Can Xi Jinpings New Economic Team Boost Chinas Economy

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Can Xi Jinpings New Economic Team Boost Chinas Economy

Chinese leader Xi Jinping is expected to unveil an economic team made up of his cronies at China's National People's Congress, which opens this Sunday (March 5). China's leadership is urgently taking a series of measures to revive the economy after abruptly canceling the "dynamic zeroing" epidemic prevention policy that hit the economy hard last December. China's economy grew by just 3% last year, its worst performance in decades. However, observers of the Chinese economy believe that the new economic team led by Li Qiang, who is likely to become prime minister, does not have many bright spots. Although the Chinese economy faces many difficult challenges, Xi Jinping values ??loyalty over ability and experience. Coupled with his emphasis on the party's centralized and unified leadership, it is doubtful whether the new team has the ability and space to implement pragmatic economic policies.

Different opinions on Li Qiang's ability

Li Qiang, the current No. 2 in the Chinese Communist Party and a close confidant of Xi Jinping and former Shanghai party secretary, is expected to succeed Li Keqiang as premier, though observers of China's economy are divided on whether Li Qiang will be able to boost the country's economy.

Scott Kennedy, a senior expert on China's economic policy in Washington and director of the China Business and Economics Program at the Center for Strategic and International Studies (CSIS), said at a news conference about this year's "two sessions" reported by the center that Li Qiangzhi Therefore, the candidate who can become the prime minister is probably more due to his loyalty to Xi Jinping. He said: "Li Qiang, who is the secretary of the Shanghai Municipal Party Committee, has always been very loyal to Xi Jinping. Maybe he was able to (become the prime minister) because he implemented the closure of Shanghai in full compliance with Beijing's requirements, not according to the requirements of the Shanghai people."

"Over the past 30-plus years, China's economic performance has relied on very smart, sensible economic bureaucrats who have provided the political space to implement all kinds of pragmatic economic policies. People worry that this era is coming to an end because Xi Jinping wants to turn the country into a The overall direction and trajectory brought in, but also because of his emphasis on political loyalty over professional knowledge." He asked: "Does this new team have the ability and space to become smart and pragmatic economic managers?"

The 63-year-old Li Qiang started his political career in Zhejiang. In April 2002, Li Qiang became the secretary of the CPC Wenzhou Municipal Committee. In November 2004, he ushered in a major turning point in his official career. He served as the secretary-general of Xi Jinping, then Secretary of the Provincial Party Committee, and became a general in the "Zhijiang New Army" of Xi Jinping's faction. He later successively took over the administration of Zhejiang, Jiangsu and Shanghai, the wealthiest and most market-oriented places in China. Li Qiang's economic philosophy can be simply summed up as "shop small second economy". He once said, "When facing the market, the government must respond to requests and do nothing, be willing to be the 'shop assistant' of service companies, and create a world-class business environment."

Gary Hufbauer, a senior fellow at the Peterson Institute for International Economics, told VOA that Li Qiang's appointment as premier is good news for the Chinese economy.

"Of course Xi Jinping has the final say, he has the big idea," he said, "but I do think it's a good sign that Shanghai Party Secretary Li Qiang (as prime minister) was picked because he understands the market, he understands the business, he's a pro-market guy. character. I also liked his predecessor. Anyway, it’s a good sign, and it makes me mildly optimistic about the prospects of the Chinese economy.”

But there are also concerns that Li Qiang does not have work experience in the State Council, which may reduce his points. He will be the first Chinese official in decades to be promoted to the top of the State Council with only local political experience. In the past, the prime minister was usually chosen from among the current deputy prime ministers. China has a vast geographical area, and the economic conditions of different regions are uneven. For example, the old industrial bases in Northeast China and Northwest China have a large proportion of state-owned enterprises, their degree of marketization is low, and their economic development level is not as good as that of coastal areas. The deputy prime minister should have better grasp of the overall economic situation than someone with local experience.

Joerg Wuttke, chairman of the European Union Chamber of Commerce in China (EU Chamber of Commerce in China), believes that the lack of work experience in the central government does not necessarily make Li Qiang incompetent, but the real test he faces is to take over a tossing job that has been "cleared" by the new crown for three years. After the economic "mess".

He told Voice of America: "Compared with when Wen Jiabao or Li Keqiang took over, he (Li Qiang) took over China's economy in a more unfavorable situation. At that time, they still had some convenience, and they could pick low-hanging fruit. ...but that's all over. In 2022, China has been off the radar screen of international business for a year. So he has to reconnect. Does he have the diplomatic skills and communication skills to convey China's open message, no It's just lip service. So, the poor man has a tough job ahead of him. And we'll have to wait and see. As a business in China, we can only hope that his efforts on this front will be successful."

