Chinese Premier Li Qiang picked to head finance commission as Xi Jinping delegates duties

The unexpected appointment makes him the first official to lead a top Communist Party organisation that would typically be chaired by Chinese president
Analysts say decision might be driven by shifts in policy direction amid economic downturn or to better coordinate among different ministries

China’s Communist Party

Vanessa Caiin ShanghaiandSylvie Zhuangin Beijing

Published: 6:00am, 25 Nov 2023

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Chinese Premier Li Qiang’s new role as the head of the Central Finance Commission, the top planner for the country’s financial system, has made him the first official to head a top Communist Party organisation that would typically be chaired by President Xi Jinping.

The pick surprised many and appeared to be a continuation of a trend over the past year of Xi delegating more responsibilities to his chosen deputies since he began his third term as party leader in the autumn last year.

Analysts said the reasons for Li’s appointment might be to better coordinate among various ministries and because Xi was considering making shifts in the overall policy direction amid the economic downturn.

Li’s role was confirmed on Monday, when he was mentioned as the chair of a meeting of the new commission in a report by state news agency Xinhua.

The late Li Keqiang never headed any top Communist Party groups in his decade as China’s premier. Photo: dpa

The CFC was set up in March to oversee the country’s banking, insurance and securities assets and to establish the Central Financial Work Commission, which serves as its general office.

A mainland-based political analyst, who spoke on condition of anonymity, said Li’s appointment as head of the CFC was unexpected, considering party practices over the past decade.

Since becoming top leader, Xi has transferred more decision-making power from government bodies to party organs. A number of leading groups and commissions headed by Xi were set up in his first term, covering key areas including national security, cybersecurity and systemic reform.

In 2018, all party leading groups led by Xi were upgraded to commissions. New commissions have continued to be set up – all headed by Xi – including one on law and order and another one on auditing.

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Xi has presided over meetings of top-level commissions to give instructions on policy points and goals. In May, for example, he chaired a meeting of the National Security Commission, a body he proposed in 2013.

Earlier this year, Xi chaired two meetings of the Central Financial and Economic Affairs Commission (CFEAC), which is tasked with a comprehensive portfolio covering all major economic policies.

Xi is the chair of both the National Security Commission and CFEAC while Li serves as their deputy head.

The scholar said one of the reasons Li was made head of the financial commission might be that Xi was considering some overall adjustments in policymaking as Beijing sought to shore up the economy and improve relations with Washington.

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In his decade as China’s second-ranked official, late premier Li Keqiang never headed any top party groups.

In January 2020, he was made head of a party group on Covid-19 prevention, but that group was soon nudged aside as Xi took centre stage in Beijing’s response to the pandemic.

The scholar said Xi might also want Li Qiang to shoulder more responsibility while financial work was difficult to manage and noted that it was possible that Li’s role was announced internally before or during the central financial work conference in late October.

“There are signs that Xi is delegating some power, and is making important adjustments on both domestic and foreign policies,” the scholar said, adding that after the 20th party congress in October of last year, some hardline official narratives about foreign relations and private capital had softened.

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Since being named premier in March, Li has represented Xi at international conferences, such as the G20 meeting in New Delhi in September – the first time the president was absent from the meeting since taking office.

Xi also did not attend the Boao Forum for Asia in late March despite his presence in previous years. Instead, Li presided over the conference, known as “Asia’s Davos”, and gave an opening speech.

Nis Grünberg, lead analyst at Berlin-based think tank the Mercator Institute for China Studies (Merics), said it was “too early” to draw conclusions about Xi’s willingness to delegate power and the impact of Li’s new leadership. He added that the coming third plenum might offer more signals.

Chinese Premier Li Qiang is seen meeting with managing director of the International Monetary Fund (IMF) Kristalina Georgieva at the Boao Forum for Asia annual conference in Xi Jinping’s stead in March. Photo: Xinhua

It also remained to be seen “how much independence or meaningful coordination” the finance commission would actually have, Grünberg said, noting that Xi was still at the helm of the CFEAC – the most powerful decision-making body on economic affairs and public finance.

Li’s appointment to head the new commission was not “by default”, he said, and one of the reasons behind it might be the premier’s power to speak to state regulatory bodies, which could help the new commission to coordinate better among ministries and financial institutions.

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But Grünberg warned against overestimating how much Li’s leadership would do for China’s financial situation, noting that the country’s challenges were not something a single leader or commission could fix.

China’s banking system, especially the country’s small regional banks, have suffered amid a prolonged property slump and rising local government debts, despite Beijing’s declaration that “preventing and resolving financial risks” was one of its main missions last year during the tone-setting annual central economic work conference in December of last year.

“The problems that China has require more structural and long-term solutions,” he said, but officials, “including Xi Jinping, apparently have not been able or willing to address them in a structural way”.