Why China's incoming premier Li Qiang, widely blamed for Shanghai's two-month lockdown, will become a more capable and more powerful leader

Li Qiang has Xi Jinping's confidence but will he have the strength of character to live up to his name and win back investors' confidence?

Thought of the Day on China

Wang Xiangwei

It is pure but interesting coincidence that both China’s outgoing and incoming prime ministers share not only the surname but also the given name Qiang (强). The word has multiple meanings depending on the context but mostly means “strong” or “powerful” or “capable”.

Li Keqiang (李克强), whose given name can mean “overcoming the powerful”, is on the way out after a decade of stewardship of the world’s second largest economy with mixed results.

In the first few years after Li became the premier in 2013, he earned the respect from the media and some international economists who coined the term “Likonomics” for his governing style and economic management approach.  

Li and his cabinet were initially praised for their determination to push for economic restructuring and streamlining and delegating regulatory powers to allow a more decisive role for the market forces in the economy.

But following the spectacular stock market crash in 2015, Li has gradually seen his power being chipped away as President Xi Jinping began to assert his authority across the spectrum of the government and the Communist Party by setting up various leading groups headed by himself.

Will his successor Li Qiang (李强）fare better and have the strength of character to live up to his name?

This is a question of paramount importance as China’s economy is at a critical juncture following three years of zero-Covid policies which have had devastating impact on the overall economy and the people’s lives.

Li Qiang’s elevation to the party’s most powerful seven-member Politburo Standing Committee at the 20th congress in October came as a surprise to most people at home and abroad.

Before his elevation, he was the party secretary of Shanghai for five years from 2017 to 2022. Many people in Shanghai have blamed him for the two-month lockdown of China’s most important financial and manufacturing centre in spring of last year, which shocked the world and caused widespread resentment among the city’s population of 28 million.

The fact that Xi decided to ignore the controversy and elevated Li to the second highest political rank in the party hierarchy says a lot not only about their close relationship but also Xi’s confidence in Li.

Li’s detractors have argued that he would probably be just another Yes man who hangs on Xi’s words and whims. But those criticisms are probably driven more by emotions rather than facts.

There are plenty of reasons to believe that Li Qiang will become a more capable and more powerful premier in the next five years.

First, Li Qiang, who is scheduled to take over the reins of the economy in March, has Xi’s total confidence, which Li Keqiang does not enjoy. Over the past 10 years, Xi has consolidated all the power in his hands but his relationship with Li Keqiang has been a fraught one.  

Now that Xi has secured his third term with ease and packed the new leadership lineup with his allies, it is highly likely that Xi feels comfortable enough to empower Li and his new team to lead in formulating and executing policy.

Second, many people have had a low opinion of Li because of Shanghai’s two-month lockdown. Indeed, as the party secretary of Shanghai, he must bear the overall leadership responsibility for the fiasco. But there is more than meets the eye.

In fact, in the two years before the lockdown last spring, Shanghai did much better than the rest of the country by implementing the approach known as “targeted measures in the prevention and control of the epidemic (精准防控)”. The aim was to minimize disruption to people’s work and lives.  Indeed, if there were new confirmed cases, the city authorities merely locked down the specific shop or restaurant where the infected persons visited instead of the entire neighborhood or even much larger districts of the city as officials in most other provinces did.  

But Li’s targeted approach could not arrest the transmission of the much more infectious Omicron variant, which hit Shanghai early spring. When the virus transmission was out of control, Vice Premier Sun Chunlan, China’s top government official in charge of epidemic control, flew to Shanghai. Representing the central government, her people took over the epidemic control in the city, leaving Li Qiang sidelined.  

To stamp out local outbreaks, Sun’s favorite approach was to impose a citywide lockdown which in the case of Shanghai lasted two months amid harrow reports of acute shortages of food and medicine.

Of course, as the highest ranking official in the city, Li was the target of popular anger and merciless mockery. The fact that he failed to attend any of Shanghai’s daily press briefings during the lock-down period and directly address the residents’ suffering and demands did not help the optics of his governance.

According to my sources in Shanghai, Li did not remain idle. As soon as the virus transmission was under control, Li reportedly held a series of meetings with officials of all local districts and urged them to help businesses reopen and improve investment climate with incentives. Recognizing the lock-down has seriously disrupted operations of multinationals in Shanghai, Li reportedly held one on one video conferencing with global CEOs and reassured them that the authorities would do their best to help them to get back on their feet again.

Li may not be liked by the ordinary Shanghai residents but his pro-business cred is well recognized among multinational executives who get to know him.

For instance, he was the driving force behind Elon Musk’s decision to set up Tesla’s Gigafactory in Shanghai as he successfully lobbied the Chinese banks to offer financing to Tesla, the first time that the Chinese banks offered large sums of loans to a wholly owned foreign enterprise. Until then, it was difficult for wholly owned overseas firms to get bank financing chiefly because Chinese banks usually require personal guarantees from the controlling shareholders of those firms which can not provide such personal guarantees. There were cases in which those firms were able to get loans albeit at modest levels.

The China International Import Expo, the world’s first import-themed national level trade fair held annually in Shanghai since 2018, is Xi’s pet project and China’s way of showing that its open door policy will continue. Li has made sure the fair runs smoothly every year to Xi’s full satisfaction.

Li was born and climbed the bureaucratic ladder in Zhejiang, arguably China’s most dynamic province where the private sector has been thriving since Deng Xiaoping’s open-door started in the late 1970s. A number of China’s biggest private conglomerates are headquartered in the province including the e-commerce giant Alibaba Group and Geely Holding Group, the auto behemoth which owns Volvo and Polestar brands, among others.

As he rose up and held various leadership positions in the province, he was well liked by private entrepreneurs because of his pro-reform, pro-business and pragmatic approach.

When Xi was the party secretary of Zhejiang, Li served as his chief of staff, allowing them to forge a close bond.

Since he went up to Beijing in October, he has already started to take over responsibilities from Li Keqiang.

A leaked official document showed that Li Qiang has replaced Li Keqiang as the head of the party’s leading group on epidemic control at the time of China’s sudden re-opening early December.

To be sure, China’s new premier faces the tough task of reviving the economy. As Li has little choice but ramp up stimulus to revive the economy ravaged by Covid and China’s own policy mishaps, he will have to contend with the government’s deficit in three Cs – credibility, capability, and confidence.

Of the three Cs, Li would have to live up to his name and demonstrate and prove his capability promptly so as to improve China’s credibility and boost investors’ confidence.

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