By Benjamin Cooper and Sherry Lu

At the 19th Party Congress, five of the seven members of the Politburo Standing Committee (PBSC) are expected to step down due to the informal age threshold of 68 years old that precludes senior officials from reappointment. If the traditional retirement rules are adhered to, only President Xi Jinping and Premier Li Keqiang will remain at the table of China’s highest governing council after the leadership succession in the fall.

The upcoming transfer of power may be an internal political issue for Beijing. In today’s world, however, its implications will extend far beyond China, and the composition of the future PBSC will carry enormous import for businesses in both the domestic and foreign business communities. Those selected to enter this innermost sanctum will be the next rulers of the emerging Chinese superpower, and the decisions emanating from these figures will now reverberate and have a spill-over effect around the world – on everything from the global economy to international governance, climate change to security matters. Without a thorough understanding of these individuals’ backgrounds, it will be even more challenging for companies to extrapolate the possible paths that China may take in 2018 and beyond and plan their corporate strategies accordingly.

In this article, the first of a series of leadership profiling conducted by H+K Strategies, we will aim to shed light on the identities of some of the heavyweight contenders who may ultimately secure a seat on the PBSC. Beginning with the constellation of close advisors orbiting within Xi’s innermost core of the central administration, we have compiled below several overviews of key individuals that companies should have on their radar in order to assess their potential impact on China’s future trajectory should they ascend to the utmost heights of the Party-state hierarchy later this year.

Mr. Li Zhanshu – The chief-of-staff

 Born in 1950, Hebei-native Li Zhanshu is the Director of the Party Central Committee’s General Office, which is responsible for coordinating administrative matters for the Party’s senior leadership. In his current role, Li is widely viewed as Xi’s right-hand man who is in charge of the president’s affairs, effectively serving as his de facto chief-of-staff while also providing counsel on a host of policy-related issues, including on the economy and diplomatic affairs.

As a longstanding associate of Xi, he first met the future president when the two were serving as party chiefs in two nearby counties in Hebei back in the early 1980s. Throughout his career, Li acquired broad provincial leadership experience – which is often viewed as the most important stepping stone to advancing into the highest ranks of the national leadership – across four provinces, including Hebei, Shaanxi, Heilongjiang, and Guizhou.[1]

Indicating his clout within the Xi administration, Li is a member of the 25-strong Politburo, a position which his predecessors as Director of the Central Committee’s General Office did not hold.[2] In addition, he is also Director of the General Office of the National Security Commission, the high-level body responsible for coordinating policy on security matters that was established by Xi. Further signaling his influence, Li nearly always accompanies the president on his domestic and international trips. And two years ago, Xi broke with diplomatic precedent by sending Li to Moscow for talks – including a meeting with President Putin – rather than a foreign affairs official, providing one of the most notable examples of Xi’s establishment of a more centralized presidential system defined by a close circle of trusted advisers.

If he is elevated onto the PBSC, Li’s extensive experience in intra-Party coordination and knowledge of the Party-state apparatus’ inner workings gained through his current role, together with his wide provincial-level networks built up earlier in his career, would both be important assets to Xi.

Mr. Zhao Leji – The HR gatekeeper

Born in Qinghai in 1957, Zhao Leji is widely viewed as another close confidant of Xi, who currently serves as the head of the Party’s Organization Department and is a member of the Politburo. In his current role, he essentially acts as the gatekeeper for China’s top official posts, overseeing the appointments of several thousand senior positons across the Party, government, military, SOEs, and other institutions. Prior to rising up into the central administration, Zhao spent more than three decades working his way up the political ladder in the remote northwest in Qinghai before moving to his ancestral home of Shaanxi and serving as Party secretary there from 2007 to 2012.[3]

As one of Xi’s close associates, the chief of the Organization Department is believed to be a leading contender for the PBSC. Similar to Li Zhanshu, Zhao’s long experience in governing at the provincial level is a strong credential for further advancement, particularly given his decades of services in the relatively under-developed northwest region – “hardship” postings are considered especially valued within the upper ranks of the national leadership – as well as his time spent in Shaanxi, Xi’s birthplace. He reportedly secured Xi’s gratitude by carefully looking after his extended family in the province during his five years as Party chief there.[4] Most importantly, Zhao’s current role supervising all top personnel appointments makes him an integral part of Xi’s inner circle, particularly due to his ability to help install Xi’s key allies in powerful positions throughout the national and provincial leadership.

Mr. Wang Huning – The scholar

Born in 1955, Shanghai-native Wang Huning is currently the Director of the Central Policy Research Office, the Party’s top research body, where he serves Xi in the capacity of a national policy adviser and leading speech writer. The eminent academic turned veteran politician holds the rare distinction of having worked consecutively under three separate Chinese administrations – Jiang Zemin, Hu Jintao, and now Xi Jinping– as a top adviser and strategist. As one of the foremost theorists in the Central Policy Research Office for nearly two decades, he has been a leading architect of the Party’s official political ideologies since the late 1990s.[5] It is believed that Wang was one of the principal drafters of Jiang’s “Three Represents” and Hu’s “Scientific Theory of Development” and led on the development of the “Chinese Dream” under the Xi administration.[6]

Wang is not only unique in Chinese politics for having enjoyed the special favor of three presidents. He also stands out for having spent the first part of his career as a scholar before transitioning into politics by entering the Central Policy Research Office in 1995. After graduating from Fudan University in Shanghai, Wang became the mainland’s youngest university professor when he decided to stay on at his alma mater and teach international politics there.[7] He eventually rose up to become dean of the international politics department and later served as dean of Fudan’s law school as well. He also acquired overseas experience when he spent time as a visiting professor at the University of Iowa and the University of California, Berkeley in the late 1980s.

