China’s new economic tsar faces challenges offers his predecessor

• China’s new economic tsar faces challenges offered by his predecessor.
• He Lifeng assumed the role of one of China’s four vice premiers in March.
• Liu’s influence often overshadowed the former Premier Li Keqiang.

He Lifeng, China’s new “economic tsar,” has been steadily gaining influence as one of President Xi Jinping’s key deputies, though some sources suggest he has yet to match the stature of his predecessor in financial markets and the diplomatic community.

He Lifeng assumed the role of one of China’s four vice premiers in March, succeeding the globally respected Liu He at the age of 68.

The full extent of his portfolio remained relatively unclear until recent developments, with state media now designating him as the director of a powerful Communist Party economic entity.

Furthermore, He is expected by China watchers to lead the new Central Financial Commission, the nation’s highest-ranking financial oversight body, which is being established to reinforce the Party’s control over China’s $61 trillion financial industry.

This places him in charge of addressing pressing issues such as the local government debt crisis and the property sector downturn, both of which pose threats to China’s long-term economic growth potential.

He Lifeng recently accompanied President Xi on a visit to China’s central bank and is playing a significant role in trade negotiations with the United States and Europe, amidst a growing geopolitical tension.

Nevertheless, compared to Harvard-trained Liu He, He is perceived as less influential in terms of policy direction. A diplomat engaged in recent trade discussions with China described him as “tough and uncompromising,” noting that he does not engage in conversations in English with his counterparts.

Liu’s influence often overshadowed the former Premier Li Keqiang, who recently passed away, as Liu was credited with shaping essential early industrial and financial reforms that contributed to China’s remarkable growth rates.

He is viewed as more of a bureaucrat who primarily implements top leaders’ policies, particularly those of President Xi.

While Beijing is implementing stimulus measures to bolster the economic recovery, economists caution that China may face a prolonged period of slow growth without comprehensive structural reforms and addressing property sector and local finance issues.

He Lifeng has maintained a relatively low profile since taking on his new role in March, which has led to frustration among investors and economists over the absence of concrete policy actions to achieve China’s goals of boosting domestic consumption and addressing municipal debt challenges.

The decreased decision-making authority of the State Council under President Xi’s leadership has led to limited room for the cabinet to set the policy agenda, which may contribute to He’s low-profile approach.

He, who has a background in economic planning and finance, is well-versed in macroeconomic control, particularly in the real economy sector, given his long experience within the economic planning system.

His close and longstanding relationship with President Xi, spanning over four decades, positions him as a trusted figure to receive policy guidance from the top and put it into practice.

However, it’s worth noting that he has not directly overseen the financial sector. He Lifeng’s influence and approach in his role as China’s “economic tsar” reflect the evolving dynamics of economic decision-making under President Xi’s leadership.

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