Exclusive | China’s former economic tsar Liu He still has a big seat at the table, quietly meets with Western delegations: sources

Liu He, 71, is keeping it low-key in public, but President Xi Jinping wants his former right-hand man for economic affairs to stay in a position of influence
Revelation shows how Xi has skirted traditions and customs by keeping a retired government official around as China navigates unfamiliar economic waters

China's economic recovery

SCMP Reporters

Published: 6:00am, 24 Oct 2023

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A trusted aide to President Xi Jinping – retired vice-premier Liu He – has retained his position as office director for a key economic policymaking body headed by Xi, sources tell the Post.

And despite Liu’s absence from the public limelight, the 71-year-old remains the person to meet for high-ranking foreign delegations visiting Beijing. US Treasury Secretary Janet Yellen, US Commerce Secretary Gina Raimondo and some European leaders are all said to have sought out meetings with him during their trips to China – meetings that Beijing did not publicise.

The continued political influence of Liu, a respected Harvard-trained official known for his firm grasp on economic and financial matters, is interesting to China observers as the country faces one of the most critical points in its development. The post-pandemic economic recovery has been uneven, fragile and slower than expected, troubled by property and debt crises at home and geopolitical tensions abroad.

Liu He, seen here in April 2019 as China’s vice-premier, speaks to former US president Donald Trump at the White House in Washington. Photo: Bloomberg

Although a new crop of senior officials has been put in charge of China’s economy, sources say there has been no sign that Liu intends to embrace full retirement.

Having been at the head of the most important economic and financial office during Xi’s second term, Liu has relinquished all government positions and stepped down from the powerful Politburo of the Communist Party. At 71, he is well past the unwritten retirement age for top party officials.

But unlike other retired government officials, Liu is said to have retained his previous oversight of the Office of the Central Financial and Economic Affairs Commission.

The party organisation was set up in 2018 on the basis of the former Central Financial and Economic Affairs Leading Group. Headed by Xi, the commission convened its first meeting in May, about half a year after China’s leadership reshuffle at the 20th party congress. Xi chaired the meeting and said the commission “has huge responsibilities” and must “continue to play its role in making key economic guidelines”.

The commission held its second meeting of the year on July 20 to discuss the protection of arable land and other agricultural-related issues, according to a statement from Xinhua. It is reported that the Central Rural Work Leading Group – another party organ responsible for rural and agricultural policies – has been incorporated into this commission, making it more powerful.

Restructure puts China’s US$58 trillion in financial assets firmly in party’s purview

Sources said Liu also sat at other relevant economic and financial meetings despite being no longer a vice-premier nor Politburo member. Beijing seldom publicises the composition and daily operations of party organs, which often hold the real decision-making power in Chinese politics.

The Post reported exclusively in June that Liu still enjoyed influence over economic and financial matters, and that he was regularly consulted by the president. The Post also reported that Liu had retired from the commission, but sources now suggest otherwise. It remains unclear when he will hand the baton off to the current vice-premier, He Lifeng.

State media’s last coverage of Liu dates back to March, around the time of China’s parliamentary sessions, when Liu and other senior officials of retirement age officially stepped down from their government positions.

The fact that Liu has retained his influence in some form is welcomed by certain contingents inside and outside the country. Many see him as a dependable and experienced old hand who knows how to handle crises. And foreign businesses see Liu as a pro-market reformist with a good understanding of the global economy.

Allowing Liu to continue serving in such roles also shows how Xi is less bound by party traditions and customs.

However, the arrangement raises questions about how senior economic officials divide their work, particularly when China faces increasingly complex and difficult challenges to continue growing its economy. China observers are looking to when the party might hold its third plenum – when leadership historically lays out policy direction and sets priorities.

As a prominent economist, Liu helped draft a landmark reform document in 2013 that detailed dozens of tasks for a market-oriented restructuring of China’s economy. The calls for economic reforms to break growth bottlenecks and find a sustainable development path have now surfaced ahead of the plenum due later this year.

Liu’s successor, He Lifeng, who was promoted to the Politburo at the 20th party congress and became a vice-premier in March, is meanwhile becoming China’s new face to the world on economic and financial matters. He Lifeng heads the powerful office of the Central Finance Commission and leads trade talks with the US and European Union.

Vice-Premier He Lifeng shown to be China’s point man on economic ties

The Central Finance Commission was set up under the ruling party to oversee the country’s financial matters, as a part of a sweeping reshuffle of the government and the party institutions in March. The commission, which is expected to be led by Xi, has not yet convened its first meeting, but the office that He Lifeng oversees began its daily operations last month.

It is not clear how the responsibilities are divided between the commissions under Liu He and He Lifeng.

Han Wenxiu, 60, is the executive deputy director of the Central Financial and Economic Affairs Commission office and is concurrently director of the Office of the Central Rural Work Leading Group, according to a state media report earlier this month.

Public records showed that finance vice-minister Liao Min, 54, remains a deputy director of the economic commission’s office, while Zhu Weidong, a 55-year-old agricultural official, was promoted to deputy director over the summer.