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Fifth Generation: Who is Zhang Gaoli?

This is the first in a series of posts examining the Chinese leaders expected to be named to the Politburo Standing Committee during the 18th National Congress of the Chinese Communist Party (中国共产党) that kicked off November 8.

With the apparent finalization of the seven members (reduced from nine) of the new Politburo Standing Committee, it appears that Zhang Gaoli (张高丽) has made the cut, and indeed, Zhang typifies the ‘new’ faces of the so-called ‘fifth generation’ of China’s leadership — neither incredibly new nor incredibly liberal.

Zhang, age 66, would be among the oldest of the Standing Committee’s new members and is a protégé of former president Jiang Zemin (江泽民).  Although Zhang is expected to be a strong voice for continued economic reform, he’s not exactly a liberal reformer in the style of Wang Yang, the Party secretary in Guangdong who has been relatively lax about censorship and restrictions on political speech.

What does stand out about Zhang’s record, though, is that he’s been at the forefront of China’s economic wave in three different positions in three urban hot spots on China’s eastern coast over the past 15 years — so much so that Zhang could emerge as the new executive vice premier, essentially the lead economics policymaker in China — it’s thought that he and Wang Qishan (王岐山) are in competition for the role.

Currently, Zhang currently serves as the Party secretary in Tianjin municipality — along with Beijing, Shanghai and Chongqing, Tianjin is one of four municipalities that is essentially governed like China’s other provinces.  Tianjin, just north of Beijing, has long been a key transportation hub on eastern China’s coast and, with 11.1 million people, China’s fourth largest city — to put it in perspective, Tianjin has just a handful more people than Chicago and New York combined.  As Party secretary, Zhang has been instrumental in developing Tianjin’s Binhai New Area — a new economic zone along the coast that aims to replicate the Pudong New Area in Shanghai, and by all accounts, is succeeding at breakneck speed, and has already surpassed Pudong in terms of GDP.

In many ways, his ascent parallels the ascent of China’s emergence as a global economic power, with all the positive and negative attributes that brings — admirers point to his fervor for liberalizing China’s economy, but critics decry debt-financed public-sector spending on misguided infrastructure:

All this debt-fuelled investment in trophy projects has certainly resulted in rapid headline growth rates, and clearly it has boosted Zhang’s career. But how much of it will ever generate an economic return is doubtful. The handful of analysts who have examined Tianjin’s finances in detail warn of a massive bad debt explosion in the making….  As party boss in Tianjin, Zhang has proved himself an ardent proponent of China’s investment-at-all-costs growth trajectory.

That is exactly the model economists say Beijing must now reject if it is to avoid the dreaded middle-income trap and sustain its development over the next 10 years.

Unfortunately, if Zhang does indeed succeed to the economic policy hot-seat next week, it looks as if China’s chances of a successful rebalancing away from debt-funded investment and towards growth powered by private consumption will be severely diminished.

Perhaps more fundamentally, however, Zhang made his mark as the Party secretary of Shenzhen from 1997 to 2002.  Shenzhen is a special economic zone adjacent to Hong Kong — it was essentially opened up to free-market policies by Deng Xiaoping in the 1980s and it was one of the first experiments in the great transformation of China from a Maoist communist economy one into a ‘market socialist’ economy.  Continue reading Fifth Generation: Who is Zhang Gaoli?