China’s legislature elected Li Keqiang as premier on Friday, installing an English-speaking bureaucrat as the man in charge of the economy, the world’s second-largest, and its aim of reviving growth through consumer-led expansion.
The largely rubber-stamp National People’s Congress, as expected, chose Li, 57, to replace Wen Jiabao.
Nearly 3,000 delegates gathered in Beijing’s Great Hall of the People to vote on Li’s appointment, putting the final stamp of approval on a generational transition of power.
Li drew only three no votes and six abstentions from the carefully selected parliament.
Li rose and shook hands with Xi Jinping, who was elected president by the legislature on Thursday, as legislators applauded. A beaming Wen walked over to Li, shook his hand and exchanged words.
While Xi is the country’s top leader, Li heads China’s State Council, or cabinet, and is charged with executing government policy and overseeing the economy.
As premier, Li is faced with one of the world’s widest gaps between rich and poor, an economy over-reliant on investment spending and a persistently frothy housing market that has stoked resentment among the middle class.
“I believe that in this class (of new leaders), his intent to reform is quite strong,” said Chen Ziming, an independent political commentator in Beijing. “He has a close relationship with reform-minded economists. We’ve seen from his speeches after the 18th party congress that the gap between them and him isn’t far.”
More than any other Chinese party leader until now, Li was immersed in the intellectual and political ferment of the decade of reform under Deng Xiaoping, which ended in the 1989 Tiananmen Square protests that were crushed by troops.
As a student at Peking University, Li befriended ardent pro-democracy advocates, some of whom later became outright challengers to party control. His friends included activists who went into exile after the June 1989 crackdown.
“He has a better understanding of how Westerners think,” a source familiar with China’s foreign policy told Reuters.
Li, who has a degree in law and a doctorate in economics, will take the reins of an economy whose growth slowed in 2012 to a 13-year low, albeit at a 7.8 per cent rate that is the envy of other major economies.
Analysts have described the Wen years as a lost decade during which economic reforms slowed and state-backed industries tightened their grip on the economy.
Both Xi and Li will need to deliver a blueprint to stabilize the real estate market. They need to do this quickly to calm a market in which real estate prices have soared 10-fold in major cities during the last decade.
Across China, people are resentful of the widening income inequality gap. China has 2.7 million U.S. dollar millionaires and 251 billionaires, according to the Hurun Report, but 13 per cent of its people live on less than $1.25 per day, according to United Nations data. The average annual urban disposable income is just 21,810 yuan ($3,500).
Failure to close this gap or deflate a dangerous property bubble could create a backlash that could even break the Communist Party’s grip on power.
The new administration must also try to turn legions of cheap, assembly-line exporters into world-beating product-makers, while expanding domestic consumption, the economy’s prime focus to ensure growth is more balanced.
Since he was elevated to the No. 2 spot in the ruling party hierarchy last November – a departure from the time of Wen, who was third-ranked – Li has embarked on an urbanization drive.
That project aims to bring 400 million people to cities over the next decade with the hope of turning China into a wealthy world power with economic growth generated by an affluent consumer class.
On the environment, an issue which is causing much anger across the country, Li added his voice to appeals to curb the toxic haze blanketing Beijing in January, but offered few specifics and said there was no quick fix.
In late November, Li promised to let non-governmental groups play a bigger role in fighting HIV/AIDS.
But during his time in central Henan province from 1998 to 2004, Li was criticized by activists for presiding over a crackdown and helping to cover up the extent of an HIV/AIDS crisis there, when hundreds of thousands of impoverished farmers became infected through botched blood-selling schemes.
In style, Li will be “less of a performer” than Wen, said Chen, the political commentator.
The Chinese public has a fondness for Wen, who is often referred to as “Grandpa Wen” in the media, for his common touch with ordinary people, and for rushing to console victims of disasters, such as earthquakes and accidents.
But his legacy has been tainted by a New York Times report that his family had accumulated massive wealth during his time in power. China labelled the story a smear.
On Thursday, China also appointed Zhou Qiang, the former party chief in the southern province of Hunan, as the head of the Supreme People’s Court.