On October 18, China’s top leadership will convene at the Great Hall of the People in Beijing to begin the weeklong 19th National Party Congress of the Communist Party of China.
The Congress is the most important political event in China, where the Party’s top representatives meet once every five years to announce changes to top leadership positions and set out the Party’s – and therefore China’s – direction for the next half decade.
This year, around 2,300 delegates will assemble for the Congress. The delegates consist of Party representatives from China’s national party organs, provinces, leading municipalities, the military, and state-owned enterprises (SOEs), as well as some private sector representatives and other influential figures.
The stakes for the 19th National Party Congress are high: five out of seven members of the Politburo Standing Committee (PSC) – the most powerful decision-making body in China – are set to retire, leaving only President Xi Jinping and Premier Li Keqiang remaining. Overall, about 70 percent of posts on the PSC, the 25-member Politburo, and the 350-member Central Committee are expected to shuffle, as well as adjustments to military positions.
As a new slate of leaders take the reins of key political and economic positions, China watchers are looking closely for hints of what the 19th National Party Congress will reveal about China’s future.
At the last Congress in 2012, the Central Committee elected Xi to the posts of General Secretary of the Party and Chairman of the Central Military Commission, replacing his predecessor Hu Jintao. In early 2013, Xi was named President, a position that carries a limit of two five-year terms. The 19th Party Congress should mark the halfway point of Xi’s term as China’s top leader.
According to convention, any politician aged 68 or older at a Congress should retire, and be replaced with a younger member. If the leadership follows convention, five members of the PSC should step down at the Congress, thereby allowing Xi to promote allies in their place.
In the run up to the Congress, China watchers have engaged in extensive debate and speculation over who will be promoted to the PSB. Among the notable names to watch are Wang Qishan, Chen Min’er, and Hu Chunhua.
Wang Qishan is a current member of the PSC and the head of Xi’s anti-corruption campaign. At 69 years old, Wang should retire at the Congress, according to convention. However, many observers have speculated that the top leadership could make an exception to the retirement rule to keep Wang on the PSB, either to continue leading the anti-corruption campaign or to move to an economic post. If Wang remains on the PSC, it would be a notable break of recent precedent.
The fates of Chen Min’er and Hu Chunhua will be watched closely largely due to their age. Born in 1960 and 1963, respectively, Chen and Hu are the only two candidates that are young enough to serve at the Congresses in 2022 and 2027, which increases the likelihood of their promotion to the PSC. This means that the two could potentially be successors to Xi and Li.
Chen is considered a close associate to Xi, and was appointed to the position of Party Secretary of Chongqing earlier this year. Hu is currently the Party Secretary of the economically vital Guangdong province, and is known to keep a low profile.
Xi and Li both rose to the PSC at the 17th Congress in 2007, halfway through Hu Jintao’s presidency. Xi earned the position of Vice-President, while Li earned Vice-Premier, signaling their future roles as President and Premier, respectively.
Congresses are at their core internal political events concerning the Party structure, as opposed to the annual Two Sessions meetings that lay out the coming year’s legislative agenda. However, speeches and press events delivered at the Congress may provide clues about China’s macro-level policy direction, mostly notably in the Work Report to be delivered by Xi.
In terms of the economy, the Work Report will likely stress the Party’s success in meeting growth targets and progress towards eliminating extreme poverty and becoming a “moderately prosperous society“. It will likely reaffirm China’s commitments to free trade and globalization and combating pollution and climate change. Further, it should affirm the Party’s efforts to push ahead with anti-corruption and SOE reform.
While any of the above statements would be unsurprising, slight changes to wording or special attention to certain issues could signal policy priorities. For example, Xi might stress the importance of his Belt and Road Initiative, which would mean further investment in the program should be expected.
Some commentators have speculated that Xi will place a greater emphasis on economic reform in his second term, as he will have a stronger political base from which to work. A promotion of a close ally such as Wang to an important economic position could be a signal that Xi is looking to tackle economic reform in the coming years. Further, the track records of individuals promoted to lead different ministries and leading groups could provide clues to their respective directions.
The 19th National Party Congress has great implications for China’s future. Foreign investors will look for a commitment to economic reform and attracting foreign direct investment, as well as policy developments concerning issues such as the Made in China 2025 initiative and the war on pollution.
Chinese politics is notoriously opaque, however, and reading too much into individual promotions risks missing the broader picture. For example, because Li holds a PhD in economics, when he became Premier in 2012, many observers expected greater economic reform and liberalization than has actually occurred since.
Ultimately, the Congress only provides broad directions for China in terms of policy, and it will be up to Xi and the new leadership to develop and implement initiatives to steer the country on its way towards to the 20th National Party Congress in 2022.
China Briefing is published by Asia Briefing, a subsidiary of Dezan Shira & Associates. We produce material for foreign investors throughout Asia, including ASEAN, India, Indonesia, Russia, the Silk Road, and Vietnam. For editorial matters please contact us here, and for a complimentary subscription to our products, please click here.
Dezan Shira & Associates is a full service practice in China, providing business intelligence, due diligence, legal, tax, IT, HR, payroll, and advisory services throughout the China and Asian region. For assistance with China business issues or investments into China, please contact us at firstname.lastname@example.org or visit us at www.dezshira.com
Dezan Shira & Associates is a pan-Asia, multi-disciplinary professional services firm, providing legal, tax and operational advisory to international corporate investors. Operational throughout China, ASEAN and India, our mission is to guide foreign companies through Asia’s complex regulatory environment and assist them with all aspects of establishing, maintaining and growing their business operations in the region. This brochure provides an overview of the services and expertise Dezan Shira & Associates can provide.
This Dezan Shira & Associates 2017 China guide provides a comprehensive background and details of all aspects of setting up and operating an American business in China, including due diligence and compliance issues, IP protection, corporate establishment options, calculating tax liabilities, as well as discussing on-going operational issues such as managing bookkeeping, accounts, banking, HR, Payroll, annual license renewals, audit, FCPA compliance and consolidation with US standards and Head Office reporting.
China’s foreign investment landscape has experienced pivotal changes this year. In this issue of China Briefing magazine, we examine how foreign investors can capitalize on China’s latest FDI reforms. First, we outline new industry liberalizations in both China’s FTZs and the country at large. We then consider when an FTZ makes sense as an investment location, and what businesses should consider when entering one. Finally, we give an overview of China’s latest pro-business reforms that streamline a wide range of administrative and regulatory measures.