China’s New Government is Conservative

Econintersect:  One week ago (07 November 2012) GEI News cited reports out of China that conservatives, and not the hoped for reformers, would control the new Chinese government.  This morning (15 November 2012) the new seven-man Politburo Standing Committee of the Communist Party of China (PSC) was introduced – and yes, they are all conservative.

Click on picture for larger image.

The new ruling group is two less than the nine-man group that was replaced.  All members of the top group are new, none of the previous members retained.  The smaller number is not without precedent:  the  PSC can be comprised of anywhere from four to nine members.

All seven new PSC members have experience serving on China’s 27-man Politburo.

Those who feel China must make aggressive reforms to rebalance from an economy overly dependent on exports and investment to increased domestic consumption fear the conservative PSC will fail to act.  They (the PSC) may feel that the rapid grow of the past 20 years justifies not “rocking the boat”.

Econintersect would suggest that China ask Japan about that country’s lack of success in “not rocking the boat” after experiencing 20 years of rapid growth.  See Michael Pettis’ recent discussion of that subject.

John Lounsbury

Sources:

• China:  Reform May Not Be Coming (GEI News, 07 November 2012)

• China chooses conservative new leaders (Kathrin Hille, Financial Times, 15 November 2012)

• Xi Jinping crowned new leader of China Communist Party (Malcolm Moore and Tom Phillips, The Telegraph, 15 November 2012)

• Imbalances, Disequilibria and Correlation Traps (Michael Pettis, 28 October 2012)