MNI ANALYSIS: China New Vice-Premier Task To Push Opening Mkts

     BEIJING (MNI) - China's newly-appointed Vice Premier Liu He will likely

take charge of pushing for the opening-up of China's markets, while implementing

reform to facilitate a campaign to root out dangerous elements in the sprawling

finance industry, MNI analysis concluded.

     Liu, described by President Xi Jinping to be a "very important person",

will continue to play an leading role in the policy-making progress. The

following lists three key aspects:

     --FURTHER ECONOMIC OPENING UP 

     The most recent high-profiled public appearance by Liu was at the Davos

World Economic Forum on Jan 24. Liu promised that China will "continue to push

the opening-up process", especially financial markets. Doing so helps China

achieve an "orderly and free-flow"  of the factors of production, which is

necessary for its long-term economic growth.

     The opening-up of banking, securities and insurance will be implemented

this year, and "the sooner the better," Liu said, claiming such reforms may be

"beyond the expectations of the international community".

     The nomination of Yi Gang, considered a pro-reform official, to be the new

governor of the People's Bank of China, also showed the top leadership's

determination to support the opening-up of the financial markets.

     In manufacturing and services, restrictions on foreign investments will be

either lowered or removed, Liu told the WEF.

     --STRUCTURAL REFORM

     Liu has long advocated for structural reform. As early as 2000, he wrote

that "the engine for China (during the previous 20 years of high growth) was

addressing structural imbalances". Further growth will rest on whether China's

policies "alleviate or worsen" those imbalances, he said. 

     This observation led to the implementation of the Xi-brand supply-side

reform, which is seen to have successfully given new life to China's ageing

economic growth model. 

     Supply-side reform, which was aimed at shedding China's industrial

overcapacity, led to a rebound in China's total productivity, Liu said at Davos,

vowing the reform will be "firmly carried out further."

     --PREVENTING FINANCIAL RISKS

     Liu is most likely the brain behind China's deleveraging campaign.

President Xi has made preventing financial risks the top priority beginning this

year. His prominence was partly built on his study of the 2008 Great Financial

Crisis as well as his research into the Great Depression, crises that he

observed to be preceded by "unprecedented economic booms". 

     Liu is widely believed to be the "authorized person" in a People's Daily

commentary from 2016 that trumpeted Xi's war on China's addiction to debt and

credit. 

     In Davos, Liu said China will strive to "effectively control macro leverage

ratio" in three years, and to deal with problems like shadow banking and local

government implicit debts.

     Liu was also careful to qualify that China isn't going to pursue austerity

severe enough to directly induce the bursting of a bubble. By containing the

growth of debt, Liu's team believe that a larger and healthier economy will be

able to live with a few legacy threats. 

--MNI Beijing Bureau; +86 10 8532 5998; email: william.bi@mni-news.com

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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