Li Keqiang

Li Keqiang takes charge of nation facing tough decisions

New premier to steer world's second-largest economy challenged by widening wealth gap, overheated property market and uneven growth

PUBLISHED : Saturday, 16 March, 2013, 12:00am
UPDATED : Saturday, 16 March, 2013, 5:30am

Li Keqiang was formally installed as China's new premier yesterday, taking the reins of the world's second-largest economy as it is beset by unbalanced economic growth, a widening wealth gap and an overheated housing market.

Li, 57, succeeded Wen Jiabao as head of the State Council, China's cabinet, after ceremonial election by National People's Congress deputies, with 2,940 affirmative votes cast and just three objections and six abstentions.

After the result was announced, Li rose and shook hands with President Xi Jinping, who was named head of state on Thursday, and Wen.

Li, the first Chinese premier with a doctorate in economics, will form his cabinet today, bringing the country's once-a-decade leadership transition to a close.

His cabinet will largely focus on narrowing the income gap, shifting a heavily investment-reliant economy to a more consumption-based one and cooling down the overheated property market without hurting economic growth.

Li will host his first press conference as premier tomorrow.

"It is getting more difficult to adjust economic development," NPC deputy Miao Xuegang said. "China has to ensure fast economic growth, but it also has to adjust the growth model and address uneven distribution of income."

It is getting more difficult to adjust economic development. China has to ensure fast economic growth, but it also has to adjust the growth model and address uneven distribution of income
NPC deputy Miao Xuegang 

Last year the UN said 13 per cent of people on the mainland lived on less than US$1.25 a day, while a Hurun Report said the country had 2.7 million US dollar-millionaires. Real estate prices have soared tenfold in major cities over the past decade, despite government measures designed to cool the market.

Public calls for measures to curb rising inflation, which reached a 10-month-high of 3.2 per cent last month, are another challenge facing the leadership, which is trying to keep economic growth from slowing rapidly after falling to 7.8 per cent last year.

"Li's challenge is to choose the best route at a time when growth rates of the past become harder to achieve," said Kerry Brown, a professor of Chinese politics at the University of Sydney. "On that, and that alone, he will thrive or dive."

Since becoming No2 in the Communist Party hierarchy in November, Li has stressed the need to narrow disparities between rural and urban areas, vowed to tackle air pollution, and to let NGOs play a bigger role in stopping the spread of Aids.

Li established his political credentials in the Communist Youth League, the power base of former president Hu Jintao . He has also served as party chief of Henan and Liaoning.

After becoming executive vice-premier in 2008, Li focused on medical reform, food safety and building affordable housing.