Financial Earthquake strikes China
My faithful Five know I am a China watcher and my goal is to pick out the seemingly small things that down the road will mean big change. The WSJ story I’ve excerpted below is a great example of this. I considered Lou the key peg in the question about what direction Xi’s purge would go – and now we know the answer, Xi is rejecting market reforms, transparency and institutions — and is going to run China the Communist way. This will not work of course, but at least now we know what direction China is headed – and that direction is economically down.
By LINGLING WEI and JEREMY PAGE
The Wall Street Journal Updated Nov. 7, 2016 7:30 a.m. ET
BEIJING—Shortly before Lou Jiwei was appointed China’s finance minister in the spring of 2013, the outspoken Communist Party veteran expressed a wish to Premier Li Keqiang: to let him serve his full five-year ter
Mr. Lou’s pitch, according to people with knowledge of the matter, was that he had a plan to overhaul the country’s creaky fiscal system and tax code and needed time to carry it out. The chat with Mr. Li helped launch him as the highest-profile finance minister China has had in years and a voice for market-oriented changes in China.
On Monday, with nearly two more years to go before his term ends, the 65-year-old Mr. Lou was unexpectedly removed from his position and replaced by a relatively low-profile bureaucrat.
The reshuffle, which also included the ministers of state security and civil affairs, was further evidence that President Xi Jinping is trying to position trusted allies in key government roles ahead of a Communist Party Congress late next year that will shape policy agendas for years to come.
Of the personnel changes announced Monday by the Standing Committee of the National People’s Congress, China’s legislature, Mr. Lou’s departure was the big surprise, raising the question of whether reform-minded officials are being sidelined.
“Lou Jiwei’s abrupt ouster sends a strong signal that any prospects of even limited economic reforms are falling prey to President Xi’s focus on consolidating his power,” said Eswar Prasad, a Cornell University professor and former China head of the International Monetary Fund.