China reappointed its finance minister and central bank governor in Sunday’s session of its annual parliamentary meeting, prioritizing continuity in the face of internal and external economic challenges. At the same time, the National People’s Assembly approved the appointment to Defense of General Li Shangfu, whom Washington sanctioned in 2018 for buying weapons from Russia.
President Xi Jinping, who has been naming allies to top posts in the government reshuffle for his third five-year term, has broken with age-limit tradition and retained Liu Kun, 66, as finance minister and Yi Gang, 65, as Governor of the People’s Bank of China. Like Xi, 69, the two men have already passed the official retirement age of 65.
Like Li Shangfu, who aged 65 was also due to retire now, but was appointed to lead a ministry that received a budget boost of 7.2% for 2023, after having already been increased by 7.1% in 2022, at a time when disputes are growing in the Indo-Pacific zone and when Beijing will try to take a few more steps towards Xi Jinping’s goal of integrating Taiwan into China.
An aerospace engineer who worked on the Chinese satellite program, Li was deputy commander of the Strategic Support Force when it was created in 2016 to develop the country’s capabilities for computer and space warfare, and then head of the Department of Equipment Development of the Central Military Commission, which is headed by Xi himself.
“The next defense minister’s operational and technological experience is especially pertinent given the People’s Liberation Army’s goal of becoming a world-class military force by 2049,” James Char, director of the School of International Studies, told Reuters. Rajaratnam, Singapore.
“I think he was promoted to this position because he fulfilled what was asked by Xi Jinping in key areas of modernization”, said, for his part, Alexander Neill, from the think tank Pacific Forum, from Hawaii, quoted by the same agency.
In 2018, when the United States imposed sanctions on the Department of Equipment Development for purchasing weapons from Russia, including Su-35 fighter jets and S-400 surface-to-air missile systems, it included Li Shangfu on the list.
continuity in the economy
This Sunday’s session of Parliament brought fewer changes than anticipated, with most ministers retaining their posts. However, new announcements are expected in the coming weeks, as the country implements the reorganization of the financial regulatory structure, as well as other areas of the Government.
Perhaps the biggest surprise was the continuation of the central bank governor. Educated in the United States, Yi Gang was expected to reform now after being left out of the Central Committee of the Chinese Communist Party at the party congress held in October.
“Choosing continuity in these key economic roles suggests an emphasis on credibility and stability,” Mattie Bekink, China director at the Economist Intelligence Corporate Network, told Reuters.
“It is also probably a tacit acknowledgment of the challenges facing Beijing at this time,” he adds. “The real challenge for the Xi Administration’s third term is whether it will resolve the structural imbalances in the Chinese economy and carry out the necessary reforms to ensure China’s long-term competitiveness.”
The Government has set an economic growth target of 5% for 2023, up from 3% last year, the weakest performance in decades.
The director of the Chinese statistics institute, Kang Yi, said this Sunday at the parliamentary session, quoted by the official press, that the Chinese economy still has “contradictions” and deep structural “problems”.
Chinese leaders face the challenge of getting the economy back on track after three years of restrictions due to the covid-19 pandemic, a weak business and consumer environment and increasingly hostile relations with the West, with many multinationals looking to protect its exposure in China.