Stung by downturn, China to upend economic leadership; Xi loyalists to replace reformists

The Chinese economy is expected to grow by just 3 per cent this year, the slowest since 1976, saving 2.2 per cent during the initial COVID hit in 2020 since there are not many signs of the zero-COVID policy to be relaxed significantly any time soon

FP Staff September 14, 2022 15:27:41 IST
Stung by downturn, China to upend economic leadership; Xi loyalists to replace reformists

Chinese president Xi Jinping. News18

New Delhi:  As the Chinese economy drags slowest in decades, mired by rising tensions with the United States and a looming housing crisis, the ruling Communist party is all set for the biggest change in economic leadership in a decade with President Xi Jinping’s loyalists to replace reform-minded policymakers.

The once-in-five years reshuffle will take place at the party congress, where Jinping will break the precedent to continue for a third term as the leader, starting on 16 October.

The congress is expected to hint as to who will succeed Li Keqiang as the premier, however, the change will take place in March during the annual parliament meeting only.

Li Keqiang has been looked at as a moderate voice during a time that has seen President Xi move towards a more state-controlled economic management.

Although Li is widely perceived to have his role diminished under Xi, both were at least appointed at the same time. His successor is thus expected to be weaker.

A policy insider, not willing to be named, said, “Li’s power has been limited but at least he was appointed at the same time as Xi. His successor could be even weaker.”

Liu He, 70-year-old economic adviser and Gua Shuqing, 66-year-old banking regulator, are also expected to step down to keep with the retirement age norms at the congress where 69-years-old Xi will become the first to get a third term as leader.

The retirement age for the party’s top brass is conventionally 68 or two five-year terms.

Premiere Li, 67, who is a doctorate in Economics from the elite Peking University speaks English fluently and Liu, a Harvard-educated economist, and Xi’s close confidant is seen as the brains behind the reforms to reduce excess factory capacity and financial risk.

Policy insiders and analysts say that the new leadership will be dominated by Xi loyalists who are mostly domestically groomed and lack an international and autonomous outlook.

The front-runners to replace Li as the new premiere are the chairman of the Chinese People’s Political Consultative Conference Wang Yang and Vice Premier Hu Chunhua. Although both are seen as pro-reform and have also led the economically strong Guangdong province, policy insiders opine that they have a limited capacity for major changes.

Other probable candidates for premiership include two other Xi loyalists Chen Miner and Li Qiang.

Liu He is expected to be succeeded by He Lifeng, an economist with close ties with Xi.

Although Xi in 2103, at the beginning of his first term, had initiated sweeping reforms, market liberalization has since lost thrust.

“The 20th Party Congress has plenty of room for choosing a new economic team,” said Bert Hofman, director of the East Asian Institute at the Lee Kuan Yew School of Public Policy in Singapore.

“If that team is a technocratic one that pursues a pragmatic agenda to achieve the broad goals outlined by Xi, we can see much of the unfinished reform agenda of the 2013 decisions resurface again, and hopefully see growth reignited,” said Hofman, former country director for China at the World Bank.

With a property crisis in reign, a zero-COVID policy threatening financial stability and rise in tensions with the US, the new leadership will inherit unprecedented challenges.

“In the face of mounting internal and external challenges, the Chinese government’s attention seems to have been drawn away from its reform agenda,” said Joerg Wuttke, president of the EU Chamber of Commerce in China. The chamber plans to issue a paper making nearly 1,000 recommendations for improving conditions for European firms in China, ahead of the congress.

“The Chamber believes the best way for China to fulfil its economic potential is by getting back to the path of reform and opening,” he said.

The economy is expected to grow by just 3 per cent this year, the slowest since 1976, saving 2.2 per cent during the initial COVID hit in 2020 since there are not many signs of the zero-COVID policy to be relaxed significantly any time soon.

Li, the soon-to-retire premiere, who has pulled through the struggle to keep the economy balanced while pushing changes is keen to leave his mark as a reformer. During a recent visit to the village-turned-megacity of Shenzhen the birthplace of Chinese economic growth, he said that the trend is irreversible.

“China’s reform and opening-up will continue to move on. The Yellow River and Yangtze River will not flow backwards,” he said at Shenzhen’s Yantian Port last month.

With inputs from Agencies

Read all the Latest News, Trending News, Cricket News, Bollywood News,
India News and Entertainment News here. Follow us on Facebook, Twitter and Instagram.

Updated Date:

also read

China eases stringent Covid-19 controls amid efforts to head off protests
World

China eases stringent Covid-19 controls amid efforts to head off protests

Following weekend demonstrations at which some crowds made the politically explosive demand that leader Xi Jinping resign, the streets of major cities have been quiet in the face of a crackdown that has been largely out of sight

Twitter searches for China COVID-19 protests bombarded by spam, porn
World

Twitter searches for China COVID-19 protests bombarded by spam, porn

For the past few days, searches in Chinese for major protest hotspots, including Beijing, Shanghai, Nanjing, and Guangzhou, show a nonstop stream of solicitations, images of scantily clad women in suggestive poses and seemingly random word and sentence fragments

Chinese president Xi faces threat from public anger over 'zero COVID'
World

Chinese president Xi faces threat from public anger over 'zero COVID'

Demonstrators poured into the streets over the weekend in cities including Shanghai and Beijing, criticizing the policy, confronting police — and even calling for Xi to step down. Students at some universities also protested