The 18th National Party Congress appointed in mid-November a new team of Party leaders for the next five years. Despite an opaque process, Xi Jinping is unsurprisingly the new General Secretary of the Communist Party who will succeed Hu Jintao next March as President and also as chairman of the Central Military Commission. Li Keqiang will become the new Prime Minister. The other five members within the Politburo Standing Committee (PSC) are mostly conservative and loyal to former president Jiang Zemin. Aged at least 64 years, they will normally be replaced in 2017 at the next National Party Congress by potentially more progressive politicians. However, until then, the newly composed PSC does not bode well for future political reforms, or put it differently, might complicate their implementation.

Impact on country risk

The latest once-in-a-decade change of political leadership has unveiled younger, better educated and less formal than usual political leaders who will be tasked with adapting China to new realities. Xi Jinping is rather seen as a reformist but any decision will have to be made collectively so that continuity through consensual policies is the most likely bet. However, a few reforms will be inevitable during his presidential mandate – potentially renewed in five years’ time - as the need to change the economic model and adjust the political system to the population’s growing expectations will become increasingly acute over the years. Indeed, the country has changed, a new era of lower economic growth might have begun and the civil society has increased swiftly its capacity to mobilise against adverse decisions and social developments. Therefore, in the future, China might need more pragmatism than just the usual gradual stance of the Communist Party if it wants to preserve internal stability in front of many challenges ahead. The regime legitimacy is at stake though several powerful groups of interests (local governments, state-owned enterprises, conservative party members…) will remain the main obstacles to changes.

Analyst: Raphaël Cecchi, r.cecchi@credendogroup.com