Business News - Opportunities - Reviews
In 1984, when China was in its early embrace of capitalism, 29-year-old He Lifeng was near the center of the action. A Communist Party member with two degrees in government finance, he got a municipal job in Xiamen, a coastal city that had just been freed by Deng Xiaoping from central planning dictates to test free markets.
Over the next two decades in Xiamen and nearby cities, Mr. He rose to become a senior party official and top local leader. And Xiamen became a bastion of small and medium-size businesses, with few state-owned enterprises. It was a model in a national experiment that helped light up years of rapid growth for China.
Mr. He, 68, was named this month as a key government official overseeing China’s economy. His appointment comes as growth is slowing and Beijing’s approach has shifted decidedly back toward a reliance on state-owned enterprises and tight party supervision.
In his new role as a vice premier, Mr. He will oversee everything from industrial policy to trade negotiations. He spent the past five years as the leading central planner of China’s economy, and will now have even more influence to make sure those plans and the edicts of Xi Jinping, China’s top leader, are followed.
The big question among economists now is which Mr. He will the world see as vice premier. Will he take his cues from the entrepreneurial energy he saw early in his career in Xiamen? Or will he follow his more recent experiences as a taciturn Communist Party boss who avoids contact with foreign executives and works closely with state-owned enterprises?
Victor Shih, a political scientist at the University of California, San Diego, said Mr. He’s recent experience suggested that he favored state-led initiatives. Such policies meet short-term needs, like the swift economic stimulus that arises from building highways and skyscrapers, but then brings difficulties, like ever-rising debt to pay for the construction.
Mr. He “has a track record of doing things immediately, in accord with his boss’s wishes, but may sacrifice some of these medium-term issues,” Mr. Shih said.
China’s new premier, Li Qiang, promised at his inaugural news conference this month that his country would treat private companies equally with state-owned enterprises, in an attempt to signal that China wanted to revive entrepreneurship. Four people who know Mr. He, speaking on the condition of anonymity to talk openly, said Mr. He was influenced by his work in Xiamen and appreciated the power of free markets in fostering economic growth.
More on China
- Loosening Ties: Western countries helped China develop into a superpower. Now, under the leadership of Xi Jinping, Beijing is turning its back to them and edging ever closer to Russia.
- A Disappointing Debut: The search giant Baidu unveiled China’s first major rival to OpenAI’s ChatGPT. But the debut of the bot, called Ernie, was a flop.
- A Surge in Activity: After being battered by the pandemic in 2022, Chinese factories bounced back with vigor in February: Manufacturing activity rose to its highest level in more than a decade.
- Erasing Vestiges of ‘Zero Covid’: The ruling Communist Party is waging a propaganda campaign to rewrite the public’s memory of its handling of the pandemic, which included some of the harshest restrictions in the world.
They also said, however, that they expected he would closely follow every decision by Mr. Xi, who has handed down statist measures that in many cases have suppressed business growth.
Mr. He is one of the closest allies of Mr. Xi, who was confirmed this month to a third five-year term. Practically no one in China’s political life has been closer to Mr. Xi over the years. The two met as young officials in Xiamen, months after Mr. He finished his master’s degree at Xiamen University. When Mr. Xi ventures out in public, Mr. He consistently appears in official photos several steps behind him.
In Xiamen in the 1980s, they worked together to set up industrial parks for factories and then wined and dined potential investors from other regions of China, as well as Taiwan and Hong Kong.
Mr. He left Xiamen in 2009 and followed Mr. Xi, who by then was China’s vice president, to northeastern China. Mr. He played a senior municipal government role in Tianjin and five years later became a senior economic planner in nearby Beijing.
Since 2017, Mr. He has played a powerful role in the economy’s shift toward state-led development. He served as the chairman and Communist Party secretary of the country’s top central planning agency, the powerful National Development and Reform Commission. He shifted the commission’s focus away from foreign investment and curtailed meetings with foreign executives, emphasizing close coordination with state-owned enterprises instead.
Mr. He’s economic policy evolution has closely paralleled his longtime boss’s declining trust in markets. Mr. He gave a speech in 2008 at his alma mater that reflected an early faith in capitalism. He extolled the decision by Mr. Deng, who dominated political life in China for two decades starting in 1978, to pursue free markets, saying he and other early graduates had “benefited from the great cause” of opening the economy.
What we consider before using anonymous sources. Do the sources know the information? What’s their motivation for telling us? Have they proved reliable in the past? Can we corroborate the information? Even with these questions satisfied, The Times uses anonymous sources as a last resort. The reporter and at least one editor know the identity of the source.
In August, Mr. He took a very different tone in a column for the state-run Economic Daily: “Strengthening the Party’s overall leadership over economic work is the fundamental guarantee for our country’s economic development. Practice has proved that the key to running China’s affairs well lies in the Party.”
A stark example of how far Mr. He has traveled in his policymaking can be seen in his role as a senior leader in Tianjin before moving to Beijing to run the national development commission.
Tianjin, a large metropolis only 70 miles southeast of Beijing, is a model of government intervention — in many ways the opposite of Xiamen, where Mr. He got his start. State-owned enterprises predominate. Extensive borrowing has left Tianjin facing one of China’s worst local government debt crises.
Mr. He oversaw the construction of a vast new city of skyscrapers on the city’s oceanfront. It was intended to become a “new Manhattan,” but has failed to attract many businesses.
Today, rows of apartment buildings stand vacant at the port in Tianjin. A 103-story skyscraper opened only its bottom 40 floors for business. Even four McDonald’s franchises were mostly empty on a recent workday.
David Xing, a 29-year-old office worker, sat in the food court of a mostly empty mall at lunchtime on a recent weekday. Friends had moved to Tianjin but stayed only a couple of years before concluding there were better job opportunities elsewhere.
“I feel like this place can’t keep people,” he said.
Cities across China are struggling with overwhelming debt burdens, and an analysis by Fitch Ratings found that Tianjin was in bigger trouble than practically anywhere else. Although Tianjin is a longtime center of heavy industry with a broad tax base, the city’s borrowing affiliates are so indebted that they pay among the highest interest rates in China. Nearly three-fifths of Tianjin’s debt falls due this year, and investors have been leery of extending long-term loans to the city.
Unlike Tianjin, Xiamen has fairly little debt. An analysis released this month by S&P Global found that Xiamen was the least indebted city in Fujian Province, which in turn had one of the best provincial credit profiles in China.
Xiamen also remains a hub of small-business activity. Sun Hao, 40, moved to Xiamen 15 years ago when he grew tired of working for others in his home province, Henan, in central China. He opened his one-man welding workshop, where he makes steel mountings for a nearby circuit board factory.
“I used to work for others, but here I can do it on my own, which feels better,” he said.
But China today is much more like Tianjin than Xiamen. Nationwide, government investment in road, bridges and other infrastructure grew nearly three times as fast in the first two months of this year as did retail, a sector that is among the most dominated by entrepreneurs in China.
Mr. He himself may never have absorbed Xiamen’s small-business ethos. Even before he moved to Tianjin, he spent his last years in Xiamen ordering the flattening of neighborhoods and villages on the outskirts of Xiamen’s historic core to make way for modern buildings, said Alfred Wu, a politics professor at the National University of Singapore who used to work as a local journalist near Xiamen.
Mr. He finished his years in Xiamen, Mr. Wu added, with a new nickname: He Dachai, or He the Big Demolisher.
Li You contributed research.
Business News - Opportunities - Reviews