China starts to reshuffle engineers of economic boom
HONG KONG |
HONG KONG (Reuters) - China has begun work on an 18-month reshuffle of its top economic and regulatory policy officials as part of a leadership transition that will see President Hu Jintao and Premier Wen Jiabao hand their posts to a younger generation.
Sources and analysts with ties to China's ruling elite say the political musical chairs among ministers, cabinet officials, agency chiefs and provincial governors is under way and will run its course by early 2013.
In the meantime, with officials unsure of where they will end up, the jockeying could lead to a slowdown in the reform agenda in the world's second-largest economy. That slowdown could approach policy paralysis as a Communist Party Congress late next year finalizes the changes to the teams that have led China's runaway growth over the past decade.
The heads of the banking and insurance regulator, China's massive social security fund, and the agency that governs the country's oil majors, telecoms and other strategic sectors should all be replaced. New faces also are likely at the central bank, a key architect of yuan currency policy, and the finance and commerce ministries.
Unlike Western countries where an elected president would appoint cabinet ministers after taking office, sometimes with confirmation hearings to ratify the choice, China's leadership changes are decided behind closed doors with senior posts filled by candidates selected by a handful of top leaders.
The Communist Party elite -- including those slated for retirement such as Hu, and incoming leaders such as his anointed replacement Xi Jinping -- will decide on the appointments at secretive meetings over the coming year.
The changes will culminate in the 18th Congress sometime next fall. In keeping with the shroud of secrecy, the actual dates are not expected be made public until weeks before the conclave. Government posts will then be rubber-stamped in March 2013 at the country's annual session of parliament.
"In the end, the final call on who gets in will be up to one or two people. The other people are just there making noise," a government official with ties to top leadership circles said on condition of anonymity.
So when Vice Premier Li Keqiang replaces Wen Jiabao as premier and head of the State Council, China's cabinet, as is widely expected, he will find that many of those who led China on its decade-long development surge to surpass Japan will be gone.
Secrecy surrounding the process makes it hard to predict with great accuracy who will move up. But, according to the sources and analysts, key policy leaders expected to depart the stage, and their possible replacements, include:
* Zhou Xiaochuan, 63, who has overseen monetary policy and the landmark 2005 revaluation of the yuan as head of the central People's Bank of China since 2002.
Zhou accompanied Vice Premier Li on a visit to Hong Kong in August, sparking talk he would stay on longer to provide policy stability and continuity through the leadership transition. Still, official and banking sources say he is expected to step aside in early 2013, retiring or moving up into the decision-making Politburo where retirement age is higher.
Guo Shuqing, chairman of China Construction Bank and a former head of the State Administration of Foreign Exchange, has long been tipped to replace Zhou.
* China Banking Regulatory Commission chief Liu Mingkang, 65, who led oversight of the troubled banking industry for close to a decade and saw the Big Four state banks cleaned up and listed on stock markets.
Likely replacements include Jiang Jiangqing, chairman of Industrial and Commercial Bank of China (ICBC), China's top lender and the world's biggest bank by market value; or Xiao Gang, Bank of China chairman, three banking sources said.
* Finance Minister Xie Xuren, who will turn 65 next October. Lou Jiwei, who heads up China's massive sovereign wealth fund, CIC, is a ministerial candidate, though he is also a contender for a new state enterprise regulatory agency, sources said.
* China Insurance Regulatory Commission head Wu Dingfu, 65, also is due for retirement. Jiang Chaoliang, president of policy lender China Development Bank, is in line to step in.
Others expected to move on include Zhang Ping, 65, head of the National Development and Reform Commission that promotes top Chinese state-owned enterprises to develop and build their business globally, and Commerce Minister Chen Deming, 62, who could still see another post. Their replacements are unclear.
Similar changes are underway at scores of Chinese state firms, banks, oil companies and other strategic industries. Hu Xiaolian and Liu Shiyu, both deputy central bank chiefs, are expected to be appointed to chair state banks, banking sources said.
The sweeping overhaul will follow a formula set when former president Jiang Zemin stepped down as party boss in 2002, taking a swathe of officials with him into retirement, said Li Xiaoning, deputy director of the State Information Center in Beijing.
"About one third of the current leadership will move in to the new government, another third will stay on the second line(in position), and one third will be fresh blood," he said.
Some decisions appear closer to final. A high-level ICBC source said on condition of anonymity that Chairman Jiang Jianqing had already completed an economic audit and that staff movements had already been frozen at the banking commission, which he is tipped to run, as well as at the insurance regulatory commission.
But critical posts like the central bank will likely be among the last to change hands to ensure veterans are on hand to provide stability during the leadership transition due to the turbulent global economic environment, and concerns over China's own domestic growth and nagging inflation, analysts said.
Xia Minren, a macroeconomic researcher at China Securities Co., said filling financial posts was harder than political jobs, where a vast pool of successors could be tapped in the ranks of provincial, city and county officials. Top leaders would need to "pay special attention to expertise and stress economic backgrounds and financial work experience", he said.
With so many top leaders on the way out, and young up-and-comers not wanting to take big risks, major policy changes such as yuan reform should become less likely in the months leading to the 2013 Party congress, said analysts.
Some retiring leaders like Premier Wen may still try to push for policy reform to make a mark before moving on, said Cheng Li, an expert on Chinese politics at the Brookings Institution.
"Nevertheless, most politicians in the country, especially those rising stars in the so-called fifth generation of leaders, will be exceptionally cautious over the next two years," Li said in a research paper. "Indeed, major policy changes will likely occur after, rather than prior to, the 18th Party Congress."
(Additional reporting by Beijing and Hong Kong newsrooms; Editing by Don Durfee and Raju Gopalakrishnan)
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