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 finalises 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.
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Similar changes are underway at scores of Chinese state firms, banks, oil companies and other strategic industries. Hu Xiaolian and Liu Shiyu, both deputy central bank chiefs, are expected to be appointed to chair state banks, banking sources said. The sweeping overhaul will follow a formula set when former president Jiang Zemin stepped down as party boss in 2002, taking a swathe of officials with him into retirement, said Li Xiaoning, deputy director of the State Information Center in Beijing.
“About one third of the current leadership will move in to the new government, another third will stay on the second line(in position), and one third will be fresh blood,” he said. Some decisions appear closer to final. A high-level ICBC source said on condition of anonymity that Chairman Jiang Jianqing had already completed an economic audit and that staff movements had already been frozen at the banking commission, which he is tipped to run, as well as at the insurance regulatory commission.
But critical posts like the central bank will likely be among the last to change hands to ensure veterans are on hand to provide stability during the leadership transition due to the turbulent global economic environment, and concerns over China’s own domestic growth and nagging inflation, analysts said.