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china’s
rising
leaders Beijing’s next cadre is market-
smart, business-savvy—and may
be even open to change
By Dexter Roberts
and Chi-Chu Tschang
A
communist party
Congress might seem
like a throwback to an
older, less dynamic
China. What the pub-
lic sees of these events,
scheduled once every
five years, are video clips of 2,000-plus
bureaucrats in the Great Hall of the
People, a monumental, socialist-realist
edifice in the heart of Beijing. In a vast
auditorium swathed in a sea of red bun-
ting, they’ll listen to hours and hours
of turgid speeches and then cast near-
unanimous votes.
Yet when officials from across the
country converge on Oct. 15 for the
Party’s 17th Congress, it won’t just be a
ceremonial exercise. True, the faces at
the very top won’t change—President
illustration by chang park
Hu Jintao and Premier Wen Jiabao will
almost certainly rule for another five
years. But below them, a new genera-
tion of leaders will likely be promoted
into key positions.
Most important for foreign business
and China’s trading partners, this will
be a new leadership that largely knows
and appreciates the rules of the road
for a market-based economy. Many of
these up-and-comers have fought in the
trenches of China’s reform wars, have the
skills needed to run complex economies,
and have shed earlier generations’ mis-
trust of foreigners. They certainly won’t
turn China into a replica of the U.S. sys-
tem. But the dialogue they start with the
West may be the most substantive and
far-reaching yet.
english-speakers
in their 50s, this bunch came of age
during the chaos and violence of the Cul-
tural Revolution, and most began their
careers after Deng Xiaoping introduced
economic reforms in the late 1970s. “The
prognostication is that they will be more
progressive, pragmatic, and forward-
thinking,” says Scott Kronick, president
of Ogilvy Public Relations Worldwide in
China. Hu and Wen spent their formative
years in remote Western China where
they had little contact with outsiders. Yet
many in this generation speak English
and have traveled widely. Some have
studied at Western universities, and most
have advanced degrees in social sciences,
economics, and law.
October 1, 2007 | BusinessWeek | 33
News&Insights
great hall More
than 2000 will be at
the Oct. 15 congress
Case in point: Zhou Xiaochuan, cur-
rently head of the People’s Bank of
China. The former economics professor
and fluent English-speaker is a strong
contender for vice-premier in charge of
finance. One of China’s most sophisti-
cated economic minds, he can hold his
own with the likes of Alan Greenspan,
Ben S. Bernanke, and other central
bankers. He has already grappled with
intransigent rivals opposed to his drive
to clean up China’s notoriously shifty
equity markets: His drive to crack down
on stock manipulators earned him the
nickname “The Flayer.” He shares ma-
jor responsibility for China’s opening of
its financial sector to big Western banks
and brokerages.
Contrast Zhou’s record with the cur-
rent leadership team, and the differ-
ences are striking. Until now, China’s
Passing
The Torch
Five generations of leadership
Revolution 1949-1976
Mao consolidated power with the support
of revolutionaries from the civil war and the
Long March. This group was largely
focused on building the Party and the
revolution to the detriment of economic
growth and pragmatism.
34 | BusinessWeek | October 1, 2007
leaders have “had a definite discomfort
in dealing with the outside,” says Kent
D. Kedl, a China hand for the past
two decades and now general manager
of Technomic Asia, a Shanghai-based
market strategy consulting firm. Most
are career bureaucrats in their 60s who
studied hard sciences or engineering.
Few have graduate degrees and some
have no higher education at all. Mao
Zedong’s comrades-in-arms are long
gone, but today’s top leaders are from
the first post-revolutionary generation
and began their careers during the Cul-
tural Revolution.
deeper western ties
more comfort with the outside doesn’t
necessarily mean a greater willingness
to do what outsiders want. Commerce
Minister Bo Xilai, for instance, may
Reform 1949-1976
Deng Xiaoping shared Mao’s revolutionary
background and endured several purges,
but ultimately opened China to economic
reform via his “socialism with Chinese
characteristics.” His limited tolerance for
reform was evident in the bloody
Tiananmen Square crackdown in 1989.
Growth 1989-2002
Led by Jiang Zemin and Zhu Rongji. Both
were groomed in China’s freewheeling
financial capital, Shanghai, and had regular
contact with foreign businesspeople. Jiang
secured the place of private enterprise by
writing its role into the Constitution, and
the economy started to take off.
become vice-premier and take over as
China’s top trade official. Bo would be
at home in Washington or New York:
“He’s stylistically very un-Chinese, a
Mayor Ed Koch type,” says Sinologist
Kenneth G. Lieberthal of the Univer-
sity of Michigan. Highly educated—he
holds a master’s degree in journalism
from the Chinese Academy of Social
Sciences—he has been a frequent critic
of Washington on trade. “Bo Xilai won’t
be so accommodating,” says Cheng
Li, a senior fellow at the Brookings
Institution, a Washington think tank.
What’s more, those who have seen Bo
at work in negotiating rooms say his
rhetoric is matched by the brilliance of
his arguments.
Overall, however, this generation will
deepen China’s engagement with the
West. Li Yuancho, 56, is a contender
Stability 2002-2012
Some thought current President Hu Jintao
and Premier Wen Jiabao might introduce
political reform, but they’ve cracked down
on dissent while working to improve the lot
of China’s poorest. The economy has come
close to overheating as local officials pursue
andrew wong/getty images
GDP growth at all costs.
Vision 2012-??
Unlike engineers Hu and Wen and their
technocrats, the new leaders are trained in
law, economics, and social sciences. The
hope is they’ll embrace political reform but
prove more adept at managing China’s
increasingly complex economy.
 for Hu’s job. Trained in economics and
law, he runs coastal Jiangsu province
and has helped turn it into a model
economy, attracting record amounts
Faces To Watch
of foreign investment from the likes Some likely leaders of Beijing’s next generation
of Emerson Electric, Advanced Micro
Devices, and Sony. Even the nationalist
Bo took a backwater northeast town,
Dalian, and turned it into a software
outsourcing center for Japanese busi-
ness. That made it one of the hottest
urban economies in China.
Some predict these new leaders, once
they take over the top positions, might
even start to dabble in democracy. Many,
particularly those who attended Peking
University in the late 70s and ’80s,
participated in elections on campus.
“There’s much more appreciation of
the plurality of interests in the economy Bo Xilai Wang Yang Zhou Xiaochuan
and in society,” says Joseph Cheng, a Age: 58 Age: 52 Age: 59
professor of political science at City
University of Hong Kong. Education: BA, history, Education: BA, Education: BA, auto-
Peking Univ.; MA, management, University mation, Beijing Univ. of
three-way race journalism, Chinese of Science & Technology Chemical Tech.; PhD,
Academy of Soc. Sciences economics, Tsinghua Univ.
the new leaders will begin to assert Experience: Chongqing
eugene hoshiko/ap photo; qilai shen/bloomberg news; jason lee/newscom; lucas schifres/bloomberg news

