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WHO IS CHINA’S NEW ECONOMIC LEADER?And no, it’s not Xi Jinping

By Kendrick Low

Mr Xi, though, has begun interacting more with foreign business executives, after a faltering economy, depressed stock market and sporadic regulatory crackdowns’. This vicious cocktail has caused foreign direct investment to plummet, as shown in the diagram below.

 China’s president and paramount leader replaced prime minister Li Qiang in such meetings, as the latter role traditionally controls economic policy. Compared to his predecessor, Mr Li is more inward-focused, holding only 2/3rds as many meetings with foreign officials and business leaders, and more time on inspection tours aroumd the country. He may deliberately be displaying deference to Xi, or simply be demoted, holding sway over a vastly ‘diminished portfolio’. As the power of Chinese leaders originates from their standing in the party, versus their government posts, by the time the party picks its next executive committee, the Politburo, in 2028, Mr Li will be above the customary retirement age of 68 and could step down.

But who would replace him as China’s economic caretaker?

Ding Xuexiang, a close aide of Mr Xi’s, could be a viable choice. The youngest member of the Politburo’s exclusive Standing Committee of a mere 7 members, he is the highest ranking of four deputy prime ministers on the State Council, China’s cabinet.  However, Mr Ding does not hold a seat on the most powerful petty commission handling the economy, the Central Comprehensively Deepening Reforms Commission(‘known for its less-than-comprehensive reforms of everything from pensions to football’, according to the Economist). Such party commissions have blossomed under Xi’s office, with such groups having less constraints over their actions, and less limits on member selection. This is best exemplified vis the Central Financial and Economic Affairs Commission. One of its 2021 meetings heralded the start of Mr Xi’s common prosperity campaign, and a February meeting approved a Chinese ‘cash dor clunkers’ scheme, enabling households to trade in old appliances for new equipment. Such commissions have sapped the influence of the State Council, which now meets only 2-3 times a month versus every week. 

However, the winning bet and the real gainer is likely to be fellow deputy prime minister He Lifeng, who acts as Xi’s economic tsar. Mr He hails from Fujian,a province where Xi spent 17 years in. Both struck up a friendship in the port city of Xiamen, and He was even a guest at Xi’s second wedding.  

Critically, Mr He sits on the board of three of the party’s financial commissions, and also two lower commissions managing the financial system and its regulations. He oversaw the appointment of Li Yunze as the head of the new Chinese financial super-regulator, encompassing banking and insurance, also gaining supervising responsibilities previously held by the People’s Bank of China. Despite its governor Dr Pan Gongsheng likely being a better economist than policymakers above him, the bank is, according to the Economist,  ‘losing staff and status’. 

Another valued aspect of Mr He is his rich network of connections. He personally knows many officials across the Chinese economic policymaking spectrum, such as former finance minister Liu Kun, who helped to pick the current finance minister, Lan Fo’an, and the head of the Chinese anti-monopoly branch, Luo Wen, was Mr He’s deputy for a year, when he was head of the main Chinese planning agency, the National Development and Reform Commission, whose current head, Zheng Shanjie, also hails from Fujian and worked under Mr He. Mr Zheng remarked once that ‘if you don’t make progress, you are regressing; if you progress slowly, you are regressing’. He himself has made an admirable journey, rising from a job in equipment maintenance to become manager of a cod-liver-oil factory, and finally the head of an important commission. At the 2024 China Development Forum, Mr Zheng and Mr He both urged foreign businesspeople to invest in ‘new productive forces’ China offered, especially via its ‘vast market and ambitious programme of innovation’. 

Clearly, Mr He has taken up the mantle of the Chinese economic leader and overseer in the coming years. Will he navigate the Chinese economy safely through choppy waters, while incentivising foreign investors, some even as big as Apple executive Tim Cook, to bite at his line?

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