Li Keqiang is the new man in China whose actions will most affect business sustainability, says Paul French

The Chinese Communist Party’s 18th congress is over and now we know the new leaders of China as Xi Jinping’s administration takes over from that of Hu Jintao.

With China’s formerly red-hot economy at a crucial juncture it seems inevitable that some economic policy changes will be forthcoming. And Li Keqiang is the name to start grappling with. Li is the new premier, the man who replaces the high-profile and generally well-regarded Wen Jiabao, as the leader who will steer through any changes likely to affect civil society and most people’s daily lives.

First a nod to the Hu-Wen administration’s legacy: the share of total urban employment accounted for by private firms rose to 81% from 72% under their watch, while the share of fixed-asset investment by private firms is now 67% of the total. In short China is less a state-run economy now and more one driven by private sector entrepreneurship creating jobs.

Additionally the economy is now one increasingly driven by domestic consumption and not simply manufacturing for export – the continued wealth of a broad range of society depends on this process continuing. Social services have become a contested political arena with demands for more cover from many sectors of society – healthcare spending has risen but is still inadequate for most people’s needs.

The new government doesn’t formally take office until March 2013, but we can test the waters. So what do we know about Li Keqiang?

Born in 1955, Li was a “sent down youth” during the cultural revolution, performing manual labour in rural Anhui province during that chaotic period. Crucially, rather than the usual top leader degree of choice – engineering – Li studied law, arguably a better background for the man who is now China’s senior policymaker and needs to guide through a more thorough rule of law programme over the rest of the decade.

According to Cheng Li, the director of research and a senior fellow at thinktank Brookings, Li’s “hot button” issues are “increasing employment, offering more affordable housing, providing basic healthcare, balancing regional development, and promoting innovation in clean energy technology”.

Indeed for those working on environmental issues Li is generally seen as good news. According to Hui Shen, director of the Institute for Solar Energy Systems at Guangdong’s Sun Yat-Sen University, Li has shown himself to be a leading advocate of renewable energy in China. Hui believes it has been Li, as Wen Jiabao’s “understudy” for some years now, who has pushed for greater adoption of alternative energy technologies and a more concerted environmental clean-up across China’s remoter, and poorer, provinces.

Urbanisation is also a key area for Li. China passed 50% urbanisation earlier than expected in 2011. By 2030, China's cities will be home to one billion people – one in every eight people on earth.

Even faster urbanisation

Tom Miller, the editor of the China Economic Quarterly in Beijing, says Li has consistently expressed his support for speedier urbanisation. To do this in an orderly, “harmonious” fashion, as the party would have it, Li will have to deal with urban issues. These happen to be the major concerns of many NGOs and civil society organisations and where much corporate responsibility work is now concentrated – raising the living standards of the urban poor, integrating migrant workers more fully into society and improving basic social services.

This means tackling one of the thorniest and long-running points of contention for many NGOs – China’s “hukou” system of household registration. The hukou has been criticised by many activists as a block on their ability to help China’s urban underprivileged.

Andy Rothman, China macro strategist for the investment bank CLSA, expects Li to move swiftly to provide more equitable access to public services for the migrant workers already living in China’s 600 tier 3 cities, which are, as he points out, “home to 57% of the urban population and 100 million migrant workers”.

How fast all this happens is the great unknown. Supporting alternative energies and a better environment, improving basic social services and removing hukou restrictions (which would increase substantially the number of urban residents qualifying for social services in most cities) will be expensive. It will take political will and a hefty financial commitment.

So far, and it is early days, the new administration has not stated its position on NGOs and civil society organisations, but involving them in this process. Freeing them up to a greater extent to participate, will be essential to this process. In the next six months Li Keqiang will indeed be the man to watch.

Paul French has been based in China for more than 20 years and is a partner in the research publisher Access Asia-Mintel.



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