Prospects for the New Chinese Leadership's Economic Policy

Abstract

Under Hu Jintao’s leadership, the Chinese economy grew so rapidly that it rose from being the sixth largest in the world as of 2001 to the second largest in 2010. Along with the impressive expansion of the economy, however, worries began to rise over increasing risks of the middle-income trap and the “system transition trap.” The first and foremost task that the new Xi Jinping regime should accomplish now is thus to prevent the Chinese economy from falling into either of these traps. Complicating the prospects of success for the new regime, however, is the dilemma of having to maintain the rapid growth.Members of the newly elected fifth-generation leadership of the Chinese Communist Party share core common characteristics in their essential orientation to stability and their experience in local administration. These members joined the Communist Party after experiencing, in their late teens, the turmoil of the Cultural Revolution as first eye witnesses. The priority of stability is thus deeply ingrained in their mindset. They have also impressively led the successful the economic development of various regions of China. They have a deep insight into the economic issues affecting the lives of ordinary people. They are unlikely to make a firm commitment to any one doctrinaire side. They are extremely skilled at managing “the politics of the system” that the labyrinthine Chinese bureaucracy demands.Another noticeable fact about the members of the new leadership is that, with the exception of Yu Zhengsheng who majored in engineering as a student, the remaining six have backgrounds in the humanities and social sciences. This composition breaks away with the tradition of the previous regimes that favored technocrats with specialties in sciences and engineering. Whereas the first and second generations of Chinese political elite were revolutionaries and the third and fourth generations were technocrats, the fifth generation could be called professional bureaucrats.Under the new leadership, Li Keqiang, as the Premier, will assume the supervision over the country’s economic affairs in general. Zhang Gaoli will serve as the Vice-Premier of commercial affairs to assist Li’s work, while Wang Yang will oversee affairs in industries, energy, transportation, and communications; Ma Kai, finance, budget making, and trade; Liu Yandong, agriculture and water resources; and Wang Huning, diplomacy and foreign relations.Li Keqiang obtained a doctorate in economics from Beijing University. After a brief stint as the first-rank secretary in the Communist Youth League of China, he went on to work in the local administrations of Hunan and Liaoning. After he rose to the position of Vice-Premiership in the central government, he has actively led policies on urbanization, industrialization, and the modernization of agriculture. Zhang Gaoli’s official career began with his fourteen-year service in the Ministry of Petroleum, followed by work in the provincial bureaucracies of Guangdong and Shandong. Zhang rose to prominence after he successfully managed the economic development of Tianjin with intensive investment. Ma Kai is a bureaucrat whose career has been steeped in the evolution of the Chinese economy. He served as the Vice-Director of the Office of Price Administration and oversaw macroeconomic management, energy policy, and the Grand Western Development projects from 2003 through 2008 as the chair of the National Development and Reform Commission (NDRC). Wang Yang is also a bureaucrat with substantial influence, as he has successfully reformed the economy of Guangdong amid the worldwide financial crisis while serving as the province’s Communist Party Chief. He had previously served as a civil servant in Anhui and a deputy head on the NDRC.