BEIJING – China’s Cabinet will undergo its most sweeping reshuffle in a decade as the world’s second-biggest economy faces mounting challenges from its rivalry with the US, an ageing population coupled with low fertility rate, and a yawning income and wealth gap.
As the Communist Party of China (CPC) navigates this complex landscape, it will also restructure the party and state institutions at the upcoming annual full session of the National People’s Congress, or Parliament which, analysts predict, means greater party control over governmental functions.
On Tuesday, President Xi Jinping signalled that major reforms would be under way in the financial sector, and science and technology development, and that “party-building” would also be stepped up in private companies.
This comes as a new political leadership team stacked with his men takes over the running of the country under the State Council and endeavours to get its Covid-19-ravaged economy back on track, while boosting sagging investor confidence following government crackdowns on tech titans, and property and private education sectors.
Mr Xi is set to secure an unprecedented third five-year term as state president in the Parliament session, which convenes on Sunday. He nailed a third term as CPC general secretary and chairman of the party’s Central Military Commission in October 2022 during the party’s congress.
Outgoing Premier Li Keqiang, who stepped down in 2022 from the CPC’s seven-member Politburo Standing Committee – the pinnacle of power in China – is expected to set an economic growth target of at least 5 per cent in his annual work report at the opening of the session.
The International Monetary Fund has revised upwards China’s 2023 growth outlook to 5.2 per cent, from its previous estimate of 4.4 per cent. China’s gross domestic product slowed to 3 per cent in 2022, the second-lowest expansion since the 1970s, after inching up 2.2 per cent in 2020 and rebounding 8.1 per cent in 2021.
“On personnel appointments, we can make good guesses at who will take top state positions by looking at their position in the party hierarchy,” said China analyst Adam Ni, who edits China Neican, a policy newsletter on China issues.
Mr Li Qiang, ranked second behind Mr Xi in the new Standing Committee and who was previously party secretary of financial capital Shanghai, will become premier, succeeding Mr Li Keqiang who will retire after two five-year terms. The two Lis are not related.
Mr Ding Xuexiang, ranked sixth in the Standing Committee, is tipped to become executive or No. 1 vice-premier, a role that involves overseeing the economic agencies. He also has to step up if the premier is unable to perform his duties.
While he has no experience in managing economies or running provinces, Mr Ding has worked in various branches of the party apparatus, and is President Xi’s most trusted aide.
Outgoing state planner He Lifeng is a shoo-in to become one of three other vice-premiers and China’s next economic czar, taking over from Mr Liu He. The other two vice-premiers are likely to be former Shaanxi provincial party secretary Liu Guozhong and former Liaoning provincial party secretary Zhang Guoqing.
All three men sit on the CPC’s 24-member Politburo, ranked one notch below the Standing Committee.
Mr Xi and Mr Li’s economic team will work with the next state planner, central bank governor, finance and commerce ministers, and banking, insurance and securities regulators to fix the economy.
The President has described the work as involving “a multitude of tasks”, among them expanding domestic consumption and creating jobs for millions of young university graduates.
As part of the upcoming reshuffle, Mr Zhao Leji, ranked third in the Standing Committee and previously the party’s top anti-corruption official, will replace Mr Li Zhanshu as chairman of Parliament.
Mr Wang Huning, the party’s top ideologue and ranked fourth in the Standing Committee, will take over from Mr Wang Yang as chairman of the Chinese People’s Political Consultative Conference, Parliament’s advisory body, which will convene its annual full session on March 4.
Mr Chen Xi, the party’s organisation or personnel minister, and outgoing executive vice-premier Han Zheng, who retired from the Standing Committee in 2022, are tipped as front runners to become vice-president, a largely ceremonial post. Mr Chen is one of the President’s closest political allies.
“Frankly, I don’t think the composition for the State Council is a big deal, as we know there are no real heavyweight economic or financial experts like Liu He. They are going to be Xi men anyway,” said Professor Steve Tsang, director of the SOAS China Institute in London.
“What I will look out for are the changes to the government structure and changing relations between the party and the state apparatus. I expect to see the party being put in an even more central and supervisory position in its relations with the central government,” he said.
“The question is how extensive such changes will be and if such changes will deliver better or more effective governance, in contrast to strength in the control of Xi and the party.”
One possible shake-up could be among the security agencies.
President Xi has put increasing emphasis on security, which featured large in his political report at last year’s party congress.
Public security chief Wang Xiaohong could step down and take over from Mr Ding as director of the party’s General Office.
And while it remains unclear if Mr Chen Yixin will remain the country’s top spy as minister of state security or take over as top cop, he is a candidate to become a state councillor.
No state security chief has ever made it to the level of state councillor, a high-level position that ranks below the vice-premiers but above ministers in the government hierarchy. His ascension would signal the priority that Mr Xi gives to security.
Others who could be promoted to become state councillors are newly appointed Foreign Minister Qin Gang and People’s Liberation Army General Li Shangfu, an aerospace engineer by training who is expected to become defence minister.