Meet the Xi Jinping Loyalist Now Overseeing China’s Economy

In 1984, when China was in the early stages of capitalism, 29-year-old He Lifeng was near the center of the action. A Communist Party member with two degrees in government finance, he got a job in Xiamen, a coastal city that had just been liberated by Deng Xiaoping from the orders of central planning. center to test the free market.

Over the next two decades in Xiamen and surrounding cities, Mr. He rose to become a senior party official and senior local leader. And Xiamen became a bastion of small and medium-sized enterprises, with very few state-owned enterprises. It’s a model in a national experiment that has helped light up years of rapid growth for China.

Mr. He, 68, was appointed this month as a key government official overseeing China’s economy. His appointment comes at a time when growth is slowing and Beijing’s approach has decisively shifted towards reliance on state-owned enterprises and close party supervision.

In his new role as deputy prime minister, Mr. He will oversee everything from industrial policy to trade negotiations. He spent five years as the leading central planner of the Chinese economy, and will now have even more influence to ensure Xi Jinping’s plans and decrees, China’s top leader, is adhered to.

The big question for economists now is which deputy prime minister Mr. He will be considered by the world. Will he take cues from the entrepreneurial energy he saw early in his career in Xiamen? Or will he follow through on his recent experience as a quiet Communist Party boss, avoiding contact with foreign executives and working closely with state-owned enterprises?

Victor Shih, a political scientist at the University of California, San Diego, said He’s recent experience shows he supports state-led initiatives. Such policies meet short-term needs, such as rapid economic stimulus arising from the construction of highways and skyscrapers, but then cause difficulties, such as debt. increasing to pay for the construction.

He “has a track record of getting things done right away, in line with his boss’s wishes, but could sacrifice some of these mid-term issues,” Mr. Shih said.

China’s new prime minister, Li Qiang, promised at his inaugural press conference this month that his country would treat private companies equally to state-owned enterprises, in an effort to signal that China wants to revive entrepreneurship. Four people who know Mr. He, who requested anonymity to speak openly, said Mr. He was influenced by his work in Xiamen and appreciated the power of the free market in boosting economic growth. .

However, they also said they expected him to follow every decision made by Mr. Xi, who has introduced statistical measures that in many cases have stunted business growth.

He is one of Xi’s closest allies, who was confirmed this month for a third five-year term. Practically no one in China’s political life has been closer to Mr. Xi over the years. The two met as a young official in Xiamen, a few months after Mr. He completed his master’s degree at Xiamen University. When Mr. Xi appeared in public, Mr. He always appeared in official photos a few steps behind him.

In Xiamen in the 1980s, they worked together to establish industrial zones for factories, then attract and entertain potential investors from other parts of China, as well as Taiwan and Hong Kong.

Mr. Xia left Xiamen in 2009 and followed Xi, then China’s vice president, to northeast China. Mr. He served as senior city government in Tianjin and five years later became a senior economic planner in nearby Beijing.

Since 2017, Mr. He has played a key role in the economy’s shift towards state-led development. He served as chairman and Communist Party secretary of the country’s top central planning body, the powerful National Development and Reform Commission. He shifted the committee’s focus away from foreign investment and cut back on meetings with foreign executives, emphasizing close coordination with state-owned enterprises instead.

Mr. He’s development of economic policy parallels the decline of his longtime boss’s confidence in the market. Mr. He gave a speech in 2008 at his alma mater, reflecting his early beliefs in capitalism. He praised Deng’s decision, who dominated political life in China for two decades starting in 1978, to pursue the free market, saying that he and other early graduates had “been benefit from the great cause” of opening the economy.

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In August, Mr. He took a very different tone in a column of the state-run Economic Daily: “Strengthening the Party’s comprehensive leadership over economic work is a fundamental guarantee for the economic development of our country. Practice has proven that the key to running China’s affairs well lies with the Party.”

A prime example of how far Mr. He has come in his policymaking process as a senior leader in Tianjin can be seen before moving to Beijing to run the committee. national development.

Tianjin, a large metropolis just 70 miles southeast of Beijing, is a model of government intervention — in many ways the opposite of Xiamen, where He began his career. State-owned enterprises dominate. Excessive borrowing has left Tianjin facing one of China’s worst local government debt crises.

Mr. He oversaw the construction of a vast new city of skyscrapers on the city’s shores. It was intended to be a “new Manhattan”, but failed to attract much business.

Today, rows of empty apartment buildings at the port in Tianjin. The 103-story skyscraper opens only the bottom 40 floors for business. Even four McDonald’s franchises had barely any customers in a recent business day.

David Xing, a 29-year-old office worker, sat in the food court of a mostly empty shopping mall at lunchtime on a recent weekday. Friends moved to Tianjin but only stayed for a few years before concluding that there were better job opportunities elsewhere.

“I feel like this place can’t hold people,” he said.

Cities across China are grappling with mounting debt burdens, and an analysis by Fitch Ratings shows Tianjin is in bigger trouble than anywhere else. Although Tianjin is a longtime heavy industry center with an extensive tax base, the city’s debt branches are so indebted that they pay the highest interest rates in China. Nearly three-fifths of Tianjin’s debt will mature this year, and investors have been cautious about extending long-term loans to the city.

Unlike Tianjin, Xiamen has relatively little debt. An analysis released by S&P Global this month found that Xiamen is the least indebted city in Fujian province, thus having one of the best provincial credit records in China.

Xiamen is also still a center of small business activity. Sun Hao, 40, moved to Xiamen 15 years ago when he got tired of working for others in central China’s Henan province. He opened his one-man soldering shop, where he made steel stands for a nearby circuit board factory.

“I used to work for other people, but here I can do it myself, feeling better,” he said.

But China today is more like Tianjin than Xiamen. Nationally, government investment in roads, bridges and other infrastructure nearly tripled in the first two months of this year, as did retail investment, a sector among those targeted by the government. The most dominant businessman in China.

Mr. He himself may never have absorbed the small business ethos of Xiamen. Alfred Wu, a professor of politics at the National University of Singapore, said that even before moving to Tianjin, he spent the last years of his life in Xiamen ordering the razing of suburban neighborhoods and villages. Xiamen’s historic center to give way to modern buildings. working as a local reporter near Xiamen.

Mr. Wu ended his years in Xiamen with a new nickname: He Dachai, or He the Big Demolisher.

Li You contribution research.


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