Economy, Talking Point

Ruling with an iron fist

Events at the Two Sessions confirm Xi Jinping’s new primacy


In Mandarin the word for the palm of the hand is zhang, which can also denote the action of gripping, while ‘fist’ (or quan) sounds the same as the word for ‘power’.

That’s why in official portraits from the Qing Dynasty, the emperor would often hold one hand in a fist while the showing the palm of the other.

The zhang-quan pose conveyed that the imperial ruler enjoyed an uncontested ‘grip’ on ‘power’.

Was the messaging similar at the Two Sessions in Beijing this week, where Xi Jinping was duly re-elected as Chinese president? Rather more dramatically, the gathering also confirmed a constitutional amendment to scrap 10-year term limits on the post. And there was a moment of pure political symbolism as the 64 year-old became the first of China’s heads of state to take a constitutional oath on assuming office: his left palm firmly on the constitution and his right fist aloft zhang-quan style.

Xi has just ushered in the biggest reshuffle at governmental level in decades, accompanying it with a slew of personnel changes in key roles. His powerplay has China-watchers reassessing the direction that the country will take as Xi launches a “new era” for the nation.

How do the Two Sessions work?

The yearly gathering combines full meetings of the National People’s Congress (NPC), the country’s legislature, and the more advisory body, the Chinese People’s Political Consultative Conference (CPPCC).

Both entities kicked off fresh five-year terms this year, bringing together close to 3,000 NPC members and 2,158 CPPCC delegates eligible for their meetings.

Positions on the NPC are generally decided by electoral committees nationwide. There are 36 NPC representatives from Hong Kong, for instance, but only 1,989 people in the territory are eligible to stand for election or vote.

According to Xinhua, only 99 of the delegates at the CPPCC are members of the ruling Communist Party of China (CPC). As part of the country’s “consultative democracy”, the majority are drawn from minority parties (there are eight, including the China Zhi Gong Party, which counts starlets Zhang Ziyi and Li Bingbing as members) and different industry sectors.

So theoretically speaking, the Two Sessions isn’t just a gathering of Party stalwarts, although coming just months after the 19th National Party Congress last October – where the CPC picked its senior cadres and enshrined ‘Xi Jinping Thought’ in its constitution – the meeting is still widely dubbed a rubber stamp.

Carefully selected lawmakers vote on whether top officials including the president, the premier, their deputies and the cabinet are given new five-year terms and the outcome is never in doubt (the NPC doesn’t do cliffhanger votes).

But with so many personnel changes and ministry mergers this time round, the NPC and CPPCC took longer than usual, lasting more than two weeks. Put simply, there was a lot more rubber-stamping to get through than normal.

Xi won handsomely?

Vladimir Putin triumphed in another rather predictable presidential election this week with 76.7% of the popular vote, but the Russian strongman’s victory margin is nowhere near comparable to Xi’s.

All of the members who turned up for the NPC meeting voted to give the reigning president a second term. That unanimous victory is an improvement from the 99.9% approval rating five years ago (out of 2,956 possible votes: one lawmaker vetoed Xi’s nomination, and three others abstained).

Probably more importantly, legislators overwhelmingly approved several key amendments to the constitution as well.

This document was first enacted in 1954 and it has now been amended six times. The most drastic changes came in 1982, when Deng Xiaoping repealed most of the language of the Cultural Revolution, and inserted a two-term, 10-year limit for the president and the vice president.

That was the limit that was just scrapped by the NPC, paving the way for Xi to stay on as the Chinese leader beyond 2023.

“I felt this wave of heat from people around me,” a delegate called Du Meishuang from Hunan told reporters after Xi had won his second term. “It should be lifelong, a whole life. That’s what the hearts of the ordinary people are saying, really.”

Moreover, lawmakers were happy to approve the addition of “Xi Jinping Thought on socialism with Chinese characteristics for a New Era” to the country’s constitution (it had already been enshrined in the Party’s own charter).

Xi’s triumph was rendered complete by some unprecedented pomp and splendour in the Great Hall of the People. Three guards of honour goose-stepped towards the podium and put a copy of the constitution before their president. Xi then raised and clenched his right fist (in the quan style of emperors’ past) and said on live television: “I swear to be loyal to China’s constitution and uphold its authority.”

