China Risks Talent Mismatch as Wang Gets Discipline Job

China's vice premier Wang Qishan
Wang Qishan, China's vice premier, said his nation must adopt more “forward looking” and flexible monetary policy as the world faces a protracted recession. Photographer: Andrew Harrer/Bloomberg

Vice Premier Wang Qishan, China’s counterpart to U.S. Treasury Secretary Timothy Geithner, was named to the Communist Party’s discipline body as part of a once-a-decade leadership transition, indicating he won’t have a post directly overseeing the economy in the new government.

Wang, 64, was appointed to the Communist Party’s Central Commission for Discipline Inspection, the official Xinhua News Agency reported today. That signals that Wang will take the top discipline post on the party’s Politburo Standing Committee, which will be unveiled tomorrow, said Bo Zhiyue, senior research fellow at the National University of Singapore’s East Asia Institute.

“This is going to be a huge waste of his strength in dealing with economic, financial matters and foreign affairs,” Bo said in an interview. “He’s a banker who’s going to be in charge of disciplinary affairs. It’s a mismatch between his true talent and his assignment.”

Wang, who jokingly calls himself Geithner’s uncle and is a former president of China Construction Bank Corp., has helped lead China’s response to the global financial crisis. His appointment comes as China’s economy is set to expand at the slowest pace since 1999 this year, stymied by lagging growth in the U.S. and European Union, its two biggest export markets.

Wang will still be able to weigh in on economic decisions as a member of the standing committee, the top decision-making panel in China. The move, though, may hinder efforts to overhaul China’s economy, said Alicia Garcia-Herrero, chief economist for emerging markets at Banco Bilbao Vizcaya Argentaria SA in Hong Kong.

‘Future Reforms’

“Clearly not a good sign for future reforms,” said Garcia-Herrero, who formerly worked for the International Monetary Fund.

The party made the announcement on the final day of its 18th party congress. Wang and Vice Premier Li Keqiang were both reappointed to the party’s Central Committee, the group with 205 members from whose ranks the Politburo and its standing committee are drawn. Vice President Xi Jinping, set to take the top party post from Hu Jintao, was also named.

Hu and Premier Wen Jiabao were dropped from the Central Committee, state-run China Central Television said. People’s Bank of China Governor Zhou Xiaochuan and Commerce Minister Chen Deming also didn’t appear as either committee members or alternates, signaling they won’t have roles in the government that will take over next year.

Economic Adviser

Liu He, a government economic adviser who has been called China’s Larry Summers, and Lou Jiwei, chairman of China’s sovereign wealth fund, were named full members of the Central Committee, indicating they may take senior positions in the new government.

Xi may begin his tenure as China’s top leader having more portfolios than Hu. The outgoing president plans to step down from his chairmanship of the Central Military Commission, Radio Television Hong Kong reported today, citing Zhang Qinsheng, deputy chief of the People’s Liberation Army general staff.

Other members reappointed to the Central Committee today were Vice Premier Zhang Dejiang, Shanghai party boss Yu Zhengsheng and propaganda minister Liu Yunshan, Xinhua said. Also on the list were Tianjin party boss Zhang Gaoli, party organization chief Li Yuanchao and Guangdong party boss Wang Yang. State Councilor Liu Yandong, the only woman on China’s 24-member Politburo, was also renamed to the committee.

Moving Ahead

“For the next 10 years, China no doubt will keep moving ahead,” Zhu Shanlu, a delegate representing Peking University, said at the end of the party congress. “We’ll also encounter new challenges and problems, and our party is very sober about it.”

China’s Communist Party cut the number of women on the 205-member Central Committee to 10. In the last Central Committee, 13 of the 204 members were women. No woman has ever served on the Politburo Standing Committee.

In the concluding meeting of the congress, delegates approved an amendment to the Communist Party constitution to “take reform and opening up as the path to a stronger China,” Xinhua reported. Delegates also approved an amendment on the need to promote ecological progress, it said.

Xi is forecast to assume the state presidency from Hu in March, when Li is set to take over the premiership from Wen.

In a Washington speech in July, 2009, Wang called himself Geithner’s uncle in a reference to ties he had with the treasury secretary’s father Peter, who headed the Ford Foundation’s office in Beijing in the 1980s. Wang has also served as head of China International Capital Corp., the country’s first investment bank, and deputy governor of the central bank.

Vice Governor

As vice governor of southern China’s Guangdong province, Wang was tapped to oversee the bankruptcy of a failed investment company in 1998. In 2003, he was appointed mayor of Beijing in the wake of the city’s botched response to an outbreak of Severe Acute Respiratory Syndrome, or SARS.

Those problem solving skills may prove useful as Wang seeks to curb corruption in the party as it weathers China’s biggest political scandal in a generation, the ouster of Chongqing party boss Bo Xilai from the Politburo in April. Bo’s wife was convicted in August for the murder of a British businessman, and Bo, once a contender for the standing committee, was later expelled from the party. He now faces trial for corruption and abuse of power.

Rail Minister

Central Committee members including former rail minister Liu Zhijun and former China National Nuclear Corp. Chairman Kang Rixi, were expelled from the panel on bribery charges. Opening the congress Nov. 8, Hu warned that failure to control corruption “could prove fatal to the Party” and could lead to its collapse.

“It may mean that the party leadership has decided that corruption has become so rampant that they really need someone who is determined, capable and clean to handle it,” Bo Zhiyue said. “Wang Qishan has a very good reputation as a firefighter, being sent to different places to deal with crises.”

— With assistance by Michael Forsythe, and Kevin Hamlin

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