themselves over the next five years, even Experience: Minister of party secretary, vice- Experience: Governor,
while Hu and Wen remain firmly in con- commerce, governor of director of the National People’s Bank of China,
trol until the following Party Congress Liaoning Province Development & Reform chair, China Securities
(clockwise from top left) shen zhong/chinafotopress/newscom; lucas schifres/bloomberg news.;

in 2012. Many see a three-way race to Commission Regulatory Commission

His father was a party
succeed Hu. Besides Li Yuancho, there’s elder and a confidant of Spent early career in the His father was Machinery
Li Keqiang, the 52-year-old party sec- Deng Xiaoping. Bo is a top Communist Youth League. Minister. The English-
retary of the northeastern province candidate for vice-premier Almost certain to win a speaker has won praise as
of Liaoning, the heart of China’s old in charge of foreign trade. seat on the Politburo. central bank chief.
industrial rustbelt. He has a PhD in
economics and a law degree but details
of his performance are scarce. Perhaps
most important when it comes to suc-
cession, he’s a veteran of the influential
Communist Youth League, Hu’s power
base—making him the leading candi-
date. The other apparent contender for
the top job is Wang Yang, 52, who runs
China’s largest city, Chongqing.
As the nation’s economy continues to
surge, the emerging leadership will face
a host of challenges. They’ll need to craft
a quick and firm response to this sum-
mer’s tide of unsafe and poorly made Xi Jinping Li Keqiang Li Yuanchao
goods from China’s factories. They’ll Age: 54 Age: 52 Age: 56
face growing pressure from Washing-
ton over their ballooning trade surplus. Education: BS, chemical Education: BA, law, Education: BA, math,
And to get a handle on everything from engineering, and PhD, Peking Univ.; PhD, Fudan Univ.; MA, econ.
pollution to job safety to counterfeiting law, Tsinghua Univ. economics, Peking Univ. mgmt., Peking Univ.; PhD,
law, Central Party School
to corruption, they’ll need to rein in lo- Experience: Shanghai Experience: Liaoning
cal officials who often ignore Beijing’s party secretary, Zhejiang Province party secretary, Experience: Jiangsu
edicts and focus on economic growth, province party secretary, governor of Henan Province party secretary,
no matter the cost. The next generation Fujian Province governor. province vice minister of culture
of leaders will “have to be attuned to On his first trip to China Like Hu Jintao, Li climbed Spent time at Harvard as a
what’s going on globally,” says Yang as U.S. Treasury Secretary, up through the ranks of visiting scholar in 2002.
Dali, director of the East Asia Institute Hank Paulson traveled to the Communist Youth Considered a Hu protégé
at the National University of Singapore, Hangzhou specifically to League. Believed to be as both came from the
and “willing to adapt, to learn, and also meet with Xi. Hu’s preferred successor. Communist Youth League.
take decisive actions when needed.” zz

October 1, 2007 | BusinessWeek | 35