what analysts may have missed

Loyalty to Xi Jinping is a must for promotion, and many State Council members have longstanding ties to him. The next prime minister, Li Qiang, worked with Xi Jinping for decades. During Xi’s tenure as Zhejiang Provincial Party Committee Secretary, Zhejiang native Li was Xi’s assistant and chief of staff of the Provincial Party Committee. Similarly, Ding Xuexiang was Xi Jinping’s chief of staff when he was party secretary in Shanghai. Ding moved to Beijing with Xi and continued to serve as Xi’s senior aide. The current Minister of Public Security, Wang Xiaohong, was a senior official in the Fuzhou Public Security Bureau when Xi Jinping was the city’s top leader. The relationship between Vice Premier He Lifeng and Xi can be traced back to four decades ago, when they worked together in Xiamen. His political progress over the past decade owes much to their patronage relationship.

However, other State Council members, some of whom are close to Xi, have less direct ties to Xi. State Councilor Chen Yiqin spent his entire career in Guizhou, working directly under Li Zhanshu, a former member of the Politburo Standing Committee and a staunch ally of Mr. Xi. State Councilor and Secretary-General Wu Zhenglong is close to Li Qiang, who served as party secretary of Jiangsu during Wu Zhenglong’s tenure as governor. Every member of the State Council is in Xi Jinping’s circle of trust, but each has different levels of loyalty. New factions and new divisions among loyalists will emerge as they compete to achieve Xi’s priorities.

Moreover, since Xi is surrounded by people he considers highly trustworthy, he is more likely to give them leeway, implement experimental policies and make his own governance decisions. Furthermore, one could argue that China’s elite recruitment, while not primarily driven by merit, rarely elevates incompetent officials to the top ranks. Ding Xuexiang, Liu Guozhong, Zhang Guoqing, Wu Zhenglong and Li Shangfu are all very capable technocrats who studied at China’s most prestigious universities. It is too early to assume that these new leaders will not effect major changes in the coming years. After all, Xi Jinping himself was considered a do-it-yourself man before he became paramount in 2012.

Perception #2: The new leadership prioritizes national security and social stability over economic concerns.

In his report to China’s leaders in October, Xi mentioned security 91 times and the economy just 60 times.In an increasingly unstable international environment, or in learning wordsin times of perilous storms, the importance of intelligence and national security has risen given Beijing’s perception that the West is trying to constrain China.

The composition of the State Council reflects a renewed focus on national security and sociopolitical stability. Half of its members have security or military backgrounds, including Wang Xiaohong, who has spent her entire career in public security. Dante did not have extensive experience in economic affairs, where the post of Deputy Prime Minister had previously been primarily economic; instead, he was a member of the National Security Council.

However, most of the incoming State Council members have extensive experience in provincial economic leadership. In China, social stability is closely linked to economic problems, which can quickly undermine national security. Most of the protests in China are related to the economic situation.For example, there are approximately 117,000 protests Every year against land expropriation. China’s economic growth rate of 3% in 2022 is a far cry from the 8% to 10% growth that the Chinese middle class has become accustomed to.

Xi Jinping recognizes the interconnectedness of these issues, and the past few months have seen major changes and adjustments in China’s economic policy.in his december speech At the Central Economic Work Conference, Xi called on financial institutions to step up support for small and micro businesses.the government has taken steps Supporting a faltering real estate sector, including encouraging local governments in most regions to invest in real estate development. also, deregulation Developments in the technology and private education sectors also reflect these policy adjustments and the greater need to stimulate the economy.

Myth #3: Xi Jinping’s third term focuses on developing state-owned enterprises at the expense of the private sector.

Compared with the previous State Council, the leaders of this term have a profound military background. The four members of the State Council can be classified as defense industry technocrats with extensive leadership experience in China’s military-industrial complex, or military-civil fusion. Zhang Guoqing has spent most of his career as a corporate executive at the military state-owned North Industries Group Corporation. Both Liu Guozhong and Wu Zhenglong were from the military industry, and Wu Zhenglong later served as the director of the general office of the state-owned industrial enterprise SINOMACH.Furthermore, these prospective appointees are not only technocrats but Technocrats with management experience Who performed well in state-owned enterprises.

However, with the exception of defense industry technocrats, State Department appointees are high-level and experienced in the economic arena, including private sector development. Li, Ding, He, Zhang and Wu are all provincial leaders in Zhejiang, Jiangsu, Fujian, Tianjin or Shanghai, coastal economic powerhouses and some provinces where the private sector dominates. Local and provincial leaders in these regions typically make many economic decisions and are policy savvy, especially if they are local officials.

The top leaders of the State Council, Li Heding, came to power through the Shanghai party apparatus. Shanghai is known as one of the most international and foreign trade-intensive regions in China, and its leaders typically maintain close ties with the private sector and foreign companies. During his tenure as Shanghai party secretary, Li struck a deal with Tesla to open the first foreign car factory in China without partnering with a Chinese company, and he has been an outspoken advocate for increased foreign investment. The State Council’s balanced leadership experience in industrial policy and market reforms ensured that the development of state-owned enterprises, while a priority, would not necessarily be at the expense of the private sector.

Yet Xi’s sweeping grip on the party-state has created a loophole: He and his handpicked leaders must deliver on their promises. Xi will be praised for his achievements and blamed for his failures. To escape the middle-income trap, China’s leaders will strive to achieve the goal of common prosperity, mainly by strengthening China’s middle class. Such a drive could stimulate China’s three growth engines, investment, consumption and foreign trade, all of which have faced challenges recently.

Whether the new leadership of the State Council can successfully define common prosperity as neither anti-market nor anti-growth will be vigorously tested in the coming months and years. Instead, China’s support for domestic economic growth and support for the middle class requires market dynamics and openness. There is more going on in China’s leadership than traditional media cartoons would suggest; the outlines of a new State Council may already be visible, but not yet drawn.