POLITICS
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China leadership

With power shift half done, who's in charge of China?

Analyst says it's time gap between handover of party and state positions was narrowed to avoid confusion over who wields real clout

PUBLISHED : Saturday, 17 November, 2012, 12:00am
UPDATED : Saturday, 17 November, 2012, 8:12am

Xi Jinping has been anointed China's most powerful man, as head of the Communist Party and the military, but Hu Jintao is still the country's president until March. So who is calling the shots until then?

Zhou Xiaochuan lost his party post this week and looks set to retire as governor of the People's Bank of China, leaving fellow central bank governors unsure whether to talk to him or wait to find out who his successor is, and investors wondering if policy will change.

The same goes for officials throughout the government. Who, for instance, has the final word for the next four months - outgoing Premier Wen Jiabao or premier-in-waiting Li Keqiang, newly installed as the Communist Party's No 2.

During the previous, even more prolonged, transition a decade ago, which eventually gave Hu supreme power, the same questions were asked, but with less urgency. Then, China was the world's seventh-biggest economy, with gross domestic product of 1.2 trillion yuan. Today output has quadrupled, making it the second-biggest economy, and the largest exporter - and the rest of the world is looking to China to keep the global economy from sliding into recession.

Moreover, China has taken a much bigger role in world affairs commensurate with its rise.

International affairs specialist Professor Pang Zhongying says the drawn-out leadership change could give rise to confusion. "It is inevitable that foreign governments will ask who are the next point men on trade and diplomacy," he said.

Of course, China's power transition, while affirmed only this week in the Great Hall of the People, has been under way for much longer, certainly as far as Xi and Li's roles are concerned.

The drawn-out transition stands in contrast to the practice in many Western democracies.

In the United States, President Barack Obama was re-elected on November 6 and will be sworn in for a second term on January 21 - a transition of some 10 weeks and one during which, moreover, government will be far from in limbo, with the outgoing Congress and the White House working to avert a "fiscal cliff" of tax rises and spending cuts.

Analysts say China is not expected to see any major changes in terms of policy. Still, Hao Hong, head of China research at the Bank of Communications in Hong Kong, said: "We may see some policy vacuum in the next four months."

That confusion could see foreign investments put on hold.

But while the efficiency of the lame-duck administration will be a cause for concern, observers say the party has been resilient enough in the past to deal with political uncertainties.