By Chun Han Wong and Lingling Wei
BEIJING--Cleared to stay in power indefinitely, Chinese
President Xi Jinping has discarded the leadership structure he
inherited and is kicking off his second term with a handpicked team
of trusted lieutenants.
For the next five years, Mr. Xi will look to his inner circle to
shore up a sluggish economy, eradicate poverty and enhance China's
global standing--while shielding his ambitious agenda from being
derailed by rocky relations with the U.S.
Two men in particular have emerged in key roles: Wang Qishan,
the former anticorruption chief who took office as deputy head of
state on Saturday, and Liu He, the architect of Mr. Xi's economic
policies, who is due for promotion on Monday.
In recent weeks, Mr. Xi and his two deputies met directly with
U.S. officials, people familiar with the matter say--a sign of the
president's heightened concerns about China-U.S. ties.
Mr. Xi hosted the U.S. ambassador to Beijing, Terry Branstad, at
an informal gathering of both men's families in early February,
according to people with knowledge of the event. The two have known
each other since Mr. Xi visited the U.S. in 1985.
The president also dispatched Messrs. Wang and Liu to meet with
the U.S. ambassador separately, those people said. And right before
the start of the legislative session, Mr. Liu went to Washington,
holding at times contentious talks with senior U.S. officials
including Treasury Secretary Steven Mnuchin and U.S. Trade
Representative Robert Lighthizer. A hoped-for meeting with
President Donald Trump didn't materialize.
The Trump administration's threats of trade and investment
penalties loom over China as it faces significant challenges at
home and abroad, including possible conflict next door on the
Korean Peninsula. And while the Chinese economy roared ahead last
year, boosted by government and state-sector spending, it was also
stoked by global demand for Chinese exports--a trend that could
quickly fade in the event of a trade war.
The National People's Congress, which closes Tuesday, marks the
culmination of Mr. Xi's efforts over his first five-year term to
shake up the political landscape and install himself and his
Communist Party at the center of Chinese society.
With relentless crackdowns on corruption and disloyalty, Mr. Xi
swept aside rivals installed under his predecessors and paved the
way for a sweeping overhaul of government bureaucracy.
The congress removed constitutional term limits on the
presidency, enabling Mr. Xi to rule indefinitely. On Sunday, the
congress appointed a leading party-discipline official as the
director of a new national supervisory commission that expands Mr.
Xi's antigraft sweep to cover all public-sector workers.
"What we are witnessing now is [Mr. Xi] putting the structures
in place that help to advance his political agenda," said Matthias
Stepan, who studies Chinese public policy at the Mercator Institute
for China Studies, in Berlin.
Over the past two weeks, delegates to the congress have hailed
Mr. Xi as a sagacious leader, while the party's flagship newspaper,
People's Daily, labeled him "the nation's helmsman" and "the
people's guide," echoing titles associated with Chairman Mao
Zedong.
Mr. Xi's dominance doesn't guarantee bold decision-making or
breakthroughs on policy impasses, analysts say.
For instance, Beijing has postponed a proposal to raise the
retirement age, a vital but unpopular measure for coping with a
rapidly aging population that was originally due to be unveiled in
2017. And a property tax that officials have floated for years as a
curb on property prices faces further delays, even as many new
housing projects sit empty.
It remains to be seen whether Mr. Xi is willing to spend his
political capital on large-scale overhauls to put the Chinese
economy on a sounder footing and assuage Washington's concerns over
trade imbalances.
Despite his official pledges to give market forces a decisive
role in China's economy, Mr. Xi has spent the past five years
strengthening state control.
"Even with this power, will he be able to make the drastic
changes?" asked June Teufel Dreyer, a political-science professor
at the University of Miami.
"There are rational arguments against tough measures. Millions
may be thrown out of work," she said.
A big wild card for Mr. Xi is the Trump White House, which in
recent weeks has given Beijing nearly-daily headaches, such as by
upgrading ties with Taiwan, a self-ruled island that Beijing
considers Chinese territory.
On Friday, Mr. Trump signed a law allowing U.S. representatives
to meet Taiwanese officials, quickly drawing a rebuke from China's
Foreign Ministry.
"We're being tormented to death by Trump," said one Chinese
official involved in policy-making.
So far, Beijing has been responding cautiously to Mr. Trump's
trade offensives, trying to balance tit-for-tat measures against
its desire to avoid a full-blown trade war with the U.S. Adding to
Beijing's anxiety is the lack of a point person in the White House
to work with.
Mr. Wang has stressed to Mr. Branstad the importance of
continued dialogue, saying external pressure often helps Beijing
push through reforms. The ambassador, in turn, indicated the Trump
administration intends to deal only with those in Mr. Xi's inner
circle.
With Mr. Liu, Mr. Branstad urged Beijing to immediately address
its enormous trade surplus with the U.S. A couple of weeks later in
Washington, Mr. Liu was asked to come up with a plan to slash the
bilateral trade gap by $100 billion.
In Beijing's view, that's a tall order.
Beijing blames the imbalance in part on U.S. restrictions on
high-tech exports to China. Commerce Minister Zhong Shan says
Washington could narrow its trade gap by 35% if it allowed Beijing
to buy more products, such as supercomputers and advanced
materials.
U.S. officials have said such sales would make up only a
fraction of the deficit while potentially threatening national
security.
Even without the prospects of a trade war, Mr. Xi faces a
formidable challenge. He has to rein in crippling debt, ensure
stable growth in household incomes, reduce inequality and pollution
as well as deliver solutions to pressing social issues like access
to affordable health care, Mr. Stepan, the Berlin-based researcher,
said.
"Xi Jinping's power and political capital ultimately rest on
delivering on policy goals and satisfying people's needs," he
said.
Write to Chun Han Wong at chunhan.wong@wsj.com and Lingling Wei
at lingling.wei@wsj.com
(END) Dow Jones Newswires
March 18, 2018 05:44 ET (09:44 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.