From wooing Tesla to Xi’s right-hand man: Li Qiang’s road to China’s premiership

As Communist celebration 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 unit within the Chinese language megacity.

On the signing with Musk in 2018, the person who would at some point change 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 celebration 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 in opposition to and eight abstentions. After signing his appointment letter, Li stood to offer Xi a fervent handshake. Hardly ever has an incoming premier confronted such a frightening in-tray.

Li and his financial group might want to devise a brand new progress technique to exchange 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 modifications lately on points starting from cracking down on web corporations to Covid-19 controls have unsettled buyers, analysts mentioned.

“He inherits a job that has so many headwinds, beginning with the true 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 minimize out for him and the low-hanging fruit has been plucked by his predecessors.” 

Elon Musk, left, meets Li Qiang in 2018 © YouKu

As with many in Xi’s interior circle, Li owes his fast 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, certainly one of China’s wealthy jap 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 celebration secretary.

Throughout these years, he was recurrently pictured rubbing shoulders with high businesspeople, notably 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 know-how committee. “Jack Ma and Wang Jian are each my favorite folks to speak 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 crucial contributions from personal, foreign-invested and state-owned enterprises”, mentioned Eric Zheng, head of the American Chamber of Commerce in Shanghai.

Except for the Tesla deal, Li can be credited with the opening of a brand new Nasdaq-style inventory market in Shanghai.

However Li’s report was blemished final 12 months after he carried out one of the vital 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 . . . received 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 desires,” 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.

Against this, 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 1000’s of officers. Li Keqiang, an economist by career, didn’t refer explicitly to Xi’s zero-Covid coverage, however his feedback hinted on the inner difficulties of balancing the method with financial progress.

Jack Ma, right, with Li Qiang, then Communist party secretary of Jiangsu province, in 2017
Jack Ma, proper, with Li Qiang, then Communist celebration secretary of Jiangsu province, in 2017 © Xiao guangdian/Imaginechina/AP

Regardless of occasional makes an attempt to be extra assertive, Li Keqiang was seen as largely stymied by Xi, who considered him as a one-time rival hailing from a special political faction.

As a trusted longtime adviser, Li Qiang may need larger entry to the president’s ear, analysts mentioned. Some recommended that, based mostly on his current speeches, Li Qiang desires to pursue comparable 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 when it comes to the achievements of the previous 5 years, however when it comes to coverage orientation he takes 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 anticipate Chinese language policymakers to be restrained within the coming 12 months as progress rebounds from final 12 months’s Covid controls.

“It seems like policymakers are hoping and anticipating that this 12 months’s progress can be coming from natural sources . . . they usually don’t actually plan to drive up this progress with very expansionary coverage,” mentioned Louis Kuijs, chief Asia economist at S&P International Scores.

However in the long term, few anticipate Li to have the ability to resurrect the robust reformist premierships of the previous, akin to these of Wen Jiabao underneath Xi’s predecessor Hu Jintao, or Zhu Rongji underneath 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 celebration, is predicted to maintain Li on a decent rein, analysts mentioned.

“The potential for unpredictability goes to stay a persistent threat with Xi in cost and particularly with a management group comprised solely of his allies,” mentioned Thomas. “Xi’s insurance policies can be carried out for good or unhealthy underneath Li Qiang.”

Further reporting by Nian Liu, Xinning Liu and Ryan McMorrow in Beijing

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