Xinhua spun the moment as Xi telling the public that everyone is equal before the law. Others had a rather different take, including the Financial Times, which reporteded on a palpable concern among intellectuals that power is being concentrated in a manner that recalls imperial times.

Many are resigned to this new state of affairs, while others have argued that only a man like Xi can deliver the years of stability that China requires to prosper further in future. “China is never free of the ‘good emperor, bad emperor’ syndrome,” Xie Yanmei, a senior policy analyst at Gavekal Dragonomics, a Beijing-based consultancy, told the FT. “The logic is not that hard for many Chinese to accept: ‘We’ve got a good emperor, so let’s keep him as long as possible.’ “

How about Xi’s sidekick?

The next person to take the oath after Xi was Wang Qishan, who had been elected as vice president (no problems there either: only one NPC member voted against him).

A large part of Xi’s authority has been built on the ruthless crackdown on corruption that Wang has led over the last five years. The anti-graft tsar, 69, stepped down from his senior positions at the Party Congress last year but he is now back in the top echelons of power.

Wang’s reappointment has circumvented an unwritten rule known as “seven up and eight down”, which requires political leaders to retire when they get to 68.

China’s vice presidency was largely a ceremonial post in the past but Wang – known as “the firefighter” because of his impressive record in tackling some of the thorniest of crises (see WiC176) – is expected to take on a far more active role.

For instance, he is likely to be tasked with the diplomatic challenges of dealing with Donald Trump’s administration – a firefighter assignment in every sense of the word.

“China’s new vice president is the country’s best hope for avoiding a trade war,” Business Insider reckoned, noting Wang’s experience of previous dialogue with the US on trade matters, while the Washington Post noted reports that Wang will attend the highest-level meetings of the Politburo’s Standing Committee as a non-voting member.

In a move that blurs the boundaries between the Party and the state, a new anti-graft regulator called the National Supervisory Commission (NSC) was also formed last week by merging the Party’s Central Commission for Discipline Inspection (CDDI) and several other government departments. Wang’s influence within the new agency will linger, however, given that Yang Xiaodu, Wang’s long-time deputy at the CDDI, has been appointed as the NSC boss (rather than Zhao Leji, who took over from Wang as CDDI chief last October).

To Sinologists the re-emergence of Xi’s most trusted lieutenant of the past five years, is another reminder of the presidential consolidation of power.

What is Li Keqiang’s role then?

Some analysts predict that Wang is set to become “vice president of everything”. If true, that may well reduce Li Keqiang to “premier of nothing”.

The 62 year-old was re-elected as the head of the Chinese government by the NPC (with 2,964 votes in favour and two against) but his cabinet has been restructured and many of the state bureaucracies have been overhauled.

This “institutional reform”, as the state-run broadcaster CCTV has put it, will see the number of ministries and commissions under the State Council cut to 26 from 34.

Tellingly, the powerful National Development and Reform Commission (NDRC), sometimes described as “the little State Council”, will also see its wings clipped. It will relinquish a number of its powers to other agencies. For example, the say-so for new free trade zones will now go (rather confusingly) to a new natural resources ministry, while financial oversight of “key national projects” such as high-speed rail will be transferred to the National Audit Office.

In the Two Sessions closing press conference Premier Li said the reshuffle is designed to cut back on bureaucracy.

“We will work to see that our people can get things done in one office, without the need for a second trip,” Li told reporters on Tuesday. “So with regulatory streamlining and further tax and fee cuts, we are making profound adjustments to government functions. This is like moving the government’s own cheese.”

Others see the changes as another move towards containing Li’s influence, including the Nikkei Asian Review, which believes that the premier has faded to a “secondary role” and that control over economic policy has long since shifted to Xi and his closest aides.

One of them is Liu He, a former soldier-turned economist, who heads the Party’s leading group on financial and economic affairs (with Li as his deputy, see WiC400).

The showpiece event of the Two Sessions is normally the government work report by the premier. But the Nikkei thought that Liu had already stolen Li’s thunder this year by highlighting several of the proposals of the report at the World Economic Forum at Davos in January. Nor was there much surprise at the NPC’s decision to elect Liu as one of the country’s four vice-premiers (Han Zheng, Sun Chunlan and Hu Chunhua make up the quartet).

