No Surprise but Plenty of Suspense in Chinese Leadership Transition

The Chinese leadership transition has been a foregone conclusion for some time. But there is still plenty of suspense.


Unlike the U.S., where the suspense of who will enter the White House for the coming presidential term will continue to occupy voters’ minds until the very last minute, China’s masses knew for at least the past five years who would run the nation from 2013-2022.

Vice President Xi Jinping, the incoming leader-in-waiting, will be officially “elected” general secretary of the Communist Party of China during the 18th Party Congress, which is set to open on November 8. He will succeed Hu Jintao who ruled China as general secretary and president since 2003.

Xi, 59, the son of one of the leaders of the 1949 revolution that brought the party to power, will also be formally anointed the president during the upcoming National People’s Congress in March. During the upcoming Congress, which gathers both party and nonparty delegates. Vice Premier Li Keqiang, 57, is expected to succeed Wen Jiabao as premier. These two were chosen by party elders in closely veiled, behind-the-scenes negotiations that began half a decade ago.

Xi earned a bachelor’s in chemical engineering and a doctorate in Marxist theory from Beijing’s prestigious Tsinghua University, China’s equivalent to Massachusetts Institute of Technology. Li, who holds a law degree and a doctorate in economics from Peking University, will become the first Chinese premier who was educated in economics. Previous premiers tended to come from engineering backgrounds.

The Communist Party prefers “stability” and has had the tradition of leaders and elders choosing successors for decades. Current leader Hu was handpicked by former paramount leader Deng Xiaoping, who ruled China in the 1980s and 1990s. Deng also handpicked former president Jiang Zemin, who played a significant role in choosing incoming leader Xi.


“Xi will have his work cut out for him,” says Guan Anping, a Beijing-based securities lawyer and a former government official. “China is entering an era of slower growth. The nation has to drastically overhaul its economic structure, decrease its high dependence on exports and increase domestic consumption to drive sustainable growth.”

While Xi and Li are ensured the top spots, suspense hangs over who will be the other members of the Standing Committee — the ruling council that runs the party and the nation. More than 2,200 party delegates will gather in Beijing for the congress to vote to decide who else joins Xi and Li at the top. Experts say eight officials are competing for the five remaining slots: Vice Premier Wang Qishan, 64; party propaganda chief Liu Yunshan, 65; party organization chief Li Yuanchao, 61; Vice Premier Zhang Dejiang, 65; Tianjin party chief Zhang Gaoli, 65; Guangdong party chief Wang Yang, 57; Shanghai party chief Yu Zhengsheng, 67; and party united front chief Liu Yandong, 67, the only woman among the contenders.

The composition of the five will determine the focus of economic reforms and political development in the coming decade, experts say.

If Vice Premier Wang, who once served as chief executive of China Construction Bank Group, Guangdong Party Chief Wang and party organization chief Li win top spots, China will accelerate the pace of both economic reforms and possibly even begin some form of political reforms, says experts. “Both incoming president Xi and incoming premier Li are reform oriented,” says an adviser to Li who asked not to be identified by name. “Both realize that China must overhaul its high reliance on state-driven investments and move towards private sector development. But how fast they move will depend on who joins them on the Standing Committee.”

As vice premier, Wang Qishan served as China’s economic czar, advocating for finance sector liberalizations, while Wang Yang accelerated economic growth in Guangdong, and party organization chief Li has continually advocated experimental political reforms within the party.

But even so-called conservatives such as Zhang Dejiang, who was educated in North Korea’s Kim Il-sung University, cut his teeth a decade ago as the party chief of Guangdong, pushing for closer economic ties between China’s largest center of manufacturing and private enterprise with Hong Kong just south of the border.

“Economic and financial reforms will be the primary focus of the incoming leadership regardless who joins the Standing Committee,” says lawyer Guan, adding that the only thing in question is the pace of reforms.

“As the west wobbles, all eyes have now turned east to see what China’s leaders will do to stimulate the economy,” says a recent report by Hong Kong–based China economist Qu Hongbin of Hong Kong and Shanghai Banking Corp. “While there’s little doubt that policymakers will gear up both monetary and fiscal easing, likely leading to a modest recovery in the coming quarters, focusing on short-term stimulus misses a far more important trend — a swathe of coordinated reforms, which we believe will revolutionize the country’s financial system. In fact, there are clear signs that China’s new leaders, who will take power in early 2013, will make speeding up reform top of their policy agenda in the coming years.”

On top of the financial reform agenda are Renminbi convertibility, banking reforms that allow banks to set their own competitive interest rates and increase lending to the private sector, and allowing local governments to issue their own bonds, which currently are under the mandate of the central government.

The run-up to the party congress hasn’t been completely devoid of fireworks, however. Former Chongqing party chief Bo Xilai was purged in the past few months for corruption and for allegedly trying to cover up crimes by him and his family. He is awaiting trial. His wife Bo Gu Kailai was sentenced to death with a two-year reprieve for murdering a British businessman.

China experts believe the real reason for Bo’s expulsion from the Party is because he openly challenged the succession plan and lost a power struggle with President Hu and party elders, including former president Jiang.

“The Bo Xilai affair illustrates that real political reforms won’t come to China any time soon,” says an investment banker whose father was a general in the People’s Liberation Army. “The party likes to keep decisions cloaked in secrecy and in the hands of party elders. As long as the Communist Party is in charge, don’t expect that to change.”