On whose authority?
A mysterious article prompts a flurry of speculation
WHEN a newspaper bases an entire story on a single, anonymous source, you would expect doubts about credibility to arise. Yet there were no questions about the credibility of an “authoritative person” who opined at length about the Chinese economy in the People’s Daily earlier this month.
Not just any old source gets front-page treatment in the Communist Party’s mouthpiece. In this case, it is the third time in the past year that this “authoritative person” has had an outing to discuss the state of the economy. On this occasion, he delivered a stark warning about relying on debt to fuel economic growth. That, he said, could lead to crisis and to a collapse in growth.
Speculation is rife over who the person might be. For Pekingologists, it is a fine parlour game.
There are two dominant theories. Both see the fingerprints of Liu He, a Harvard-trained economic adviser to Xi Jinping, China’s powerful president. Mr Liu has been a strong proponent of such structural reforms as cutting off funding for state-owned industries blighted by overcapacity. His views chime with the authoritative person’s message of tough love.
Writing under pseudonyms or anonymity to challenge those in charge is an ancient communist tradition. Some speculate that Mr Liu used the article to criticise the way in which the prime minister, Li Keqiang, has (mis-)managed the economy. The authoritative person cautioned against asking banks to swap loans for equity in troubled borrowers, an idea that Mr Li had pushed. But the problem with this argument is that Mr Liu already wields tremendous influence thanks to being close to Mr Xi. Why would he resort to attacks in print to push back against Mr Li?
So a second possibility is that Mr Xi wanted the article not to criticise Mr Li but rather to deliver a shock to underlings who had strayed from his prescribed programme of slower but sounder growth.
Supporting the notion that Mr Xi himself was involved was the publication the following day in the People’s Daily of a speech he gave on the economy. The speech, actually delivered in January, echoed many of the themes raised by the authoritative person, albeit in gentler tones.
The authoritative person could be less diplomatic. Among other broadsides, the person heaped scorn on officials who described, in terms of economic performance, a “red-letter start” to the year. That was a phrase used by Zhang Gaoli, a member of the Politburo’s seven-man Standing Committee, China’s top decision-making body.
If the first theory is true—that Mr Liu was rebuffing Mr Li—the saga would point to divisions about economic policy in the highest echelons of the party. Slowing growth has stabilised in recent months, but that is in large part thanks to a gusher of new credit. In this scenario, Mr Xi would seem to be far more hawkish than Mr Li as he fights to rein in China’s credit-fuelled stimulus. If the second theory holds, Mr Xi and Mr Li generally see eye-to-eye on the economy but are struggling to get other officials to curb a reliance on debt. In this scenario, no matter how ambitious or justifiable their policy, the business of implementation remains precarious.
Whichever theory is nearer the truth, it is clearly easier for China to talk about changing its growth model than actually to change it.