25th November 2023 – (Beijing) Chinese Premier Li Qiang has been appointed as the head of the Central Finance Commission (CFC), a top-tier Communist Party organisation traditionally chaired by the country’s president. This development continues the trend of President Xi Jinping delegating increased responsibilities to his selected deputies since the onset of his third tenure as party leader in the previous autumn.
The CFC, established in March, is tasked with the oversight of China’s banking, insurance, and securities assets, as well as the establishment of the Central Financial Work Commission, serving as its general office. The appointment of Li, announced on Monday in a Xinhua report, is considered unexpected given the party practices of the past decade, where decision-making power has been transferred from government entities to party organisations.
Over the past decade, the late Premier Li Keqiang never held leadership of any top Communist Party groups. Yet, since his appointment as Premier in March, Li Qiang has represented President Xi at international conferences, marking a significant elevation in his role.
Analysts suggest that the reasons for Li’s appointment might include a desire for better coordination among various ministries and a potential shift in the overall policy direction in response to the economic downturn. There is also speculation that Li’s appointment could be a sign of Xi considering substantial policy modifications as Beijing seeks to bolster the economy and improve relations with Washington.
Since Xi’s ascendency to the top leadership role, he has established several leading groups and commissions, all led by him, covering key areas such as national security, cybersecurity, and systemic reform. However, this year, Premier Li Qiang’s leadership over the CFC marks a departure from this trend.
This transition raises questions about the extent of Li’s independence and the level of meaningful coordination the finance commission will have, considering the continued leadership of Xi over the Central Financial and Economic Affairs Commission (CFEAC) – the most potent decision-making body on economic affairs and public finance.
Nonetheless, the appointment of Li to head the new commission does not appear to be “by default”. One potential reason behind it could be the Premier’s ability to liaise with state regulatory bodies, potentially facilitating better coordination among ministries and financial institutions.
However, caution is advised against overestimating the extent of change Li’s leadership might bring to China’s financial situation. The country’s banking system, particularly the smaller regional banks, have struggled amidst a protracted property slump and escalating local government debts. As the analyst from the Berlin-based think tank, the Mercator Institute for China Studies (Merics) noted, the challenges China faces require more structural and long-term solutions which a single leader or commission may not be able to address independently.