China’s 20th Party Congress - Things We Know & Things We Are Learning
A week ago Sunday, China's 20th Party Congress adjourned with a new leadership, old faces and new faces pooled together in the Standing Committee.
It was of little surprise to anybody that president Xi Jinping was confirmed for his third five-year term.
But the real news from the Congress may be who else is going to be with him at the table. The spotlight shown on the man who was named as the new second in command, Li Qiang.
Mr. Li was born and grew up in prosperous Zhejiang Province, just south of Shanghai, and worked his way up the provincial bureaucracy. His career took off after he served as essentially the chief of staff for Mr. Xi, who was the province’s Communist Party secretary from 2002 to 2007.
Two months after Mr. Xi became China’s top leader in 2012, he named Mr. Li the governor of Zhejiang Province. Three years later, he promoted Mr. Li, appointing him the Communist Party secretary of Jiangsu Province, an affluent hub of industrial activity. And in 2017, he named Mr. Li as Communist Party secretary of Shanghai — traditionally a steppingstone to the Standing Committee of the Politburo, including for Mr. Xi himself.
Mr. Li worked closely with multinational executives and Chinese business leaders alike in Zhejiang, Jiangsu and Shanghai. But he has not worked in Beijing and has no experience in overseeing the State Council, China’s cabinet or the dozens of ministries under the State Council.
That lack of Beijing experience means that Mr. Li will be heavily dependent on Mr. Xi’s continued support.?He will have to rely upon Xi’s authority and other aides — most of whom will be Xi’s associates from other sources — to make the State Council function.
At the same time last week, China released its quarterly economic figures, indicating that China's economy grew at 3.9% in the quarter ending in September, beating consensus estimates.
This was a strong bounce back from the 0.4% growth seen for the previous three months, when Shanghai was still in lockdown.
The 20th Party Congress did not obviously reveal any new directions in economic policy. Whether the overall economic approach will deliver the type of growth that China desires remains to basically be seen.
However, while the latest growth figures may seem high compared to most western economies, they are significantly below the rate of expansion China has seen for many decades and still far off target from the 5.5% goal set earlier in the year.
Some media have commented that the standing committee appointments show that President Xi rewards loyalty over expertise and experience. But that may not be quite as easy an explanation.
Premier Li is expected to become China's premier next year and take over the role of managing China's economy, even though he does not have any working experience in the central government.
He is also just five years away from the customary retirement age of top Chinese leaders. However, he has been closely involved in managing the local economies of the two fastest growing Chinese provinces, as well as Shanghai and was a central figure in the development of the massive Tesla factory in Shanghai.?He knows how to manage government and business and international investors at the same time.?Sometimes it is good to get new blood to make things happen.
Li may be the perfect candidate for the job. He is a strong supporter of President Xi, which means the decision making process will probably be far more efficient than before, assuming that those decisions are actually good decisions.
There's also been much talk about the zero Covid policy and that perseverance to the policy is the right way to go. It's always important to remember that policy decisions voiced publicly are very hard to retract. As we say in China, words are not actions but actions speak one thousand words.
What everybody in China knows very well, whether you run a business or whether you are an employee, zero Covid has been an economic constraint, impacting every business in China and in many cases causing havoc.
What's most likely to occur is that the policy will simply be amended and changed to accommodate a more scientific approach to mitigating the virus spread and peoples individual health. It's highly likely that there will be an incremental process of reducing zero Covid. China is trying to juggle a middle ground between control and growth. It's not one way or the other, instead it's going to be a system of opening and controlling but allowing progress in all directions - a very Chinese approach.
Some voices have been concerned that China would move to close itself off from the global economy. Clearly China is having relationship issues with Europe and the US. As President Xi stated in his speech, "China cannot develop without the world, and the world also needs China".
The reality is that over 40 years of Chinese pragmatic efforts towards reform and opening up, China has essentially created two miracles, rapid economic development and long-term social stability which translates into government security and the overall role of the party at the top of the political system. It's unlikely that we're going to see a radical change in this approach because, bluntly speaking, it works very well.
China knows how it has gotten to its place in the world and even though it may want to amend its short term and long term goals, the course will remain in the general direction that we have seen in the past. There may be movement to the left and to the right, but that is normal as one sails across the ocean.
From Shanghai,
Alexander Glos