Thread by @MacroPoloChina

1/China has a new “trinity” of econ/finance committees under the Party’s aegis. Two are old and one is new, but they all have the word “central” in their titles and sound kinda the same. So what’s the difference and which one really matters? We unpack all this in this thread.

2/First, the CFEC. Helmed by General Secretary Xi, it’s the OG commission that’s been around since 1980s. When it convenes, it sets the big picture and ideological direction on the economy. What happens here gets enshrined in Party documents, like Xi’s 2015 supply-side reforms.

3/Second, the newly established CFC. Sitting just below the CFEC, the CFC ostensibly controls the banking regulators and makes decisions on capital allocation. While Premier Li Qiang leads the CFC, we’re agnostic on whether that actually means he’s more empowered.

4/Third, the CFWC. It got a second lease on life after it was put on ice in 2003. Its OG mission was to break up interest groups and it will likely serve similar disciplinary functions in this incarnation. Vice Premier He Lifeng is the “enforcer-in-chief” leading the CFWC.

5/He’s place on all three commissions (director x 2, chair x 1) and his longtime relationship with Xi all but confirm his rise as a top confidante on economic affairs. We know that when it comes to personnel, Xi puts a premium on personal trust. So just how close are Xi and He?

6/Close enough that He was invited to Xi and Peng Liyuan’s wedding in 1987. They became comrade-in-arms during the 80s when both served in Xiamen. Xi deferred to He on economic matters even then, and when he started climbing the political ladder, Xi never left He behind.

7/During their Xiamen tenure, He introduced Xi to his grad mentor Deng Ziji, a scholar known for advocating state-led economics. Deng shaped China's 1994 tax reform and influenced Xi, He, and former Finance Minister Liu Kun. Xi and He have publicly credited Deng’s influence.

8/As a close Xi ally, He will have Xi’s ear in coming years. His influence can already be seen in the seven State Council appointments he has shepherded through, including NDRC head Zheng Shanjie. This likely sets up Zheng as He’s successor to the Vice Premiership in 2027.

9/While He may have Xi’s ear, who has He’s ear is just as important. But that might be harder to come by these days as “fincrats” (finance technocrats) in the bureaucracy have been depleted. Nearly 80% of officials with finance backgrounds left the Central Committee (CC) in 2022.

10/To compensate for the dearth of fincrats on the CC, Beijing has brought in personnel like Wang Jiang as deputy director of CFC and CFWC. His experience includes cleaning up the 2023 Everbright debt crisis, which will come in handy in dealing with property/local debt problems.

11/So, it looks like it’s going to be “He said, Xi said” on economic affairs for the foreseeable future. He has also clearly taken on the US-China economic portfolio, so we will be seeing a lot more of him.

12/It has taken about a year for the new economic team to be put in place. Now it’s done; can they effectively manage the risks to China’s financial system and reboot growth? Follow @MacroPoloChina for insights on how institutional and personnel changes affect China’s economy.