Why the passing of a colorless premier might matter to Xi Jinping – Ian Johnson

 

Ian Johnson

During his life, former Prime Minister Li Keqiang was mainly remembered for being side-lined by Xi Jinping. But after his sudden death he might become a problem for his former boss, writes author Ian Johnson at the Council on Foreign Relations, as it might be used as a way for the hidden criticizing of Xi.

Ian Johnson:

The sudden death of former Chinese premier Li Keqiang is the latest in a steady series of crises, mishaps, and blunders to afflict top leader Xi Jinping over the past two years.

The official Xinhua news agency said in a terse report that Mr. Li, 68, died of a heart attack early Friday morning in Shanghai. The death clearly caught Chinese officialdom off guard because an obituary had not been prepared, with the agency saying one would be issued later.

Mr. Li’s death is unlikely to alter the power dynamic at the top of China’s leadership. He had already retired from all posts and was not part of Xi’s inner circle. Although often seen as a pro-reformist moderate in contrast to the more authoritarian-minded Mr. Xi–he held a PhD in economics, and was seen as quick-witted–he never appeared to challenge his boss’s hardline policies. Compared to his more dynamic predecessors, especially the hard-charging Zhu Rongji in the 1990s and the reform-oriented (if tainted by family corruption) Wen Jiabao in the 2000s, Mr. Li was easily one of the most colorless premiers in the nearly 75-year history of the People’s Republic.

More at the website of the Council on Foreign Relations.

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China’s modest economic ambitions – Victor Shih

 

Victor Shih

China limited its GDP growth for 2023 to a modest 5 percent at the opening of the National People’s Congress this weekend. Political analyst Victor Shih explains the background of this lower-than-expected ambition in the Guardian.

The Guardian:

[Premier] Li [Keqiang] began the speech saying Covid-19 and other domestic and international factors had affected the country’s economy “beyond our expectations”.

He announced the government would aim to create about 12m urban jobs, but left room to move with unemployment rates – keeping the urban target at 5.5%, which it was most recently reported as being in December.

Prof Victor Shih at the University of California, San Diego, told the Guardian the targets were “not overly ambitious”, and allowed the government and its incoming new premier a potential “easy victory”.

“They don’t call for any massive stimulus, and that partly stems from a recognition that exports – a main engine of growth for China’s economy in the last three years – will likely not be so strong this coming year,” he said.

The speech also pledged to resolve housing issues for young people, improve welfare provisions to elderly people and “improve the birth support system”. In recent weeks, the CCP has unveiled a number of policies that aim to reverse the declining birthrate by encouraging people to have more children.

Shih said welfare increases and stimulating consumption – another focus of Li’s speech – would require sizeable government funding.

“So a lot of this wording sounds to me like an empty promise in a sense, because it’s unclear where the money would come from unless growth miraculously comes in way beyond expectations.”

More in the Guardian.

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Will Xi Jinping become more assertive in his third term? – Ian Johnson

 

Ian Johnson

Political analyst Ian Johnson answers some basic questions on the upcoming 5-yearly meeting of the Chinese Communist Party at the website of the Council of Foreign Affairs. Most Polit bureau members will retire, Premier Li Keqiang will prepare for his replacement in March, and secretary-general Xi Jinping will be re-elected for his third term. What will it mean for Xi’s position?

Ian Johnson:

Will a third term make Xi more assertive, particularly in terms of his foreign policy moves?

That is hard to say because he’s already been quite assertive. Domestically, he’s pursued a scorched-earth policy in areas with many minority populations, essentially forcing them to follow Han Chinese cultural practices. He’s also quashed civil society, reined in religious groups, and put limits on nongovernmental organizations. Internationally, he has allowed diplomats to pursue “wolf warrior” policies, which often means speaking extremely bluntly to officials in host countries; presided over a military buildup in the South China Sea; and pushed a more aggressive policy toward Hong Kong and Taiwan.

These policies have created backlash. Almost all wealthy, democratic countries—including the United States, European Union countries, Japan, and South Korea—now view China as a rival and not just an economic competitor. This has led countries to pursue policies to reduce reliance on China. This is a huge change from a little over a decade ago, when China was seen as a potential partner in the existing international order.

Today, China is instead seen as a disruptor—not on the level of Russia, which has invaded neighbors under President Vladimir Putin, but still as a serious challenge to democratic countries. That seismic shift largely took place on Xi’s watch and is almost certain to continue.

Will there be any big policy announcements during the twentieth party congress, such as economic reforms or a lifting of China’s zero-COVID policy?

