China Leadership Monitor

Economic Policy after the 16th Party Congress

Thursday, January 30, 2003

The 16th Party Congress focused primarily on political principles and personnel issues. With respect to economic policy, the party congress understandably stressed continuity. Thus, fewer dramatic signs of future economic policy orientation have come in the aftermath of the congress than may be the case in other issue areas. In economic policy, the most important personnel choices tend to come at the level of ministers and vice ministers, one level below the top politicians chosen by the 16th Party Congress. These choices are being announced only gradually in the run-up to the 10th National People’s Congress (NPC) meeting in March 2003. Nonetheless, some important choices have already been made—particularly with respect to the financial system—and the implications of those choices are discussed in this essay. The most important signal is the promotion of the former chairman of the China Securities Regulatory Commission (CSRC), Zhou Xiaochuan, to head the Central Bank. The reassignment of economic managers is especially important because the key personnel involved represent the young, better-educated members of China’s “fourth generation,” those who began their educations after the Cultural Revolution. The senior members of the fourth generation, who have just ascended to the top of the formal political system, by contrast completed their educations before the Cultural Revolution. Some of the shortcomings of the political succession process may imply that the younger, post–Cultural Revolution leaders could begin to play an especially important role effective immediately.