China’s Xi Factor

HONG KONG – Before China’s leadership transition earlier this year, experts said that the Chinese Communist Party was intent on preventing a larger-than-life personality from assuming power. The CCP, it was argued, wanted someone more like the bureaucratic outgoing leader, Hu Jintao, rather than a charismatic successor like, say, the former Chongqing provincial governor Bo Xilai.

Yet the new president and CCP leader, Xi Jinping, is hardly dull. He began his term by paying homage to Deng Xiaoping at his statue in Shenzhen, where, more than three decades ago, the former Communist Party leader had launched the campaign to convert a reluctant Party to free-market reforms. In a top-level November meeting, Xi set out the details of a fundamental change in economic direction, overshadowing his colleagues.

Xi now leads a new economic group that will coordinate and impose his reforms on fractious colleagues. And, unlike Hu, he immediately became head of the military and now runs a parallel national security council. At first glance, a new “paramount leader” appears to be emerging.

Recent history explains this re-concentration of power. In 1993, central-government leaders enjoyed relatively limited powers: they did not control the money supply and had difficulty firing provincial governors or relocating top generals. Central government revenue was low; indeed, proportionately smaller than that of central governments in any other major economy.