The Li vs Xi silly season

When Premier Lǐ Kèqiáng 李克强, visiting Shenzhen in Guangdong last week, laid a wreath at the foot of a statue of Dèng Xiǎopíng 邓小平 and pledged to continue the paramount leader’s “Reform and Opening” policy, he unleashed a flurry of rumors that he might be challenging the “Politics in Command” form of state capitalism favored by Xí Jìnpíng 习近平, and by extension challenging Xi and his future running of China too.

Speaking to local officials, the 67-year-old Li, trained as an economist, waxed poetic, saying, “the Yellow River and Yangtze River will not flow backwards,” widely interpreted to mean that despite recent setbacks for market reform, like the Xi-directed crackdown on China’s top private technology companies, China would inevitably right its course and once again continue on a path of economic integration with the West.

The location too was noteworthy. As China’s first special economic zone, Shenzhen was where many of China’s economic reforms took off in the early ‘80s. It was also where Deng himself traveled on his famed 1992 Southern Tour, where he jumpstarted market opening, in the bad days of isolation for China after the Tiananmen Square Massacre in June 1989, and when conservatives like Lǐ Péng 李鹏 tried to push the country back towards a more planned system.

Also notable for some was the contrast between where Li and the 69-year-old Xi decided to travel after both leaders attended the annual political retreat held in the coastal city of Beidaihe. While Li was traveling in the south, Xi went to the northeastern province of Liaoning, visited a revolutionary memorial to a key Communist Party battle against arch rival the Kuomintang in Jinzhou, and made some decidedly conservative remarks. “We will never allow our socialist country to change its nature. Nor will the people,” Xi said on August 16. China should strive for self-reliance in science and technology, he said later, while visiting a local robot and automation company in the provincial capital of Shenyang.

“It is no coincidence that Xi went to Liaoning and Li to Guangdong. The two provinces represent different models of modernization: Northeastern China follows the Soviet-style dominated by SOEs and heavy industry; Shenzhen tries to copy the U.S. model by relying on private firms,” tweeted Henry Gao, a law professor at Singapore Management University.

So did we just witness the latest proof that Li is unhappy with China’s economic direction under Xi and is willing to challenge him? Only three months ago, a separate tele-address by the premier to thousands of local officials was widely seen as criticizing Xi’s COVID-zero policy and also set off rumors that Xi’s transition to a third term (and what some have called “rule for life”) might not be so smooth. Adding some weight to the theory that the two leaders were locked in a battle for influence: After being widely shared on WeChat, the video of Li’s Shenzhen speech was reportedly blocked and news of his speech banned.

That Li may be subtly showing his disapproval of Xi is certainly possible but as for the more fevered speculation — that Li is actually trying to block Xi’s continued leadership — forget about it. First of all, we earlier heard from the Premier himself that he will be stepping down after this year, so presumably he has given up on any possible ambition to reach the apex of power in China, that he might have once had.

Even more importantly, over the last decade, Li has consistently been sidelined by Xi, who has effectively usurped even those powers traditionally held by the already less powerful number two premier, such as economic policy-making. Li simply has shown himself incapable of mounting any challenge to the unquestionably very powerful Xi.

“The narrative around Li Keqiang’s purported challenge to Xi is both the most pervasive and the least well-grounded in substance,” writes Christopher Johnson, Senior Fellow at the Asia Society Policy Institute and former longtime CIA China analyst. “Li is also the feeblest premier in the CCP’s history, and that is by Xi’s design.” Adam Ni, publisher and co-founder of China Neican, tweets: Li’s trip to Shenzhen showed “the actions/words of a man found wanting against greater forces, and trying to leave his mark on the public memory. It is Li’s way of saying that he tried but failed, and this is goodbye…”

Don’t read the latest gossip about Li challenging Xi as anything more than gossip. Xi almost certainly will continue on to a third term, making history as the most powerful Chinese leader in generations. And if you’ve been put off by Xi’s heavy-handed approach to running the economy, well, get used to being uncomfortable for some time yet.