HONG KONG: Given his pro-business history, the next Chinese economic leader will be put to the test during his tenure to see if he can rein in President Xi Jinping’s interventionist tendencies.
China’s incoming leader, 63-year-old Li Qiang, will have to deal with a slowdown in the world’s second-largest economy as it recovers from the COVID-19 pandemic, faces weak global demand for exports, endures the aftereffects of US tariff hikes, and sees its workforce and population decline.
Xi, who has bolstered the state sector, has said that he wants the ruling party to return to its “original mission” as China’s economic, social and cultural leader. It has also coincided with the proliferation of a “social credit” system that punishes the public for offenses ranging from fraud to littering, and the tightening of control over certain industries. In 2012, Xi assumed China’s highest leadership position.
The world is waiting to see if, during his five-year term, Li can implement any pragmatic policies. However, due to the lack of transparency in Chinese politics, it is difficult for observers from the outside to assess the country’s strategic direction.
Li’s track record as party chief of China’s most populous city, Shanghai, and governor of the neighboring province of Zhejiang, a center for small and medium-sized enterprises, has set the bar high. And, perhaps more importantly, his close ties with Xi.
During an interview with the prestigious business publication Caixin in 2013, Li was quoted as saying that government officials should “put the government’s hands back in place, put away the restless hands, retract the overstretched hands.”
Li hailed Zhejiang’s businessmen as the most valuable resource in the province, pointing to e-commerce billionaire Jack Ma, and he highlighted his government’s cutting red tape.
While Li has relaxed some federal regulations, he has strictly implemented others, such as those aimed at halting the spread of the deadly COVID-19 virus. When his local rule has been out of tune with national policies set by the president and his team, he has eventually fallen into step, seen as key to his rise.
Greater government oversight of e-commerce and other tech firms, in addition to stricter political controls and anti-COVID curbs, has unnerved entrepreneurs under President Xi. The stock market value of companies has been reduced by billions of dollars as a result of anti-monopoly and data security crackdowns. Beijing is also putting pressure on them to fund official initiatives to advance processor chip and other technology as well as social programs.
Li is a local of the province of Zhejiang who rose through the ranks after studying agricultural mechanization and becoming an influential party member. Like many ambitious party cadres, he enrolled in an executive MBA program at Hong Kong Polytechnic University in 2003.
Li took Priscilla Lau’s class on Hong Kong’s free-market economy for a chamber in the city, and he recalled the class when they met in Shanghai over a decade later, according to Lau, a former university professor and former Hong Kong delegate to China’s legislature.
This demonstrates his diligence, Lau said.
When Xi was named party chief in Zhejiang in the 2000s, Li began working with him. Li was promoted to Zhejiang governor in 2013, the No. 2 position in the provincial government, after Xi moved to Beijing and was appointed party general secretary.
It wasn’t until three years later that Li was given his first position outside of his home province when he was named party chief of Jiangsu province, an economic powerhouse on China’s eastern coast. After Xi’s rise to power in China, he was named party boss of Shanghai in 2017, a position Xi had previously held.
Li maintained pro-business policies in Shanghai, an important financial center. In 2018, Tesla, a manufacturer of electric automobiles, announced that it would construct its first factory outside the United States. Half a year later, it launched as China’s first automaker with 100% foreign ownership. Official news agency Xinhua reported that the factory was able to resume production after a roughly 20-day suspension even though the city of Shanghai was under a strict COVID lockdown at the time.
Tao Lin, vice president of Tesla, was quoted as saying that several government agencies had worked nearly nonstop to help businesses resume operations.
Tu Le, the head of Beijing-based consultancy Sino Auto Insights, said that the Shanghai government “bent over backwards” to help the company succeed.
Things have not gone swimmingly with respect to more intricate issues.
Joerg Wuttke, president of the EU Chamber of Commerce in China, said that despite Li’s efforts to broker a deal between Chinese and European companies for the production of mRNA vaccines, Beijing was not supportive of the deal and it was put on hold.
In the days before the citywide lockdown, Li appeared to have more discretion than the mayors of other cities in handling the smaller previous outbreaks in the financial hub. The government did not lock down entire neighborhoods, but rather isolated housing complexes and businesses.
Prior to the intervention of the central government, which sealed off Shanghai after an outbreak of the highly contagious omicron variant, Li took a moderate approach. In the spring of 2016, a brutal two-month lockdown kept 25 million people inside their homes and severely hampered the economy.
China’s president defied tradition in October and appointed himself general secretary of the Communist Party for a third five-year term, promoting Li to the position of number two in the party.
Li, unlike most of his predecessors, lacks national-level government experience, and his reputation took a hit after he was widely criticized for his harsh enforcement of the prolonged COVID-19 lockdown in the financial hub.
The fact that he is widely expected to be appointed shows how important it is to gain the confidence of Xi, China’s most powerful figure in decades, if one wants to rise in the political ranks.
Xi is consolidating government powers into party bodies because he thinks the party should play a larger role in Chinese society, which poses a challenge for Li as premier because the State Council, China’s Cabinet, has been a pillar of legitimacy under previous administrations. Although Xi’s predecessor was seen as a rival, not a protege, by many, some analysts believe the new leader will be more trusted and, thus, more influential.
Xi Jinping need not be concerned that Li Qiang is a separate locus of power, according to Ho Pin, a veteran journalist and Chinese political observer. Since they trust one another, Li Qiang is able to be more proactive in his work, to talk to Xi about his concerns, and to offer Xi many direct insights and suggestions.
According to Iris Pang, chief China economist at ING, Li isn’t much of a moderating influence, but rather a loyal enforcer of Xi’s will.
Pang claimed that Li’s history of government service had influenced his pro-business stance.
His “strong execution,” she remarked, is his defining characteristic.