Monday, February 27, 2006

After some reflection and talking to a couple of people, it seems my earlier prediction of Zhou Xiaochuan or Bo Xilai serving as Huang's replacement contains one major flaw. It has to do with the likelihood of a two-step promotion in the Communist Party. Basically, if the Standing Committee wants a Standing Committee member as Huang's replacement, they would have to promote the likes of Zhou Xiaochuan two steps: from a central committee member direct into the Standing Committee, skipping the Politburo. Although such a promotion is not without precedent (Zhu Rongji at the 14th Party Congress), it is highly unlikely these days. Even someone's favorite would probably need a pro forma one-year term as a Politburo member before being inducted into the Standing Committee.

If they want someone like Zhou or Bo, or even Dai Xianglong, they would have to settle with a relatively weaker vice-Premier with a Politburo rank. That is not advisable for important portfolios like finance and state assets since several provincial party secretaries are themselves Politburo members. A Vice-Premier with only a Politburo rank would have a hard time ordering say Guangdong what to do since Zhang Dejiang is also a Politburo member.

Speaking of Zhang Dejiang, one option that remains is to appoint a current Politburo member as the vice-premier, with the understanding that this person would be promoted into the Standing Committee at the 17th Party Congress. So let's see. Hui Liangyu, Wu Yi, Zeng Peiyan, Cao Gangchuan and Zhou Yongkang are already Vice-Premiers and State Councilor with heavy portfolios. Of the remaining, Liu Yunshan, He Guoqiang, Guo Boxiong, and Wang Gang are all specialists of the military or party affairs and would make unlikely candidates (well, look at Wen....). If they are promoting someone from the Politburo, it is likely to be one of the provincial party secretaries: Wang Lequan, Liu Qi, Zhang Lichang, Zhang Dejiang, Chen Liangyu, and Yu Zhengsheng. Of these, Zhang Lichang is probably too old at 67, especially given that his patron Li Ruihuan now retains little influence. If Jiang's power remains very robust, it is possible that Chen Liangyu would follow Huang Ju's footstep and become Vice-Premier and Standing Committee member. I think Chen is more controversial than Huang was, and Jiang's power is probably not what it was when Huang was appointed. Therefore, I do not place high odds on a Chen appointment. I certainly hope that the Chinese government has enough sense not to appoint Wang Lequan and Zhang Dejiang. While Wang has done a fine job running Xinjiang's natural resource-based economy, some might see him as inexperienced in managing a manufacturing based economy. As for Zhang Dejiang, it would alarm foreign investors if a graduate of the Kim Il-sung University in North Korea were to take over China's financial sector.

Among the Politburo members, I would place the highest odds on Yu Zhengsheng and Liu Qi. Yu Zhengsheng is a well-known princeling with close ties to Deng's family and is on good terms with Jiang. Moreover, he has served both in central ministries (Electronics, Construction) and in provincial governments, making him a well-rounded candidate for the job. Liu Qi was appointed by Jiang, and also has a well-rounded CV with experience both in central ministries (steel) and local government. In terms of technical expertise, Liu Qi probably has much more experience managing SOEs, one of Huang's portfolios. However, Yu's connections in Chinese officialdom cannot be underestimated.

What about Wang Zhaoguo? He is supposedly a close ally of Hu Jintao, and the only Politburo level supporter of Hu. Although Hu would probably like to maneuver him into Huang's position, I think he has too little experience in economic affairs, and Wen might even reject his candidacy. Hu can try to promote one of his provincial followers (Li Yuanchao of Jiangsu or Lu Zhangong of Fujian) to the vice-Premier position. But the problem again is the two-step promotion. For the sake of promoting one of them, Hu might choose to have a Politburo-level Vice-Premier instead of a Standing Committee level one. Let's hope he doesn't do that because it would greatly diminish the reform impetus in the financial sector.

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