success in their careers to date.
They all will of course also be handpicked by Xi himself.
The Rising and Falling Stars
Specifically, we understand that Xi is considering the following changes:
Yang Jing, Secretary-general of the State Council and State Councilor, is under consideration to be named as Secretary of the CPC Tianjin Municipal Committee.
Huang Xingguo, Xi’s close aide and the current Mayor of Tianjin and acting Secretary of the CPC Tianjin Municipal Committee, will be named as Mayor of Chongqing. Down the road, Xi is believed to be grooming Huang Xingguo to replace Sun Zhengcai as Secretary of the CPC Chongqing Municipal Committee and member of the Political Bureau of the CPC Central Committee in the autumn of 2017.
And either Huang Qifan, the current Chongqing mayor, or You Quan, Secretary of the CPC Fujian Provincial Committee, are likely to replace Yang Jing as Secretary-general of the State Council.
But any appointments to the post of Secretary-general of the State Council must be approved by the Political Bureau of the CPC Central Committee first, and then approved by the NPC (National People’s Congress) Standing Committee. And the Political Bureau has not discussed these personnel issues yet.
There have been a number of rumors nevertheless swirling around about Huang Qifan recently, such as that Huang will replace Xiao Gang as Chairman of the China Securities Regulatory Commission (CSRC). That is unclear, and it is too early to say yet whether Huang will become Secretary-general of the State Council.
But we are told one thing certain is that Huang Qifan will not step down during the Xi and Li’s second term (2018-2023), despite the fact that he will be hitting 71 years-old in 2023.
Indeed, Xi has apparently started to enquire and scout for candidates for the next State Council leadership under Premier Li Keqiang, and two names have come up prominently: Han Zheng and Huang Qifan. Both Han and Huang have been commended for their economic performance.
Of those two, Han Zheng, who is Secretary of the CPC Shanghai Municipal Committee and member of the Political Bureau of the CPC Central Committee, could be promoted as the Executive Vice Premier and member of the Politburo Standing Committee. That is one of the top leadership positions and the promotion would reflect and reward the enormous success he has had in his leadership of Shanghai.
Huang Qifan would be promoted as the Vice Premier and member of the Political Bureau, eventually to become Vice Premier and NDRC head Ma Kai’s successor in March of 2018. Ma is expected to remain in charge of the financial, banking and industrial sectors even if Huang Qifan or You Quan is appointed Secretary-general of the State Council.
If both Han and Huang are chosen, that would replace two of the total four vice premier positions under Premier Li, but not until March of 2018.
All new Vice Premiers will be required to work at Zhongnanhai party headquarters in late 2017 after the 19th CPC National Congress – about four to five months ahead of the 13th National People’s Congress – in order to be approved for the appointment of the State Council leadership in the spring of 2018.