Wang is somewhat of an anomaly in a system where the majority of leading officials have had to work their way up through the Party hierarchy from the grassroots level. Given his lack of provincial leadership experience, the fact that Wang has managed to rise up to become a member of the Politburo and one of Xi’s closest advisers indicates that Beijing is increasingly opening up the worlds of academia and government think tanks as a new venue for top-level recruitment.[8] If he ascends still further and secures a seat on the PBSC this autumn, Wang’s elevation would bode well for continued diversification of the leadership team’s make-up in the future.

Wang’s key areas of focus on the PBSC could include bolstering the rule of law and continuing to push forward the Xi administration’s governance overhaul towards a stronger centralized authority, which would likely see even greater empowerment of the Party-based leading small groups system.[9] For domestic and foreign companies, this could mean that they would increasingly need to go directly to the leading small groups, rather than the State Council and the government bureaucracy under its supervision, when lobbying Chinese authorities on their business issues.[10]

Mr. Liu He – The economist

Liu He is the Director of the General Office of the Central Leading Group on Financial and Economic Affairs, the high-level committee responsible for ensuring that the Party contains to manage and retain oversight of the Chinese economy. In this capacity, Liu serves as China’s top economic policymaker under the Xi administration, and it is believed that he was the leading architect of Xi’s landmark blueprint for economic reform unveiled at the Third Plenum in November 2013 as well as the “new normal” slogan that became the leadership’s signature economic catchphrase during Xi’s first term.[11] The renowned economist is a strong advocate for financial liberalization and has stressed the need for market-based economic reforms.

After graduating from Renmin University’s Department of Economics in Beijing, Liu then taught briefly at his alma mater before embarking on a research career at the Development Research Center of the State Council and later the State Development Planning Commission (SPC), the National Development and Reform Commission’s (NDRC) predecessor, where he worked on crafting China’s Five-Year Plans. While working at the SPC, he spent several years studying abroad, receiving an MBA from Seton Hall University and an MPA from Harvard’s Kennedy School of Government.[12] Later in his career, Liu was heavily involved in the preparation of a joint report by the World Bank and the Development Research Center of the State Council that called for an acceleration of market-based changes to drive China’s economic transformation onto a more sustainable path, indicating his liberal economic position.[13]

Liu is a childhood friend of Xi, having first met the future head-of-state while they were studying in nearby high schools in Beijing.[14] Since assuming office, Xi has described his chief economic adviser as being “very important to me,”[15] and Liu’s favored status as a member of Xi’s small grouping of top aides has become apparent over the past several years. In particular, the rapid assumption of much more direct policy oversight by the Central Leading Group on Financial and Economic Affairs under Liu’s leadership, as well as the considerable expansion of its staff, have both testified to his influence in the current administration.

Liu is widely expected to be promoted to the Politburo at the 19th Party Congress, and it is even possible, although unlikely, that he will leapfrog straight up to the PBSC. Similar to Wang Huning, the promotion of another intellectual without provincial leadership experience would further indicate that the doors of the national leadership are widening to include more diverse membership.[16] And for domestic and foreign businesses, the ascension of the reform-minded economist to either the Politburo or the PBSC would send a positive signal about the likelihood of economic liberalization progressing more rapidly in China over the next five years.

[1] Cheng Li, “Xi Jinping’s inner circle (Part 3: political protégés from the provinces),” The Hoover Institution, China Leadership Monitor, No. 45, October 2014.

[2] Jun Mai, “Inside Xi Jinping’s inner circle,” The South China Morning Post, 03 March 2016.

[3] Choi Chi-Yuk, “Zhao Leji: a man whose time has come,” The South China Morning Post, 29 October 2012.

[4] Willy Lam, “All the general secretary’s men: Xi Jinping’s inner circle revealed,” The Jamestown Foundation, Volume 13, Issue 4, 15 February 2013.

[5] Chutian Zhou, “Who will be enthroned at China’s 19th Party Congress?,” The Diplomat, 26 October 2016.

[6] Huang Yuanxi, “Wang Huning, often seen at the side of two presidents,” The South China Morning Post, 11 October 2012; Kathrin Hille and Patti Waldmeir, “25 Chinese to watch,” The Financial Times, 20 September 2013.

[7] Huang Yuanxi, “Wang Huning, often seen at the side of two presidents,” The South China Morning Post, 11 October 2012.

[8] Cheng Li and Lucy Xu, “Chinese think tanks: a new ‘revolving door’ for elite recruitment,” The Brookings Institution, 10 February 2017.

[9] Cheng Li, “China’s top future leaders to watch: biographical sketches of possible members of the post-2012 Politburo (Part 3),” The Brookings Institution.

[10] “Multinationals are rethinking how they lobby Xi’s China,” Bloomberg, 14 March 2017.

[11] Cheng Li, “Xi Jinping’s inner circle (Part 5: The mishu cluster II),” The Brookings Institution.

[12] Cheng Li, “Xi Jinping’s inner circle: part 2, friends from Xi’s formative years,” The Hoover Institution, China Leadership Monitor, No. 44, July 2014.

[13] Cheng Li, “Xi Jinping’s inner circle: part 2, friends from Xi’s formative years,” The Hoover Institution, China Leadership Monitor, No. 44, July 2014.

[14] Willy Wo-Lap Lam, “Members of the Xi Jinping clique revealed,” The Jamestown Foundation, 07 February 2014.

[15] “Meet the people shaping China-U.S. ties ahead of the Xi-Trump summit,” The South China Morning Post,” 03 April 2017.

[16] Cheng Li and Lucy Xu, “Chinese think tanks: a new ‘revolving door’ for elite recruitment,” The Brookings Institution, 10 February 2017.

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