Who will be China’s next economic czar?

IN APRIL 2019 the Americans thought they were about to end their trade war with China. They had a draft agreement that would force China to strengthen its intellectual property rights and buy more American crops, among other things. And they trusted their negotiating partner, Liu He, China’s special envoy (pictured). Fluent in English, Harvard-educated and committed to reform, he was frankly one of the most respected men in the world, according to Donald Trump, then President of the Americas.

But Americans overestimated Mr. Liu’s influence, according to the book Superpower Showdown by Bob Davis and Lingling Wei. Simply because Liu had not said no to WE the proposals did not mean that Beijing had said yes. When the Politburo Standing Committee, the Communist Party’s top decision-making body, rejected the draft agreement, Americans were surprised.

The episode illustrates the strengths and limitations of Mr. Liu, China’s economic czar, who is expected to step down from his Politburo post at the party’s congress in October. One of China’s four vice-premiers, he also plays a leading role in two bodies set up by Chinese leader Xi Jinping to strengthen his grip on economic policy-making: the Central Commission for overall deepening of reforms and the Central Commission for Financial and Economic Affairs (CFEAC).

Mr. Liu is respected by economists, had a relationship of trust with his American counterparts and is said to have known Mr. Xi since childhood. (They both grew up in Beijing as favored sons of party officials.) It’s hard to imagine a business decision maker in China with a better combination of credentials. His departure is therefore unfortunate.

Who could be his successor? If he could choose himself, he could choose Han Wenxiu, who assists him in the CFEAC. Mr. Han holds a PhD in finance and spent a year at Oxford University. He tried to allay fears about Mr. Xi’s pursuit of common prosperity (that doesn’t involve killing the rich to help the poor) and technological autonomy (which isn’t a return to the traditional self-sufficiency).

In 2014, he wrote a thought-provoking article distinguishing between the flow of production in China and the accumulated stock of wealth. If a bridge is built, demolished, then rebuilt, it contributes three times to the flow of GDP, he noted, but only once to the wealth of the country. This phenomenon is not uncommon in our country. He mentioned the Rainbow Bridge in Qijiang, which collapsed after three years. China has 5,000 years of history, he writes, but few buildings are over 50 years old.

Mr. Han has already written a book with Guo Shuqing, a more plausible candidate for the role of economic chief. After working in the countryside during the Cultural Revolution, Mr. Guo earned his doctorate from the Chinese Academy of Social Sciences and also spent a year at Oxford University. He has written over 300 research articles and essays. Many were scrutinized by China’s first economic czar, Zhu Rongji, who became deputy prime minister for economic affairs in 1991.

In 2004, Mr. Guo complained that direct government intervention was hurting the Chinese economy. Investment decisions have been decoupled from market realities, costs have been unconstrained, risk is borne by no one and cannot be attributed to anyone. Many of these concerns stayed with him in his later roles as financial regulator. Last year he warned the property was a gray rhino, a significant, obvious but overlooked risk. He was right.

Unlike the other candidates, Mr. Guo is a doer and a thinker. He served as Governor of Shandong Province and Chairman of China Construction Bank, a state-owned giant, where he tried to infuse a more customer-centric approach.

Mr Liu’s most likely successor, however, is He Lifeng, known for his Xi-centric approach. Head of China’s planning agency, Mr. He was educated at Xiamen University in Fujian Province, where Mr. Xi spent more than 17 years of his career. He took the future president for a drink in Xiamen and showed him around the city, according to the the wall street journal. He also attended Mr. Xi’s second wedding. As a local provincial official, Mr. He was known for demolishing buildings, contributing to GDP if not wealth.

Mr. He helps oversee Mr. Xis’ Belt and Road Initiative, an effort to build infrastructure and trade routes around the world. Before that, in 2002, he co-edited a book on China’s entry into the World Trade Organization. He warned that anti-socialist forces would use the WTO and the Internet to spread Western values ​​and spiritual opium in China. WTO membership would also open the door to multinational corporations resistant to party influence. Mr. Hes fears separating him from the more cosmopolitan economists. But Mr. Xi is also inclined to think that Westerners are pushing reforms toward China not to strengthen its economy but to weaken party control.

Whoever becomes the next economic czar will struggle to live up to the title. It will only be as powerful as Mr. Xi wants it to be. Even the fearsome Mr. Zhu didn’t like the term. Decisions are made collectively, he told a reporter in 1994. If his views on the economy carried weight, it was because he had devoted most of his energy to economic work and never made no major mistakes. Today there is only one Tsar. And nothing, certainly not the economy, escapes its competence.

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