China starts to reshuffle engineers of economic boom

Thursday, 8 September 2011 00:00 -     - {{hitsCtrl.values.hits}}

HONG KONG : 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.