Xi Jinping has effectively put the final touches of victory on a brief, virtually one-sided power skirmish with premier Li Keqiang.
A People's Daily article (link in Chinese) cites an "authoritative insider" as saying that the economy will endure an "L-shaped" stabilization, not a resounding U- or V-shaped resurgence, as it slowly retools and restructures.
Notably, it says that the "fantasy" of monetary stimulus to prop up short-term growth must be dropped altogether, and the economy should increasingly reflect the risks of the "original sin" of too much debt.
Given Xi Jinping's stranglehold on Chinese media, this "authoritative insider" commentary is effectively the party strongman's reiteration of his commitment to supply-side structural reforms alongside deleveraging.
It's also Xi reminding everyone that he, not premier Li Keqiang, is the mastermind of the country's economic transition, read: a confirmation that he's still fully in charge at the helm.
Ever since Li visibly upstaged Xi at the National People's Congress in early March, the latter's party opponents have apparently pinned their hopes on the former as a replacement as party chief at the 19th CPC congress in late 2017.
Unfortunately for the otherwise highly cerebral and technocratic Li, he seems to have been suckered into this opportunistic scheming against his boss, and has now paid a price. Naturally, he was delighted at the NPC to finally take the limelight on economic policy back from Xi - to the roaring approval of the government ministers whose collective rapport with Xi had hit a low ebb. While this was only natural, the premier subsequently demonstrated a rather surprising lack of political acumen that has left him in an even more subservient position than before.
Where he should have kept a low profile and quietly carried out his job - thereby securing his own standing with Xi - he instead stuck his neck out by staging a public appearance with his power base at the communist youth league (CYL) last month. The main political effect of this was to paint a big target sign on his own forehead: within just two weeks, Xi had further consolidated control of the military, by visiting the Central Military Commission's new joint headquarters in a much-publicized promotional tour, and had also given the go-ahead for an anti-corruption investigation against the CYL which threatens to render it impotent in the Chinese political landscape.
These events have only ensured even more direct micromanaging of day-to-day economic affairs by Xi's party "central leading groups", particularly the group for "comprehensive deepening reforms" and that for finance and economics. In the coming months, we can expect to see his henchmen in these parallel power committees exercise even greater authority at the expense of the State Council headed by Li.
One can't help but feel sorry for Li, but on closer inspection, his miscalculation deserves little sympathy. His insubordination to Xi would only have made sense if Xi were indeed reinstating a kind of neo-Maoist, anti-market command system to roll back 37 years of reform and opening, but this was patently not the case. Instead, he unwittingly made common cause with the very special and vested interests in local governments and the SOEs who were deliberately foot-dragging the next, difficult stage of such reform and marketization. They were clearly hoping that once it came down to it, sheer inertia would prevent the premier from interfering with their schemes to keep zombie firms alive with more "evergreen" financing - just as they'd thwarted such downsizing attempts by Beijing for years.
It helped their cause that Beijing did in fact unleash another massive stimulus to the tune of $1 trillion in new "social financing" in the first quarter; this was taken as affirmation that the central government couldn't do without a continued accommodative stance towards the SOEs and local governments. While largely correct, provincial and local officials misjudged Xi's seriousness to finally start reining in overcapacity and unplugging zombie life-support. As a torrid industrial, real estate and infrastructure investment recovery in March and April fizzled out by May, it became clear that this wasn't "business as usual" anymore to revive the old growth model.
Ironically, Li's very act of challenging Xi - however feeble and ill-conceived - has now left him no choice but to serve the dictator more loyally than ever. He will continue a relatively high profile from now until the 19th party congress, not to demonstrate independence or an alternative, but to retain relevance to a reform program which he has never opposed in principle (and indeed helped to initially draft), but has very nearly attempted to botch in practice. What's doubly troubling about this whole mishap is that it has actually betrayed what can only be his own personal ambition over and above his concern for the Chinese nation: there's simply no other explanation as to why the staunchly populist CYL faction (tuanpai) could have found itself on the wrong side of the elitist/populist divide of the contemporary PRC.
If anything, it's Li and not Xi who will get the boot in 18 months.
No comments:
Post a Comment