Beijing steps up centralisation of power to control provincial leaders

Beijing steps up centralisation of power to control provincial leaders

Friday, 05 July, 2013, 12:00am

Ivan Zhai and Echo Hui

More governors now have central government backgrounds and analysts say the trend of centralisation will continue for at least a decade

Beijing has sent more officials from ministries and state-owned enterprises to provinces during the latest leadership reshuffle, amid fears it may lose control of local governments, observers said. They say the trend of centralising power is likely to continue for at least a decade. More than 800 senior officials were elected to local governments, people’s congresses and people’s political consultative conferences during the reshuffle, which was wound up last week, Xinhua said. For the first time in nearly three decades, half of the 22 governors – most of whom were elected during the 18th party congress leadership reshuffle last year – had central government backgrounds, according to research by the Post. Five years ago, only two governors were directly installed by Beijing.Wang Xuejun, the 61-year-old governor of Anhui, is the latest Beijing-installed governor. He was the director of the State Bureau for Letters and Calls for nine years before being transferred in March.

Other senior officials transferred from Beijing to provinces this year include governor of Henan Xie Fuzhan, who was the former director for the State Council’s Research Office, and Shandong governor Guo Shuqing, who spent most of his career at the State Council and in the mainland’s money policy regulation sector.

Political analysts said the leadership in Beijing was tightening its control of provincial governments and the trend of centralisation was irreversible.

“Generally, we can see the phenomenon of installing officials from Beijing within the central government’s leadership reshuffle, but it has become more popular in recent years,” said Alfred Muluan Wu, a research fellow at the Centre for Governance and Citizenship at the Hong Kong Institute of Education.

Generally, we can see the phenomenon of installing officials from Beijing within the central government’s leadership reshuffle, but it has become more popular in recent years

Wu said that for more than 20 years, most governors were either from local provinces, or transferred from others, as they needed to be familiar with local affairs.

“But some local officials told me in interviews that it felt like it was back to the early 1980s, when many senior local officials were installed by Beijing.

“And we believe that once the trend of power centralisation starts, it will be irreversible in about 10 years – if there are no big complaints at the local level.”

According to the Post’s research, most governors were from local provinces between the early 1980s and the late 2000s, while almost none were directly from ministries or state-owned enterprises.

Jeffrey Wu, research fellow at the Hong Kong-based think tank the Tianda Institute, said that by installing governors, new leaders Xi Jingping and Li Keqiang, might have a better chance to fulfil their goal of creating a strong and efficient government.

“It is much easier for senior officials from Beijing to understand the central government’s policies. They will also benefit from their connections in Beijing when they need help in realising the top leaders’ ideas.”

During the administration of former premier Wen Jiabao , the authority of the central government had been so weak that even “the officials outside Wen’s office in Zhongnanhai wouldn’t listen to him”, analysts said.

Professor Zhou Zhiren, from Peking University’s School of Government, said the trend of Beijing-installed governors was related to the top leaders’ personal styles and the different power struggles they face.

“Obviously, Xi is more ambitious than Hu Jintao. He might intend seizing all the power for himself,” Zhou said, adding that appointing people he trusts to local governments was Xi’s method of achieving his goal.

Analysts believe that after the 16th party congress, Hu was not authorised by the military leadership, which may have undermined his capacity to appoint his own people. In contrast, Xi took the position as chairman of the Central Military Commission, as well as being elected the nation’s president.

“It means that Xi has more influence on important appointments than Hu,” Zhu said.

But Alfred Wu said Xi was not the first one who wanted to centralise Beijing’s power and this reshuffle of governors was not directly related to Xi.

Wu said that in the first 15 years of the nation’s economic reform, from the late 1970s to the early 1990s, late leader Deng Xiaoping decentralised Beijing’s power as he hoped to encourage the local officials own desires for economic development in provinces.

After taking power in Beijing in the early 1990s, Jiang Zemin launched a reform of the taxation system in 1994 and the “vertical personnel management” system, through which local governments eventually lost the power to appoint senior officials to local customs and bank branches.

Post research also shows that Beijing started to appoint deputy ministers as deputy governors as early as in mid-2010.

The post of governor is not the only position Beijing focuses on. The Guangzhou-based Southern Weekly reported early last month that among nearly 600 senior local officials, which include deputy party secretaries and deputy governors, about 20 per cent were from Beijing.

“The data we collected since the 1980s tells us that Beijing is having more control on local finance and important appointments. There is no doubt we are heading towards the centralisation of power,” Wu said.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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