Xi strengthens his position – what does this mean to economic policy?

October 26, 2017, by Hubert Fromlet, Kalmar

Now we also have the answers to the three – maybe four – most important questions we had ahead of the National Congress: Who will be the new members of the Standing Committee of the Politburo of the Chinese Communist Party? Will China’s Core Leader Xi Jinping introduce a possible successor? Will the number of the members of the Standing Committee be enlarged? How may future economic policy look like?

Some answered  questions
First – as expected – the number of members of the Standing Committee stayed at seven which easily can be explained by Xi’s strengthened position and therefore in his eyes no real need to enlarge the number of the highest decision-makers.

Second, Xi Jinping found obviously no reason to introduce his probable successor. This fact strengthens the assumption that he may run for a third term as China’s core leader after 2022. This actually would be a new phenomenon in modern China politics. It may be the case that Xi thinks that he may need at least one more term for guiding China on the necessary track to a real superpower status.

Third, the five new members of the Standing Committees are, of course, well received in China but also visibly in (parts of) the Western hemisphere. This may be also due to the re-appointment of Prime Minister Li Keqiang who has a relatively good reputation outside China as a reform-minded executive of economic policy reforms.

One important question, however, remains unanswered. What do the new core leadership of Xi and the obviously somewhat weakened position of Li mean to the future course and determination of economic policy reforms? Economic history gives us lots of examples that demonstrate that very strong individual leaders at some point run difficulties compared to a democratic or stricter collective political leadership. It may – psychologically – become more difficult for a strong leader to reverse bad or wrong policy decisions. And opposite or questioning positions may be expressed much more carefully vis-à-vis the strong leader.

So far, the Standing Committee itself was a kind of high-level decision forum also for different views (which I many times in China got explained as the Chinese version of democracy). The new model with Xi Jinping’s core leadership – which now also is anchored in the constitution – makes it even more urgent to regularly follow developments in China  for foreign (Swedish) corporations, also as regards economic policy. Future Chinese economic policy may become more uncertain – but not necessarily.

That is exactly why regular China analysis will be needed – and not only in times when corporations outside China are about to prepare a new budget for activities in China for the coming year.


Hubert Fromlet
Affiliate Professor at the School of Business and Economics, Linnaeus University
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