Last Updated:2017-03-05
By Geoff Raby
In the fog of Trump, with media running from one provocation to the next, sight is lost of a much more serious, albeit boring, event taking place in China. Meetings that have just started in Beijing will set the stage and policy directions for the all-important 19th Party Congress, expected to be held in the northern autumn this year.
These will be the last in President Xi Jinping's first five-year term. Over the next three weeks, the People's Political Consultative Conference – where retired Party grandees, Red Capitalists (the rich entrepreneurs who have joined the Party) and fellow- travellers from Hong Kong and Taiwan – and the more influential National People's Congress (NPC) will be in session.
For the next three weeks Beijing, the centre of all power in China, will be crammed with officials from every corner of the country. Intended to show respect for its minority groups, many officials come to meetings dressed as if attending a fancy dress party in traditional costumes no longer worn in China's remote mountains or vast deserts. But it is a serious time, with officials speed-networking as they seek influence and favours and their own personal advancement. The USA's Party National Conventions have nothing on what occurs in Beijing every March.
Outwardly calm, behind closed doors of private rooms of restaurants and teahouses across Beijing, this year the atmosphere will be more febrile than usual as participants speculate on future leadership changes towards the end of this year.
The likely composition of the all-powerful, seven-person, Standing Committee of the Party's Central Committee will be the hottest topic discussed. Some will not just be speculating, but will also be actively lobbying for their own advancement through the thickets of the Party's bureaucracy.
Already a number of key ministerial changes has been announced, including three new appointments to head key economic portfolios. The new appointees are Xi Jinping's people, furthering his control over economic management and presumably weakening Premier Li's influence.
Guo Shuqing takes over the highly sensitive role as head of China Banking Regulatory Commission (CBRC). He has been Governor of Shandong, with a background in
finance and banking. He is regarded as close to Xi and is rumoured to be in line to become the next Governor of the People's Bank of China in October (PBoC). This appointment might also indicate that the other three major financial regulatory bodies are about to be folded into one and put under the control of PBoC.
He Lifeng is the new Chairman of the powerful National Development Reform Commission and is from Fujian Province where Xi held various positions, including Governor, over a 17-year period. Zhong Shan is the new Minister for Commerce and another Xi loyalist, coming from Zhejiang Province where Xi was Party Secretary for many years, before a brief stint in Shanghai in 2007 on his way to becoming Vice- President and ultimately the Party's General Secretary and China's President.
Indicators of intent
But the big question hanging over China's leadership transition is what will President Xi's intentions be when his own 10-year term expires in 2022. Some inkling of this might be gleaned from what happens at the 19th Party Congress. If Xi's enforcer of his anti-corruption drive, Wang Qishan, is kept on beyond the customary retirement age, which he has now passed, it will be seen as clear indication that Xi is unlikely to be bound by precedent when it comes to his own term.
The new Vice-President to be appointed later this year would normally be Xi's successor, but this may not transpire if Xi himself decides to remain in charge at the end of his second lustrum. Some are even speculating that Xi may have himself appointed "Chairman". A position that was abolished by Deng Xiaoping after Mao died.
The future of the Premier, Li Keqiang, is another subject on which speculation runs hot and cold. Over the next few weeks, his every move and inflection, especially when delivering the government's Annual Work Report, will be scrutinised by delegates for some sign of his future.
Foreign analysts will also be parsing every phrase for the same reason, and not least Australia's diplomats as they prepare the government for Li's visit this month after the NPC concludes. His visit will also provide the opportunity for Australian officials to meet some of the Xi's new ministerial appointees if they accompany Li.
Li is the least influential Premier to hold the position in decades. Whether he remains as Premier, or is kicked upstairs to become Chairman of the NPC, will most likely not be known until the time of the 19th Party Congress. Whatever Li's weaknesses, he is unlikely to be humiliated by being sacked in the autumn as is also sometimes rumoured.
While the Premier is normally in charge of running the economy, Xi's centralisation of power over the past five years has unusually also extended to economic management. Xi's Leading Group on Financial and Economic Affairs, created soon after he became President, is to oversee economic policy. It sits above China's State Council which has formal responsibility for the economy and reports to Premier Li.
The Leading Group is headed by Liu He, an English-speaking, US-trained economist. His formal bureaucratic position is Vice-Chairman of the National Development and Reform Commission, but his real power derives from being Xi's main adviser on economic policy. Said to have a global view on China's economic development, he would have written Xi's much-discussed recent World Economic Forum speech on the benefits of globalisation. Liu may well emerge with a major appointment in the autumn.
Whether by good luck or good management, delegates at the NPC will receive an overall positive assessment of China's recent economic performance and outlook. Premier Li in his speech on Sunday set a growth target for this year of 6.5 per cent, but it already seems likely to be exceeded at 7 per cent. A sense prevails that the past several years of comparatively weaker performance are over as fiscal stimulus reinforces years of loose monetary policy. This sentiment is reflected in current unexpectedly high prices for Australia's commodities, notably iron ore and coal.
Liu He and his team will certainly want to deliver robust growth for Xi in the run up to the 19th Party Congress. Meanwhile, the can of rapidly rising, and potentially de- stabilising, debt will be kicked further down the road as internal politics trumps all policy consideration in the last months of President Xi's first five-year term. Whatever the talk of economic reform, especially in the financial sector, at the NPC, it will come only after the end of Xi's first lustrum, if at all.
Geoff Raby is Chairman and CEO of Geoff Raby & Associates and a former Australian Ambassador to China.
This article first appeared in the Australian Financial Review:
