As Communist social gathering boss in Shanghai, Li Qiang’s signature enterprise coup was persuading Tesla founder Elon Musk to construct the US electric-car maker’s first abroad manufacturing facility within the Chinese language megacity.
On the signing with Musk in 2018, the person who would at some point turn into President Xi Jinping’s quantity two spoke glowingly about creating “beneficial” situations for commerce, whereas a rainbow on a large portray behind them created a halo over the rising social gathering star.
However Li’s pro-business credentials are about to be sorely examined. China’s rubber-stamp parliament confirmed him as premier and head of the State Council, or the cupboard, on Saturday, with 2,936 votes in favour, three towards and eight abstentions. After signing his appointment letter, Li stood to provide Xi a fervent handshake. Not often has an incoming premier confronted such a frightening in-tray.
Li and his financial group might want to devise a brand new development technique to switch China’s flagging debt-fuelled mannequin whereas overseeing a sweeping restructuring of the state, together with the monetary regulators, introduced this week.
Maybe tougher nonetheless, he should handle his boss. Xi’s sudden coverage adjustments lately on points starting from cracking down on web firms to Covid-19 controls have unsettled buyers, analysts mentioned.
“He inherits a job that has so many headwinds, beginning with the actual property disaster, the debt burden, US sanctions, the ageing of China and the sentiment being down,” mentioned Jörg Wuttke, head of the EU Chamber of Commerce in China. “The man has his work reduce out for him and the low-hanging fruit has been plucked by his predecessors.”
As with many in Xi’s internal circle, Li owes his speedy rise to an in depth affiliation with the Chinese language chief after they each served in provincial jobs. An agricultural engineer, Li labored for Xi in a secretarial position when the latter was governor of Li’s native Zhejiang, considered one of China’s wealthy japanese coastal provinces, within the mid-2000s.
After Xi turned president in 2012, Li turned Zhejiang governor himself, then the communist boss of close by Jiangsu province and in 2017, Shanghai social gathering secretary.
Throughout these years, he was repeatedly pictured rubbing shoulders with prime businesspeople, significantly Jack Ma, founding father of Zhejiang-based web group Alibaba, who has largely disappeared from public view since Xi’s web crackdown.
He even wrote the prologue to a e-book by Wang Jian, chair of the Alibaba Group’s expertise committee. “Jack Ma and Wang Jian are each my favorite folks to talk with,” Li wrote when he was governor of Zhejiang.
Li is “uniquely positioned to guide the brand new administration” given his expertise in heading “probably the most developed regional economies in China with essential contributions from personal, foreign-invested and state-owned enterprises”, mentioned Eric Zheng, head of the American Chamber of Commerce in Shanghai.
Apart from the Tesla deal, Li can be credited with the opening of a brand new Nasdaq-style inventory market in Shanghai.
However Li’s document was blemished final yr after he applied some of the stringent and, within the eyes of many, mismanaged Covid lockdowns in China. Residents of the nation’s wealthiest metropolis struggled to get sufficient to eat.
But he has refused to accede to criticism of the dealing with of the outbreak, later saying “we . . . gained the battle to defend Shanghai”.
The Shanghai lockdown has been extensively interpreted as a show of fealty to Xi, who had repeatedly emphasised the significance of the zero-Covid technique earlier than the coverage was deserted in December.
“The Shanghai lockdown confirmed that when push involves shove, Li Qiang will do no matter Xi Jinping needs,” mentioned Neil Thomas, a China analyst who this month will be a part of the Asia Society Coverage Institute’s Centre for China Evaluation in Washington.
In contrast, whereas Li Qiang was paralysing China’s monetary hub, his predecessor, outgoing Premier Li Keqiang, was sounding the alarm over the financial affect of the pandemic on a video name with tens of hundreds of officers. Li Keqiang, an economist by career, didn’t refer explicitly to Xi’s zero-Covid coverage, however his feedback hinted on the inside difficulties of balancing the method with financial development.
Regardless of occasional makes an attempt to be extra assertive, Li Keqiang was seen as largely stymied by Xi, who seen him as a one-time rival hailing from a distinct political faction.
As a trusted longtime adviser, Li Qiang might need better entry to the president’s ear, analysts mentioned. Some advised that, primarily based on his latest speeches, Li Qiang needs to pursue related insurance policies to his predecessor, together with controlling debt and reorienting the financial system in direction of consumption.
“Politically he’ll give credit score to Xi Jinping by way of the achievements of the previous 5 years, however by way of coverage orientation he’s taking his cue from Li Keqiang,” mentioned Bo Zhiyue, founding father of the Bo Zhiyue China Institute, a consulting agency.
Whereas extra particulars of Li Qiang’s financial programme are anticipated to be revealed on Monday, when he offers his first remarks as premier, many observers count on Chinese language policymakers to be restrained within the coming yr as development rebounds from final yr’s Covid controls.
“It appears like policymakers are hoping and anticipating that this yr’s development can be coming from natural sources . . . they usually don’t actually plan to drive up this development with very expansionary coverage,” mentioned Louis Kuijs, chief Asia economist at S&P World Rankings.
However in the long term, few count on Li to have the ability to resurrect the sturdy reformist premierships of the previous, corresponding to these of Wen Jiabao below Xi’s predecessor Hu Jintao, or Zhu Rongji below the late president Jiang Zemin.
A newcomer to the nationwide stage, Li Qiang might want to construct alliances in Beijing. However Xi, ever cautious about his place on the head of the social gathering, is predicted to maintain Li on a good rein, analysts mentioned.
“The potential for unpredictability goes to stay a persistent threat with Xi in cost and particularly with a management group comprised completely of his allies,” mentioned Thomas. “Xi’s insurance policies can be applied for good or unhealthy below Li Qiang.”
Further reporting by Nian Liu, Xinning Liu and Ryan McMorrow in Beijing