China vice premier Liu He to take broad economic role

  • Chinese President Xi Jinping’s top fiscal adviser has been named vice premier, allowing him to take the role of “economic tsar” following a government restructuring that has granted wide-ranging powers to Mr Xi’s top lieutenants.
  • Liu He – who was confirmed on 19 Mar 18 as one of four vice premiers by China’s rubber-stamp parliament — will hold an unusually powerful portfolio, overshadowing the country’s premier Li Keqiang.
  • He is expected to head the recently created Financial Stability and Development Commission, overseeing policy co-ordination between the central bank and banking and securities regulators.
  • Mr Liu, 66, is also expected to take up day-to-day responsibility for relations with the US, China’s largest trading partner and chief global rival.
  • Former anti-corruption tsar Wang Qishan will have a broader, strategic role also focused on the US, after his appointment as vice-president on 17 Mar 18 ended a five-month retirement from top party echelons.
  • The Chinese Communist party’s most trusted crisis manager has returned to front-line politics just in time to face one of the biggest challenges of his long career — managing the fallout from what is likely to be the most dramatic deterioration in Sino-US relations in 30 years.
  • Now 69, he also headed China’s “strategic and economic dialogues” with the US during the depths of the global financial crisis. That experience, coupled with his extensive US contacts list, has burnished Mr Wang’s reputation as Beijing’s foremost “America hand”.
  • One of Mr Wang’s biggest challenges will be how to manage a Trump administration in which the balance of power has shifted dramatically to “China hawks” such as US trade representative Robert Lighthizer and Peter Navarro, Mr Trump’s trade adviser. Mr Lighthizer’s office is preparing wide-ranging sanctions against China for alleged theft and forced transfers of US companies’ intellectual property and technologies.
  • Mr Liu is one of the main advocates of the idea that China’s debt-driven model of economic growth carries with it not only financial risk, but a more fundamental security issue.
  • In a commentary in the official People’s Daily, Mr Liu left no doubt about his top priority: “Strengthening the party’s overall leadership is the core issue,” he wrote.
  • Mr Liu has twice stepped into the spotlight in Mar 18. He travelled to Washington in the face of growing trade tensions to pitch the idea of a point-person to handle bilateral relations between the world’s two largest economies.
  • Mr Xi has already presided over a consolidation of power that has left him the most powerful Chinese leader since Mao Zedong. To do so, he bypassed bureaucratic structures established during the past 40 years of economic reform to rule instead through more personalised “small leading groups”, in which the quiet-spoken Mr Liu has played a key role.
  • Mr Xi’s crackdown on corruption, opposing factions in the party and military, free speech and civil society in general is designed to eliminate that pushback. Westerners who predicted reforms in 2013 have been disappointed that the consolidation of power has not led to the economic liberalisation they expected.
  • The last time a Chinese vice premier wielded so much power was in the early 1990s, when former Shanghai party boss Zhu Rongji similarly jumped bureaucratic ranks. Mr Zhu went on to become one of the country’s most effective premiers, restructuring the country’s bankrupt state-owned sector and facilitating China’s entry into the World Trade Organization.
  • Mr Liu’s thinking can be glimpsed in an influential 2016 editorial in the People’s Daily by an anonymous “authoritative person”, which many believe that he wrote. It warned against accelerating economic growth with loose monetary policy – a strategy Beijing has pursued since the global financial crisis of 2008 – and argued that high leverage could lead to a systemic financial crisis.

External Link : https://www.ft.com/content/ceea03f4-2a85-11e8-9b4b-bc4b9f08f381

External Link : https://www.ft.com/content/aa260008-28d3-11e8-b27e-cc62a39d57a0

19-Mar-2018


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