Probably not. Congresses are about choosing the party’s leaders and setting its general direction. There will be a lengthy communiqué issued at the end of the meeting from which observers can glean ideas about what the government has planned. But it will mostly praise the government and list challenges.

More answers at the CFR-website

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How Xi Jinping dominates China’s top leadership – Victor Shih

 

Victor Shih

At China’s top leadership, it was always possible for different political agendas to exist next to each other. But since 2012 next to Xi Jinping – up for his unprecedented third term as CCP party secretary – very few variations in leadership style have been given room, says political analyst Victor Shih at the ABC. The retirement of premier Li Keqiang finalizes Xi’s powerful position, he adds. China’s next premier is likely to be a good friend of Xi, while women and ethnic minorities make little chance.

ABC:

As soon as he came into power within the party in 2012, Xi formed and headed a whole series of groups ranging from economic reforms, to Taiwanese affairs, to national security.

That has left Li little autonomy to set his own agenda, according to Associate Professor Victor Shih, from the University of California San Diego.

“The leading groups headed by Xi Jinping have been setting the agenda to a large extent,” Professor Shih said.

“The State Council became kind of an implementation organ instead of a policy-making organ.”…

So what kind of people are more likely to join the Politburo in October?

Professor Shih, who leads the CCP Elite Database, which tracks biographical information of thousands of elite party members, said connections with Xi Jinping would be key when it comes to eligibility for the Politburo.

This could be either through families — descendants of senior communist officials — or past working relationships with Xi.

Professor Shih said while there was still a place for officials with an ordinary background like Li to join the State Council next year, key positions would most likely be held by Xi’s connections.

He also said there would be fewer leadership positions for people coming from a social science background like Li, with more politicians from engineering backgrounds having been promoted during Xi’s reign.

The CCP Elite Database also shows that all current members of Politburo are of Han ethnicity, despite China being made up of 55 other minor ethnic groups.

And China is unlikely to have a female premier any time soon.

Less than 10 per cent of officials serving in the central government are women, according to China Elite Database.

“Even in a lot of Islamic countries, [some of which] discriminate against women, you typically will see a higher ratio. And in Western democracies, it’s like 40 to 60 per cent are women,” Professor Shih said.

Currently, the most powerful female official is Sun Chunlan, who is the second vice-premier overseeing China’s COVID strategy.

She is also the only woman in the current Politburo. There are no women in the Politburo Standing Committee.

Sun had been seen on the frontline of the pandemic in Shanghai and Wuhan, the two cities that went into lockdowns during China’s coronavirus peaks in 2020 and 2022.

“She should be the number one person in the party. But in that political system, she’s not qualified,” Professor Shih said.

More at ABC.

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New policies and people at the upcoming 20th Party Congress – Victor Shih

 

Victor Shih at the China Edge

Political analyst Victor Shih, author of Coalitions of the Weak, (2022), looks at the new policies and people emerging ahead of the upcoming 20th Party Congress. While party-secretary Xi Jinping will be up for a third term, Premier Li Keqiang, typically in charge of economic affairs will be replaced, he tells at the China Edge.

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Premier Li Keqiang's new leadership's style - Victor Shih

 

Victor Shih (top right)

Leading political analyst Victor Shih joins a panel at the Atlantic Council to discuss China’s top leadership, including the different style premier Li Keqiang tries to display in a situation where little deviation from the top leadership is possible. Including the leadership perspective on the Shanghai lockdown.

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China needs technology, not street vendors, to save the economy - Shirley Ze Yu

Shirley Ze Yu

Premier Li Keqiang caused some rippled over the past few weeks by pushing street vendors as a way to save the economy and generate employment in the post-corona era. Some big cities disagreed, as they have tried to get rid of those vendors and political economist Shirley Ze Yu also disagrees with the street vendor policies, she writes in the South China Morning Post.

Shirley Ze Yu:

The “street vendor economy”, the latest economic policy from Premier Li Keqiang, has spread across China’s city streets in the past two weeks. It may seem alluring at first, but it’s far from a prescription for economic prosperity. A street vendor economy cannot save China. 

During his visit to Yantai, Shandong province, on May 31, Li said: “Street vendors and small shops are important sources of employment. This is the ordinary people’s way of living. Just like those advanced and hi-tech industries, they are vital to the economy.” 

Shanghai quickly announced a month-long festival promoting street nightlife. By June 4, at least 27 cities had enacted policies promoting street vendors. 

Street vending has long been considered at odds with metropolitan modernity in China. For the past decade, city patrols and street vendors have engaged in a cat-and-mouse game on China’s streets, occasionally ending in brutality... 

In an event too orchestrated to be accidental, a group of mayors from Hubei province held a wave of social media live streams in April. The mayors went on popular social media apps such as Douyin – China’s TikTok – to promote local produce, accompanied by their accents and on-camera unease. 

They were quickly overshadowed last month when Gree Electric Appliances chairwoman Dong Mingzhu sold 310 million yuan (US$43.7 million) of goods during a three-hour stream on Kuaishou. Viya Huang, a streamer who was virtually unknown to the world before 2017 but now enjoys a celebrity status in China on a par with Kim Kardashian in the West, sold a rocket launch service for 40 million yuan on an April stream that attracted more than 19 million viewers. 

Once China has experienced the power of a digital economy, how can it travel back in time and return to a more labour-intensive, less productive output narrative? 

SpaceX recently made history by sending astronauts to space on an American rocket again. Solemn salutes were made on Chinese social media to the spirit of innovation. While the United States celebrated the revival of its space economy, China celebrated the revival of its street economy. No country becomes a leading nation by adding flocks of vendors to its city streets. Government policy intervention can create emotional exuberance on the streets. 

China’s leaders know a street vendor economy won’t save the country this time. They are simply soothing the public while stalling to also gaze at the stars.

More in the South China Morning Post.

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China trade, investments to Eastern Europe still lagging - Sara Hsu

Sara Hsu

Eyes were on Sofia, Bulgaria, last week, as China's prime minister Li Keqiang tries to improve relations with Eastern Europe. Economist Sara Hsu puts Li's efforts into perspective as both trade and investments between China and Eastern Europe have been stagnant, compared to other countries in the One-Belt, One-Road initiative, she tells at CGTN. Also: the contagious relations with the EU.

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Premier Li in anti-recession mode - Sara Hsu

+Sara Hsu 

Europe talks already about a triple-dip, a third financial crisis, as China´s premier Li Keqiang visited the continent with a global anti-recession business trip, offering deals to Germany, Italy and Russia. Financial analyst Sara Hsu. "Bolstering growth is needed in those countries... It won´t be Li´s last tour," writes financial analyst Sara Hsu in the Diplomat.

Sara Hsu:

Li’s tour highlights the major challenges facing these countries. While Germany remains economically strong, as a producer and exporter of high-value added products, China, Italy and Russia must overcome structural barriers to economic growth. China, for its part, currently faces a large debt burden incurred mainly by its corporate sector and local governments. At the same time, the nation is attempting to move away from a low value-added manufacturing model of growth to a high value-added manufacturing and service-based economy. Italy faces major challenges pulling out of its debt distress, with the most difficult issue its underlying need for economic restructuring. Finally, Russia faces not only economic sanctions, but serious challenges to the expansion of its market economy. Institutions favoring rent-oriented firms have stalled the growth of the private economy, with a lack of competition, corruption, and inefficiency posing barriers to market expansion. 

It is hopeful that the agreements resulting from Li’s tour will bolster growth in these countries. The agreements work in part to facilitate restructuring, focusing to some extent on economic upgrading and innovation, as between China and Germany and China and Russia, the building of infrastructure to complement industry growth, as between China and Russia, and investment, as between China and all three nations. The lion’s share of the restructuring onus still falls on the shoulders of each nation, however, and the difficulty of the task may mean that Li’s Recession Tour won’t be his last.

More in the Diplomat.

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Why China needs Europe now - Shaun Rein

+Shaun Rein 

Premier Li Keqiang will visit Germany this week with the largest business delegation ever. Business analyst Shaun Rein explains why China has a rather weak economy, and needs Europe for support. With some advise on German business how to treat Chinese competitors.

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Europe book tour for Joel Backaler

+Joel Backaler 

 Author Joel Backaler of China Goes West: Everything You Need to Know About Chinese Companies Going Global is visiting Europe this month on an impressive book tour. Shortly, he will visit Dublin, London, Hamburg, Brussels, Amsterdam, 14 events in 8 cities.

The Hamburg EU-China is the largest event, also attended by premier Li Keqiang.

A selection of these events you can find here:

• London, Oct 6: London School of Economics
• London, Oct 7: SOAS
• London, Oct 7: China-Britain Business Council
• Dublin, Oct 8: Institute of European and International Affairs
• Hamburg, Oct 10-11: Hamburg Summit
• Brussels, Oct 13: EU-Asia Centre
• Amsterdam, Oct 17: NCH Netherlands

If you are interested in attending one of these events, please follow the links to check on the availability of seat, reservation and other details.

Joel Backaler is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers´request form.

