Skip to main content
China's Politburo Standing Committee member Wang Qishan (bottom row, C), the head of China's anti-corruption watchdog, walks toward his seat during the opening session of the National People's Congress (NPC) in Beijing, China, March 5, 2016. REUTERS/Jason Lee TPX IMAGES OF THE DAY
Op-Ed

The rise of state-owned enterprise executives in China’s provincial leadership

and
Editor's Note:

Cheng Li and Lucy Xu write that the recent rise of provincial chiefs who have experience as top commanders of state-owned enterprises (SOEs) suggests that these individuals will play a more pronounced role in Chinese politics in the years ahead. This piece was originally published in China-US Focus. Part 1 of the series can be found here.

Can business leaders become central players in the Chinese Communist Party (CCP) leadership? The recent rise of provincial chiefs (governors and provincial party secretaries) who have experience as top commanders of state-owned enterprises (SOEs) suggests that these individuals will play a more pronounced role in Chinese politics in the years ahead.

Authors

L

Lucy Xu

Senior Research Assistant & Communications Coordinator - John L. Thornton China Center, Foreign Policy

For SOE executives in pursuit of power at the provincial level, the last five years under Chinese President Xi Jinping have been encouraging. Zhang Qingwei (张庆伟), the former chairman of China Commercial Aircraft Co., Ltd., was appointed Hebei governor in 2012, and Guo Shuqing (郭树清), the former chairman of China Construction Bank, was confirmed as Shandong governor in 2013. In 2015, Chen Qiufa (陈求发), formerly with the Aviation Industry Corporation of China, became Liaoning governor. In 2016, three more individuals with SOE backgrounds were appointed as provincial chiefs: Hubei party secretary Jiang Chaoliang (蒋超良), who had been chairman of China’s Agricultural Bank; Hunan governor Xu Dazhe (许达哲), who had been general manager of China Aerospace Science and Industry Corporation (CASIC); and Jiangxi governor Liu Qi, who had been general manager of a state-run chemical manufacturing plant. Just last month, Ma Xingrui (马兴瑞), the former general manager of CASIC, and Zhang Guoqing (张国清), the former general manager of China North Industries Group Corporation, were confirmed as governor of Guangdong and mayor of Chongqing, respectively.

Interestingly, two of the aforementioned were CEOs of China’s state banks and four were leaders in China’s aerospace industry—including two who led CASIC, the principal state-owned contractor for China’s space program—underscoring the importance Xi has attached to developing the aerospace and financial sectors.

One may argue that this is not a new phenomenon. After all, in the 1970s and ‘80s, Jiang Zemin and Li Peng both rose to prominence through China’s then-burgeoning web of SOEs. But, at that time, China’s state enterprises were small, locally oriented operations—a far cry from the global conglomerates they are today. While a handful of the CCP’s current heavyweight leaders were once SOE chiefs (Politburo Standing Committee member Wang Qishan served as governor of the China Construction Bank until 1997, and State Councilor Guo Shenkun was general manager of the Aluminum Corporation of China Limited until 2004), former business executives had never penetrated provincial-level leadership at the rate and scale they have under Xi. Since the beginning of 2016, six such leaders have officially taken on top provincial positions, demonstrating the rapid growth of this group. Today, SOE executives-turned-provincial leaders are a sizable force, constituting more than 16 percent (10 out of 62) of all current provincial-level chiefs.

Provincial leadership experience is highly valued within the CCP. Governing a Chinese province is no easy task, as the average province has a higher population than even the average European country. Provincial bosses, like top leaders across Asia, focus constantly on maximizing regional economic development. They cope with daunting challenges such as unemployment, distributive justice, social stability, and the welfare needs of their constituents. Unsurprisingly, then, experience in provincial leadership is one of the most common stepping-stones to central party leadership. Within the 18th Central Committee, which formed in 2012, 76 percent of Politburo members previously served as provincial chiefs. Not only do former CEOs now have a high chance of entering the top party leadership, but three of the youngest who are also members of the Central Committee—Zhang Qingwei, Ma Xingrui, and Zhang Guoqing—are poised to be major competitors for top positions in five to ten years.

Why has Xi elevated SOE executives to the helm of China’s provinces? There are at least three factors at play. First, nurturing a new set of protégés hailing from China’s SOEs allows Xi to diversify the composition of his powerbase, thereby broadening his support within the party. Second, leaders from SOE and technical backgrounds are seen as, “less tainted by the political bureaucracy’s interests and undesirable customs.” Bringing in provincial leaders who are “outsiders”—with respect to both a locality and its provincial bureaucracy—allows Xi to undermine forces of localism and potential factionalism that might otherwise constrain his power. Third, former CEOs possess substantial and multifaceted business experience. Xi expects these individuals to improve the financial administration of their respective provinces and implement policies to stimulate their local economies.

The rise of business leaders could have long-lasting implications for elite recruitment in China. This development not only broadens the channels for political recruitment but could also significantly alter the composition of the CCP leadership. Might this cohort even congeal into a new elite group within the party? Indeed, an increasing overlap between China’s business elite and political elite will have immense consequences for the direction of Chinese leadership as a whole, profoundly influencing policy choices and decision-making at the highest level.

Get daily updates from Brookings