Xi Jinping’s economic inner circle comes under the spotlight
Publicity around Liu He and his team signals stepped-up efforts to remove barriers to reform ahead of annual Beidaihe meetings, observer says
A semi-official magazine has shone the light on President Xi Jinping’s inner circle of economic advisors, publishing long profiles of the officials yesterday ahead of a key party meeting this summer.
The China Newsweek profiles of economist Liu He and his team from the General Office of the Leading Group for Financial and Economic Affairs highlighted the body’s influence as it presses ahead with the tough task of shifting the economy onto a sustainable and healthier track.
It comes a month after Communist Party mouthpiece People’s Daily published an interview with an unnamed authoritative source on the future direction of the mainland’s economy and reform.
There was no official naming of the “authoritative figure” but yesterday’s report said Liu and his team were widely believed to behind the mystery source.
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The China Newsweek report said Liu attended Harvard University’s John F. Kennedy School of Government, and was one of the key people advising Xi.
The publication of the profile comes as Liu’s office ramps up preparations for key annual meetings in Beidaihe, where party elites set the tone for major national policies.
But China Newsweek is only the latest outlet to put the spotlight on Liu and his team.
In April, Xiamen Daily reported that the city’s party leader visited the office that month, seeking support for Xiamen’s economy.
Mainland media have also reported that Liu’s office chose 16 cities, including Foshan in Guangdong province and Ankang in Shaanxi province, as “liaison stations” to track the economy.
Wei Jianguo, vice-director of the China Centre for International Economic Exchanges and a former vice-commerce minister, said the frequent coverage of Liu’s office and the research trip signalled that efforts were being stepped up to remove obstacles to economic reform.
“In addition to the summer meeting, [the coverage is] for reaching broader consensus and removing differences to push ahead with reform,” Wei said.
A Beijing-based economist with a foreign investment bank said “economic issues could be one of the important items” at the Beidaihe meetings, and it was necessary to overcome internal divisions and reach consensus on the way ahead for reform, especially stalled changes to state-owned enterprises.
The authoritative source quoted by People’s Daily ruled out old-fashioned investment-driven measures to stimulate activity and said the mainland’s economic growth was L-shaped. The source also underscored the need for supply-side structural reforms, such as addressing high debt burdens, unsold property and industrial overcapacity.
But other voices have expressed different views on major economic issues since the publication of the interview.
Caijing quoted Yu Yongding, an outspoken economist with the Chinese Academy of Social Sciences, as saying the authoritative source failed to give a detailed explanation of an L-shaped economy, “leaving suspense and space for debate” among economists.
He said the simple solution to just shut down excess capacity might not stabilise prices or output under the weight of deflation and hefty debt.
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“Given the overcapacity [in manufacturing], as a developing country, there is no need for the Chinese government to hesitate to increase infrastructure investment,” he said, suggesting that the government should identify investment projects better and improve coordination with local governments.
The mainland will announce major economic indicators, including industrial output, investment and retail sales today, offering further signals of the economy’s resilience.
A Beijing-based professor, who declined to be named, said authorities were eager to establish consensus on the economy.
“Now there is no divergence on big issues such as the economic slowdown, structural problems, overcapacity and environmental protection,” the professor said. “The key differences are about which level of economic growth should be maintained and what are the best ways to address the economic difficulties.”