New team or lack of international vision

Another important Xi Jinping confidant, He Lifeng, the current director of China's National Development and Reform Commission (NDRC), is expected to take the post of vice-premier, succeeding the retired Liu He and taking charge of the country's economic, financial and industrial affairs, and becoming a future US-China leader. The leader of economic and trade relations. He became a member of the Political Bureau of the Central Committee at the 20th National Congress of the Communist Party of China, and he may also serve as the party secretary of the People's Bank of China, the central bank of China.

He Lifeng, 67, is also a close confidant and friend of Xi, with a relationship dating back to the 1980s, when Xi was appointed vice mayor of Xiamen, where he met He Lifeng. He Lifeng is a finance graduate with a Ph.D. in economics and is considered a practical official.

"He (He Lifeng) is a mature manager. He understands the situation, and he knows how to play an administrative role here. He knows the situation of the National Development and Reform Commission like the back of his hand," said Wu Ke, chairman of the European Union Chamber of Commerce in China.

The Wall Street Journal reported in December that He Lifeng was working on a plan for China's economy to grow by 5 percent this year. The final economic growth target will be announced in Li Keqiang's final government work report.

Gan Side of the Center for Strategic and International Studies said He Lifeng was not considered an economic reformer.

According to the Wall Street Journal , Xi is also believed to be installing his confidant, Zhu Hexin, chairman of the Chinese financial giant CITIC Group, to succeed Yi Gang as governor of the People's Bank of China.

Gerard DiPippo, a senior fellow in the economics program at the Center for Strategic and International Studies, said Zhu Hexin lacked an international perspective compared with his predecessors.

He told Voice of America: "I'm actually a little worried. He's less concerned with international affairs and more concerned with internal affairs. I mean, if you look at Yi Gang or Guo Shuqing, these people are all direct descendants of Zhou Xiaochuan, who five years ago I was the governor of the People's Bank of China. They put more emphasis on opening up the economy and the exchange rate. I'm not sure if the new governor will have this idea."

Di Pippo also said that having He Lifeng, who may be vice premier, also serve as party secretary of the central bank means that the autonomy of the People's Bank of China in monetary and financial policies has further declined. “I don’t know how much that matters. I think the bigger problem is that the incoming technocrats have less background in the international economy. You know, they’re just a different generation or half,” he said.

Zhu Hexin, who is about to turn 55, has spent most of his career at China's largest state-owned banks, including more than 20 years at Bank of Communications, one of China's four major state-owned lenders. He also served as vice president of Bank of China, another one of China's four major state-owned banks. From 2018 to 2020, he served as the deputy governor of the People's Bank of China, responsible for maintaining financial stability.

The key is how much power Xi Jinping transfers

In addition to the above-mentioned several important roles, who will serve as the director of the National Development and Reform Commission, the Minister of Commerce, the chairman of the China Banking Regulatory Commission and the China Securities Regulatory Commission has yet to be announced. There have also been reports that the two financial regulators, the China Banking and Insurance Regulatory Commission and the China Securities Regulatory Commission, may merge. The Wall Street Journal quoted people familiar with the matter as reporting that the CCP also plans to reinstate the Central Financial Work Committee, and that Prime Minister-designate Li Qiang and Ding Xuexiang, one of the seven Standing Committee members of the Political Bureau of the CCP Central Committee, are possible candidates to head the committee.

Although China's latest economic data was better than expected, the official manufacturing purchasing managers' index (PMI) showed that economic activity has expanded sharply for two consecutive months, the service industry and construction industry are also recovering, and new export orders have also been realized in the past two years. China's economy is now facing multiple challenges, including a sharp drop in exports due to weakening global demand, high tariffs imposed by the United States on Chinese goods, and U.S. sanctions on Chinese chips and their chip manufacturing technology and equipment, as well as other high-tech Restrictions and blockades in China, as well as the shrinking labor market in China, which has continued for a decade, are combined with the challenges of local debt burden, real estate crisis and aging population. Xi Jinping's new economy team will have to take over economic work at a time when China faces many headwinds.

Whether the new team can revive the Chinese economy will ultimately depend on how much power the party can delegate to officials, said Woodker, president of the European Union Chamber of Commerce in China.

"From the people I know in Beijing and in the provinces, most of them are well-educated in business and economics, so there is no shortage of expertise in the new leadership. The problem is, the party has given these What leeway do people have to make rational decisions, and to what extent does ideology interfere?"

At the just-concluded Second Plenary Session of the 20th Central Committee of the Communist Party of China, the CCP proposed to further strengthen the party’s leadership and promote the party-government organization “led by strengthening the centralized and unified leadership of the Party Central Committee and oriented by promoting the modernization of the national governance system and governance capabilities” reform. The communiqué of the plenary session stated, "Coordinate the Party Central Committee, the National People's Congress, the State Council, and the National Committee of the Chinese People's Political Consultative Conference, coordinate the central and local governments, deepen institutional reforms in key areas, and promote the party's leadership over socialist modernization to be more scientific in terms of institutional settings and functional. It is more optimized in terms of configuration, more perfect in system and mechanism, and more efficient in operation and management.”

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