Welcome to the 187th edition of Trade War.
Retired premier Li Keqiang unexpectedly dies of a heart attack sparking online angst directed at Xi Jinping. California governor Gavin Newsom feted in China, meets China’s top leader.
Foreign minister Wang Yi travels to Washington to prepare for a Xi-Biden meeting at next month’s APEC summit in San Francisco. And defense minister Li Shangfu and ex-foreign minister Qin Gang formally sacked.
Real estate giant Country Garden defaults for the first time. Xi visits the central bank in a sign of concern over mounting economic challenges. And next week Beijing to hold once-every-five year financial work conference to deal with property crisis and swelling local government debt.
A Chinese Foxconn probe is a new headache for Apple. Books review examines Deng era myth-making. And the U.S. must “keep China entangled in a global system,” argues Brookings Institution senior fellow Ryan Hass.
‘Frustrated reformer’ Li Keqiang dies
The 68-year old former premier of China Li Keqiang died Friday of a sudden heart attack in Shanghai. Li, who only stepped down from his role heading China’s government in March, was widely seen as an economically savvy but deeply frustrated reformer, who had less power and was less effective than any other premier in Chinese modern history.
Li, who was once considered a rival to Xi for the top position in China, was “an excellent CPC member, a time-tested and loyal communist soldier and an outstanding proletarian revolutionist, statesman and leader of the Party and the state,“ reported CCTV.
The source of Li’s frustration? He was forced to hand over management of the economy—traditionally granted to the premier—to his extremely powerful and ambitious boss Xi Jinping.
Xi’s single-minded focus on creating a “politics in command economy” as well his obsession with putting national security above everything else, meant he he would never be satisfied with the CPC general secretary/president’s typical role—running foreign policy, the military, domestic security, and technology—but also would demand the economy be firmly in his hands.
Li’s death sparked a surge in mourning on China’s internet with people posting picture of him over the years, including those showing the premier standing in mud while visiting victims of a flood.
One reason for the outpouring of grief: the widespread belief that Li, who came from a humble background unlike princeling Xi, cared about the many less well-off people of China. That sentiment became particularly strong after Li, speaking in a nationally-broadcast press conference over three years ago, commented that China had 600 million people who survived on only 1,000 yuan ($140) a month, “not even enough to rent a room in a medium Chinese city.”
The Li tributes, however, also appear to be a way to indirectly express anger at Xi’s highly politicized rule and his policies, which many view as signaling an end to decades of Deng Xiaoping’s Reform and Opening, later in large part carried on by presidents Jiang Zemin and Hu Jintao, and premiers Zhu Rongji and Wen Jiabao.
One widely shared meme focused on Li’s promise made in March of last year, that China inevitably would remain open and that reform could never be reversed, “just as the course of the Yangtze and Yellow rivers will not be reversed.”
And as China author Ian Johnson noted in a blog for the Council on Foreign Relations, some began posting on social media a video of the song “A pity it wasn’t you” by Liang Jingru, a Malaysian-Chinese singer (also known as Fish Leong) — That apparently was a way to obliquely suggest China would have been better off losing a different leader. Most of these posts have been quickly removed from the internet by China’s censors.
Remember that the demise of senior leaders has been used by dissatisfied Chinese to attack their leadership before, as we saw when the death of liberal reformer Hu Yaobang in 1989 became an excuse for students and workers to fill Tiananmen Square and begin the protests that later shook China.
The death of high-ranking officials is “always an extremely complicated and challenging moment” for the leadership, says Joseph Torigian, an expert on elite politics at Stanford University.
‘Most educated premier’
“He was the most educated Chinese premier, as he held a Ph.D. in economics from Peking University, but as a premier, he was given very little power over economic affairs,” Chang Wu-ueh, a scholar of Chinese politics at Tamkang University in Taiwan, told VOA’s William Yang.
“While Li was supposed to be in charge of economic affairs as the Chinese premier, over the last 10 years, all major economic decisions in China were made by Xi Jinping,” he added.
During Li’s decade as premier, “there was constant talk about reforming the land system in China’s countryside, which would be a key reform that allowed rural people to monetize their land and let people in the countryside start to get richer,” said Dexter Roberts, the director of China Affairs at the University of Montana’s Mansfield Center.
“In his latter years, Li Keqiang started talking about things like cutting red tape and reducing the number of administration regulations, which seemed to me like real serious reforms were not going to be possible,” Roberts said.
“In addition to minor reforms with limited impact on the Chinese economy, Roberts said, Li also championed the idea that entrepreneurship and innovation were the new growth engine. While premier, Li vowed to improve conditions for entrepreneurs, but in recent years, China has tightened control over technology and other industries and instituted laws deemed unfriendly to foreign businesses,” writes VOA’s Yang.
“I feel like Li was led into pushing these things that were not significant economic reforms simply because he didn't have the power to do that under Xi Jinping. He was a frustrated reformer,” Roberts added.
In one way, Li indirectly did have an impact on the economy, or rather on how people interpreted it. When it was revealed by Wikileaks in 2010 that Li was deeply skeptical about China’s official GDP figures, and had referred to them several years earlier as “man-made” and “for reference only,” that helped convince investment bankers, analysts and economists to start to try to come up with their own alternate methods to measure China’s economy, as I wrote in Bloomberg Businessweek in 2012.
Here I am casting cold water on the likelihood of Li (or Xi) successfully driving economic reforms a decade ago, shortly after he assumed the premiership:
“Li [has] called economic reform the ‘biggest dividend for China,’ saying that efforts to limit government influence over the economy were a ‘self-imposed revolution’ but one that would ‘be very painful and even feel like cutting one’s wrist.’ More recently, in a speech on May 13, Li said Beijing must continue to cut bloated government approvals that are inhibiting the growth of private enterprise. Instead, he said, Beijing must limit the role of state-led investment and ‘rely upon the market mechanism,’” I wrote in Bloomberg Businessweek in 2013.
“Almost 10 years after China amended its constitution to protect the rights of private business, entrepreneurs continue to face formidable obstacles in getting access to credit that’s controlled by China’s state-owned banks and in winning business contracts while competing with state enterprises. Some economists remain skeptical that Beijing is ready to throw open cossetted state sectors to genuine competition, given the vested interests—including powerful oligopolies in telecoms, finance, power and energy—that benefit from the present system.”
California governor feted in China
On a week-long trip to China, California’s governor Gavin Newsom focused on how his state and China can cooperate on climate change, raised concerns about human rights violations and China’s role in producing the chemicals for fentanyl, and secured a surprise meeting with Xi Jinping.
The largely amicable visit—plus earlier ones by other U.S. officials including Senate majority leader Chuck Schumer—suggest that a much-anticipated meeting between Xi and U.S. president Biden at next month’s Asia-Pacific Economic Cooperation, or APEC summit in San Francisco, looks increasingly likely to happen.
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