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China´s unpredictable GDP growth - Sara Hsu

+Sara Hsu 

Slowing economic growth, uncertainty about measurement tools being used and promises by the government for reform. Those are just three elements making assessing China´s GDP for the coming years tough. Financial analyst Sara Hsu gives it a go at the Diplomat.

Sara Hsu:

Taking a step back, we can define GDP as a measurement of the market value of goods and services produced during a particular period. GDP tells policymakers whether an economy is generally healthy or not, to determine what approach should be taken to improve circumstances. However, China’s problem with inflated GDP numbers and its alternative method of reporting debt (rolling it over and recording it as an asset) lead us to mistrust the reported GDP numbers. Alternative indexes, most recently provided by Premier Li Keqiang, in the form of railway volume, electricity consumption, and bank loans, are problematic as well. Electricity consumption is subsidized, so that even in a downturn, electricity consumption is likely to be buoyant. Bank loans are often provided to larger state owned enterprises that may put the loans to unproductive use. Railway volume fails to capture the services component of the economy. 

Although China’s GDP measurement is a serious problem, there may be ways to determine whether GDP data is more or less reliable. The National Bureau of Statistics performs checks against reported data using alternative sources. For example, household consumption expenditures are first tallied from the retail sales of consumer goods, and later checked against household surveys. We may choose to conduct our own checks on reported GDP figures as well, as some financial analysts already do. Looking at the reported figures of the primary, secondary and tertiary sectors, we can compare elements of the Li Keqiang Index and other proxies. Primary sector figures can, for example, be checked against metric tons of rice or wheat production. The secondary sector reported figures can be compared against the railway cargo volume. The tertiary sector may be checked against sales of new automobile sales and white goods, as well as against housing starts. 

We can also compare the national and provincial GDP statistics. In 2011, the National Bureau of Statistics published economic data for 2010 that revealed a growth rate of 10.3 percent, while China Economic Net reported growth rates in more than 90 percent of provinces that were above this amount, revealing a large discrepancy.

More (including some conclusions) in the Diplomat.

Sara Hsu is a speaker at the China Speakers Bureau. Do you need her at your meeting or conference? Do get in touch or fill in our speakers´request form.

Sara Hsu produces a wide range of financial analyses. For a regularly updated overview, check our page here. 

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China meets growing skepticism in Africa - Howard French

+Howard French 

A decade of Chinese investments in Africa is now triggering off a larger degree of skepticism, writes author Howard French in the New York Times. Earlier this month he published his latest book China's Second Continent: How a Million Migrants Are Building a New Empire in Africa.

Howard French:

The doubts aren’t coming from any soured feelings from African leaders themselves, most of whom still welcome (and profit from) China’s embrace. The new skepticism has even less to do with the hectoring of Western governments, the traditional source of Africa’s foreign aid and investment (and interference). In a 2012 speech in Senegal, Hillary Rodham Clinton, then secretary of state, implicitly warned Africa about China. The continent needs “a model of sustainable partnership that adds value, rather than extracts it,” she said, adding that unlike other countries, “America will stand up for democracy and universal human rights even when it might be easier to look the other way and keep the resources flowing.”

Some Africans found Mrs. Clinton’s remarks patronizing. What’s most remarkable, however, is how passé this now seems, given skepticism about China from Africa’s own increasingly vibrant civil society, which is demanding to know what China’s billions of dollars in infrastructure building, mineral extraction and land acquisition mean for the daily lives and political rights of ordinary Africans.

This represents a tricky and unfamiliar challenge for China’s authoritarian system, whose foreign policy has always focused heavily on state-to-state relations. China’s leaders demonstrate little appreciation of the yawning gulfs that separate African people from their rulers, even in newly democratic countries. Beijing is constitutionally uneasy about dealing with independent actors like advocacy groups, labor unions and independent journalists.

After a decade of bland talk about “win-win” partnerships, China seems finally aware that it needs to improve both the style and substance of its push into Africa. Last week, at the start of a four-country African trip, Prime Minister Li Keqiang acknowledged “growing pains” in the relationship, and the need to “assure our African friends in all seriousness that China will never pursue a colonialist path like some countries did, or allow colonialism, which belongs to the past, to reappear in Africa.”

More in the New York Times.

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Why setting a growth target is wrong - Shaun Rein

Shaun Rein

Premier Li Keqiang announced a 7.5% growth target for the GDP. Not a good idea, since it might be hard to achieve, tells business analyst Shaun Rein at BloombergTV. The economy is very weak, consumer confidence is low, and pushing infrastructure might cause more pollution.

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