China’s ‘Two Sessions’ ends with Xi in charge and Li in second

China’s biggest political gathering of the year wrapped up today with the naming of the new men who will lead the country in the coming years.

The 14th iteration of the “Two Sessions,” which began on March 4, was a largely ceremonial affair of side-by-side meetings of China’s nominal legislature, the National People’s Congress (NPC), and the Chinese People’s Political Consultative Conference (CPPCC). Many of the key appointments that were announced had already been decided at the twice-a-decade Party Congress in October 2022.

Xi is China’s most powerful leader since Mao

Xí Jìnpíng 习近平 was unanimously sworn into his third term as China’s president at a NPC meeting on Friday, further cementing his grip on power. For some, the extended reign of China’s most powerful leader since Máo Zédōng 毛泽东 has marked a solemn end to the reform-and-opening era pushed forth by Mao’s successor, Dèng Xiǎopíng 邓小平.

Xi’s appointment, passed with 2,952 votes in favor and zero against, concludes his five-year-long campaign to remove the two-term limit on China’s presidency, effectively allowing him to rule for as long as he chooses. There were no term limits on the tenure of the General Secretary of the Party, which is the real source of Xi’s power. But the removal of limits on the presidency marks a departure from a collective leadership system designed by Deng in the 1980s, as a safeguard against a one-person rule or a cult of personality after Mao.

Li Qiang, China’s new premier, will lead the world’s second-largest economy

Lǐ Qiáng 李强 replaced Lǐ Kèqiáng 李克强 in China’s No. 2 position as premier of the State Council on Saturday. The 63-year-old former Party chief of Shanghai, who oversaw the city’s two months of COVID lockdowns, pledged to provide “unswerving” support for the private sector.

“We will create a level playing field for all kinds of business entities and further support private enterprises in growing and thriving,” Li Qiang said today at his first press briefing in his position, as he seeks to restore business confidence in the world’s second-largest economy.

He also acknowledged that it will not be easy for China to achieve a lower economic growth target of 5% for this year, given the “many factors of uncertainty and instability.” China will emphasize stable growth, consumer prices and employment, and the “advancement in high-quality development.”

The country’s economy is expected to rebound this year after hitting one of its lowest levels of growth in decades due to its harsh COVID-zero policies and its debt-ridden property sector. But record levels of youth unemployment and a widespread demographic crisis have further weighed on the nation’s economy, and “the tone at the conclusion of the 14th NPC was decidedly conservative,” Patricia M. Thornton, associate professor in the Department of Politics (DPIR) and the University of Oxford China Centre, told The China Project today.

China’s “economic prospects have taken a decided downward turn in the past three years due to serious structural imbalances…The relatively modest GDP growth target set this year is revealing in that it reflects just how serious the challenges are that the new leadership is facing,” Thornton added.

Xi, who has been filling China’s top leadership positions with the men most loyal to him, made the surprise decision to retain Yì Gāng 易纲, 65, as governor of the People’s Bank of China (PBOC) and Liú Kūn 刘昆, 66, as China’s finance minister.

“The reappointments of the PBOC governor and finance minister further signaled the core leadership’s concern with stability in the financial sector,” Thornton told The China Project. China last week also moved to consolidate its financial oversight with a new watchdog unit, as part of a massive overhaul of State Council government ministries.

Meanwhile, Beijing is trying to win back wary overseas investors, who remain cautious about a sour business climate caused by China’s mounting domestic problems and geopolitical tensions with the U.S.

“China and the U.S. have each other in their economies, and both have benefited from each other’s development,” Li Qiang said. “China and the U.S. can and should cooperate. There is great potential for China-U.S. cooperation. Containing and suppressing will do no one any good.”

China “is facing new export controls on high-tech equipment from the U.S. and its allies, which will make the ‘high-quality development’ Li Qiang is seeking all the more difficult to achieve,” Thornton told The China Project. “However, on the positive side, some signs of rebounding back into positive growth territory have also appeared since the reversal of zero-COVID.”

But how much can Li do under Xi’s government?

Li is known to be one of Xi’s closest allies with a reputation for business-friendly policies. While he is sometimes viewed as a counterbalance to Xi’s heavy-handed security- and stability-focused politics, the power of his role as premier has diminished under Xi, leaving some to question how effective he will be in his position.

“During my own conversations with individuals who have had the opportunity to interact or work alongside Li Qiang, it is frequently mentioned that he possesses the trademark pragmatism of those hailing from Wenzhou,” according to Lizzi Lee, economist and host of The China Project’s Signal. “This trait is reflected in his candid demeanor, his granular knowledge of the workings of business and bureaucracy at the grassroots level, and a certain flexibility and willingness to consider new approaches to get things done.”

Prior to his appointment as premier, Li had developed a pragmatic reputation by maintaining close ties with China’s tech tycoons, such as Alibaba’s burned founder Jack Ma (马云 Mǎ Yún), and was said to have acted as a restraining voice to Beijing’s crackdown on private enterprises that chilled the business environment. He was also reported to be a leading supporter of China’s decision to pivot away from COVID zero, fanning hopes that he might help tame some of the more extreme policies driven by Xi.

“In contrast to prominent predecessors such as Wēn Jiābǎo 温家宝, who was known for his verbal grandiose and showmanship, or Zhū Róngjī 朱镕基, who exhibited an iron-fisted decisiveness, Li Qiang’s more understated presence may work in his favor, particularly considering Xi Jinping’s reluctance to share the spotlight,” Lee added. “However, it is important to note that Li Qiang’s strengths lie in his ability to implement policies and execute plans, rather than conceive grand strategic visions.”