In an article published in the People’s Daily last week – before Li made his comment on the cabinet reshuffle – Liu had made plain that the restructuring was meant to “shake up entrenched power and interests”. This could be code for saying factionalism is a thing of the past, or at least that Xi wants to defang further the groups that oppose his primacy. For example, the move to merge the electricity regulator into the energy ministry could be an attempt to offset the influence of the ‘energy faction’ whose orbit is the powerful (and anti-reformist) State Grid Corp.

How about the financial regulators?

Yi Gang, who has served as a deputy to Zhou Xiaochuan at the People’s Bank of China for a decade, is replacing his boss, who is retiring at 70.

According to Chinese media outlets, Yi is good friends with the fast-rising Liu and they are both members of the China Finance 40 Forum, a think tank formed in 2008 by 40 up-and-coming regulators in the financial sector (see WiC216). Both Liu and Yi have spent time studying in the United States but stayed relatively low-profile before their ascension to key roles in the government, Hong Kong’s Singtao Daily notes, and their elevation un derlines Xi’s concerns with the future direction of the China-US relationship.

“Deepening China’s reforms is a trump card for Beijing when dealing with Washington,” the newspaper writes. “Yi Gang understands the United States well and he could play a key roles in future negotiations.”

Yi needs to deal with many challenges at home as well. Top of his agenda will be cleaning up parts of the financial system – especially shadow banking activities – but doing so without crashing the economy. To assist him, the NPC has given the central bank more authority over the $43 trillion banking and insurance industries. Rather than serving in an advisory capacity, the central bank will now write more of the rules for the financial sector.

Moreover, the banking and insurance regulators, aka the CBRC and the CIRC, will merge into another new body called the China Banking and Insurance Regulatory Commission (CBIRC). Both the PBoC and the CBIRC will have representatives at the newly created Financial Stability and Development Committee, another influential body to be chaired by Liu He.

What will Xi do next?

“If there’s anything that’s going to be different from the past, it will be that China will open even wider to the world. With the Chinese economy so integrated into the global economy, closing China’s door will only hinder our own progress,” Li Keqiang said on Tuesday.

The premier was addressing a question about how China would press ahead with its economic opening as it celebrates the 40th anniversary of the beginning of economic reforms after Mao.

Li also warned against the kind of protectionist sentiment emanating from the White House, albeit in a conciliatory style.

“It’s like rowing a boat: if only one of the two oarsmen is giving it their best, the boat will just keep turning on the spot. They’ll only move forward if both are working in the same direction,” he said.

According to the Wall Street Journal, Beijing is working on plans that allow deeper foreign participation in sectors such as insurance. Xi Jinping is expected to unveil some of these initiatives during the Boao Forum in Hainan province next month.

But Xi was also determined to remind the world of his vision of China’s “peaceful rejuvenation as a world power” and to warn against foreign separatist plots.“The Chinese people and the Chinese nation share a common belief that no inch of our great motherland’s territory can possibly be separated from China,” he said in his closing speech

“We are resolved to fight the bloody battle against our enemies… with a strong determination to take our place in the world.”

Again, the presidential closing speech was the first of its kind at the NPC, and it overshadowed the press conference from the premier that normally leads in the newspapers.

Some analysts saw this as a further snub to Li – perhaps designed to signal Xi’s sidelining of the Communist Youth League, the faction that propelled Li and former leader Hu Jintao to power.

In his speech Xi used the term “the people” 85 times and his blunt views about defending the homeland seemed to be a warning on Taiwan – triggered perhaps by Donald Trump’s signing of the Taiwan Travel Act (which encourages visits between the US and Taiwan “at all levels” specifically citing “cabinet-level national security officials”).

“The tough talk on Taiwan isn’t new. But Xi now has the option to serve as president for life, meaning he can execute strategies that last decades rather than years,” CNN reported. “That long leash could give Xi opportunity to focus on achieving something that’s eluded Chinese Communist leaders for nearly seven decades since the founding of the People’s Republic: regaining control of Taiwan.”

In the meantime, there was no doubt that the events of the last two weeks have heralded Xi’s emergence as a leader without equal in contemporary Chinese politics.

“Supported by the whole Party, loved and esteemed by the people, Comrade Xi Jinping is fully deserving to be the core of the Party, commander of the military and leader of the people,” professed Li Zhanshu the NPC’s newly appointed chairman. “He is the national helmsman for a new era of socialism with Chinese characteristics and the guide of the people.”

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