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By William Bi
     BEIJING (MNI) - For months, China watchers speculated about the makeup of
the leadership of the ruling Communist Party of China (CPC) for the next five
years: will a longstanding retirement age tradition (68) be set aside to allow
the 69-year-old Vice Premier and anti-corruption czar Wang Qishan to remain on
the supreme Politburo Standing Committee? Will Premier Li Keqiang, No. 2 in the
current leadership, get the boot? Will the number of Standing Committee members
be cut to five from seven to let General Secretary Xi Jinping exert even more
control? Will an obvious successor to Xi be appointed to the panel?
     Despite the many questions about the makeup of the leadership, the
consensus was Xi would amass the kind of power over the world's biggest economy
(by purchasing-power-parity) unseen since the days of Mao Zedong.
     On Wednesday, Led by Xi, who was born in 1953, the rest of the Politburo
Standing Committee team stepped one by one onto the main stage in the Eastern
Hall of the Great Hall of the People, which has hosted the new Chinese
leadership's meet-the-public appearances since the 1990s: Li Keqiang, born in
1955, whose continued presence on the team defied naysayers; Wang Yang, born in
1955, a former member of the Communist Youth League supposedly aligned with Xi's
predecessor Hu Jintao; a capable vice premier in charge of agriculture and
foreign trade, Li Zhanshu, born in 1950; the secretariat of Xi's party office,
Han Zheng, born in 1954, the youngest mayor Shanghai has had; Zhao Leji, born in
1957, the head of the CPC's organizing department; and Wang Huning, born in
1955, director of the CPC's Central Policy Research Office and the party's top
ideologist.
     Wang Qishan did retire and there was no obvious successor to Xi appointed
to the top leadership.
     The makeup of the new team was seen as confirmation that Xi is poised to
control China well beyond his next five-year term, or through 2022, breaking
with a tradition that a younger-generation leader -- or the post-60er's in
Chinese vernacular -- is inducted into the highest echelon of power in a sitting
party secretary's second term.
     Top party officials seen by observers as strong candidates to succeed Xi
had been pushed out of the way. Sun Zhengcai, born in 1963 and a once-rising
star, was charged with corruption earlier this year. Another would-be
leader-of-tomorrow, Hu Chunha, the 54-year-old party secretary of Guangdong
province, was spared jail but steered out of Xi's way.
     Xi's overarching power was apparent from day one of the week-long affair,
when he laid out his expansive vision of China well into the middle of the
century in a three-and-a-half-hour speech, lecturing the nearly 90 million CPC
members and 1.4 billion Chinese citizens on what they should or shouldn't do on
the road to the "great revival" of the Chinese nation, labeled "Xi Jinping
Thought on Socialism with Chinese Characteristics For a New Era." At the
congress's conclusion on Tuesday, the party announced that "Xi Jinping Thought"
is now enshrined in its constitution, alongside those of former leaders Mao and
Deng Xiaoping.
     To be sure, every Chinese leader from Mao left a legacy imprinted in the
party's psyche: Mao's "thought," Deng's "theory" of developing socialism with
Chinese characteristics, even Jiang Zemin and Hu Jintao had their shares of
slogans touted, though much less memorably. But critics note that Xi is the
first leader to have himself enshrined after only serving one term; other
leaders were elevated only after their retirement.
     That has led to the concern that Xi's absolute grip on power is undermining
China's system of checks and balances installed by Deng, who was a victim of the
ruthless purges of Mao. There now seems to be no one who could challenge Xi if
he were to make a major policy misstep, critics say.
     From an economic perspective, from now until the National People's Congress
in March next year, the CPC's leadership is expected to consolidate and
stabilize. Even some of Xi's fiercest critics admit that he has put in place
well-intended policies: steering China away from the growth-at-all-costs frenzy,
providing a basic social safety net for the poor, and attempting to repair a
scarred environment depleted of resources. The 19th party congress left little
doubt that these measures will continue.
     In the medium term, there should be no major shift in policy direction.
Xi's report as well as comments by his ministers and state media during the
week-long congress repeated the country's priorities: supply-side reform; bigger
and stronger state-owned enterprises, boosting private investments; continued
global expansion under the "One Belt, One Road" banner; and improving social
safety.
     UBS projected growth would soften slightly in the next two years, because
only 6.3% is needed to achieve China's goal of doubling its GDP by 2020 from
2010. But as Xi said, "development is the foundation and key to addressing all
problems." Don't expect China to tolerate a significant slowdown that could
jeopardize employment and hence social stability.
     "All in, we think the 19th Party Congress has effectively strengthened
President Xi's power," analysts at Mizuho said. "It allows the leadership to
turn its focus from solely the pace of China's economic growth to the quality
and sustainability of it."
     BALANCED GROWTH:
     Xi stressed that China must now pursue more balanced growth. His phrase
"the contradiction between unbalanced and inadequate development and the
people's ever-growing needs for a better life" has been repeated as a slogan by
state media and no doubt will be studied and touted by party cadres for years to
come.
     Xi, in his report on the congress's opening day, subtly de-emphasized
specific growth targets. During the week-long proceeding, Xi's ministers and
state media also emphasized "quality over speed."
     The most comprehensive discussions, or reiteration of key economic
principles, were laid out in an editorial run by the Xinhua News Agency
newspaper and the People's Daily, both CPC mouthpieces: continued reform
measures to address the real economy's structural imbalances in supply and
demand; the divergence of speculative financing from the real economy and the
divergence of investor and homeowner demand in the housing market; the removal
of excess industrial capacity; continued property controls and deleveraging; and
the support of weak sectors, including municipal services and environmental
protection.
     What is also certain is the increased focus on improving the country's
drive to clean up the environment. Xi had already actively pushed his government
along that line this year, espousing an "ecological civilization" campaign. But
the once-toothless Ministry of Environmental Protection was given new authority
by Xi himself to apply the strictest measures on industry throughout the country
in the run-up to the 19th congress, sending auditors to shut down steel blast
furnaces, coal-burning cement plants and even starch producers.
     The unprecedented 2+26 campaign, which will see major city centers in
northern China halting production by heavily polluting factories during the
winter months, has already caused a commodity price boom in anticipation of
tighter supplies of industrial materials, such as steel, cement and plywood.
     These coercive measures will likely continue. At a press conference last
week, Li Ganjie, the environment minister, vowed China will sharply cut its
pollution levels by 2020 and "fundamentally" improve its ecosystem by 2030.
Moreover, Li said the government is seeking to establish laws to codify the
current ad-hoc environmental supervision.
     As expected, the congress was about personnel changes and did not give much
new direction on policy. On that front, the first decisions may come when the
new Xi-led economic team presides over the annual economic work conference in
early December, which will set the country's policy direction for next year,
including giving signals about the new growth target.
--MNI Beijing Bureau; +86 10 8532 5998; email: william.bi@mni-news.com
--MNI BEIJING Bureau; +1 202-371-2121; email: john.carter@mni-news.com
--MNI Beijing Bureau; +86 (10) 8532-5998; email: vince.morkri@marketnews.com
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