MERICS Blog, European Voices on China, Header


Matthias Stepan

Premier Li Keqiang receives scant international attention by China watchers who view Xi Jinping as the strong man at the top. Yet Li and the State Council have a bigger role than meets the eye.

Image by Imagine China

International China watchers tend to present Party and state leader Xi Jinping as China’s sole decision-maker, but this view misses an important point. It neglects the implementation of those decisions – a massive undertaking in a country with a population of more than 1.3 billion and wide regional gaps in economic development. The task of specifying and implementing the Party’s guidelines is left to the State Council, China’s cabinet under the leadership of Li Keqiang, the number two within the Communist party structure.

Public programs carry the State Council’s signature

The newly created CCP Central Committee Leading Small Group for Comprehensively Deepening Reform under Xi Jinping’s leadership has taken a key role in shaping fundamental political-decisions. These are decisions on economic policy as well as the reform of the judicial system, party building and improvements of social services.

Contrary to a common assumption, the State Council is not sidelined, or even excluded from the process of decision-making. Li Keqiang and vice-premier Zhang Gaoli are among the group’s three vice-leaders, and the large majority of cabinet members are represented in the group’s sub-organizations. This tight interlocking between party and state simplifies the process of specifying abstract political decisions.

Image removed.

New initiatives like “Made in China 2025”, the program to promote the digitization of China’s industry, carry the signature of Li Keqiang and the State Council. The impact of this high-level initiative is being felt beyond China’s borders through Chinese acquisitions of technology companies across Europe and the U.S.

Other measures may be more inward looking, but are as far-reaching in their outlook and impact as “Made in China 2025”. Deregulation and targeted support for small and medium enterprises has led to a record number of more than four million new businesses being started in 2015. On the societal level, the State Council’s work is leading to constant improvements in the education and health care sectors. Another important goal is the abolition of absolute poverty in China by 2020 for which the State Council has presented schedules and a budget to fund the expansion of rural infrastructure, hospitals and schooling.

Li Keqiang and his cabinet as policy brokers

Policy implementation is a difficult undertaking in China. Extreme regional discrepancies in the economic and social field do not facilitate one-size-fits-all solutions. Government ministries, provincial governments and interest groups often promote different positions, leading to conflict if not reform deadlock.

It is up to Li and his inner circle within the State Council to prevent this from happening. Their task is to coordinate new initiatives and programs and to monitor progress on the provincial and municipal level. This is being done through a number of State Council Leading Small Groups (see graph below).

One such body, set up in June 2015 under the leadership of vice premier Ma Kai, is responsible for overseeing the digitization of industrial manufacturing in China. The group consists of 23 state organs and organizes regular meetings and inspection tours to identify obstacles and shortcomings of the initiative on the ground in different provinces and to ensure its implementation.

Image removed.

Party and State Council: a division of work, not different camps

Not all initiatives are successful though, many suffer setbacks and yet others will take decades to reach full scale. In the course of implementation, criticism of government measures – as expressed in a commentary run by a party-led newspaper in early May – are neither a new development in the Xi-Li Administration, nor uncommon in the Chinese context.

To view such criticism and different wordings used by the two leaders as signs of discord between Xi Jinping and China's number two or even a political crisis would be premature. Multiple parallel projects and a worsening economic outlook create enormous pressure for the entire Xi-Li administration. Lonely decision-making by one strong Party leader at the top would do little to resolve this.

Instead, there is evidence that a division of work between Party and state bodies is still very much in place. The challenges of implementing China’s reform agenda fall to the State Council – and to its leader Li Keqiang.

The image of Li Keqiang and Xi Jinping in the preview is by Imagine China.