Xie Xuren, China
Xie keeps the China fires burning
XIE XUREN, CHINA’S minister of finance, took office in September 2007 when he replaced Jin Renqing. The 12 months that followed were extraordinary even by the high standards of newsworthiness that China has set in recent years, bringing a devastating earthquake and the spectacle of the Olympics. Behind these headline-grabbing incidents, though, another amazing China story continued: despite rising commodity prices, global financial turmoil and widespread fears over inflation and consumer spending slowdown, China’s growth continued at a rate of 10%. The year saw the country’s policymakers address the complex task of maintaining double-digit growth while managing difficult global environment and keeping inflation under control, and it is for their overall success in this field that Xie, the public face of China’s economic policymaking, wins the award.
It was a busy first year in office for the 60-year-old Xie, who was born in Ningbo city in the Zhejiang province of eastern China and served in various provincial administrative roles before joining the ministry of finance in 1990. Despite the focus of the world’s media on the earthquake and the Olympics, Xie’s central battle over the past 12 months has been to execute effectively the Communist Party’s policies for dealing with the issues of growth and inflation against a backdrop of turmoil in the world’s financial markets.
The role of the minister of finance in China is of course very different to that played by similarly titled officials in other countries, thanks to the economic policy-making Communist Party infrastructure above the ministry. Minister of commerce Chen Deming, vice-premier Wang Qishan, the People’s Bank of China and others all have an influence on economic matters yet Xie’s ministry is central and he is the public spokesman for economic results and new policy.
Xie reported fiscal revenues of Rmb4 trillion ($585 billion) for the first seven months of 2008, up more than 30% year on year and nearing 70% of the budgeted income projected at the National People’s Congress in March. In the same period, the country’s spending hit Rmb2.7 trillion, up almost as much as revenues but still within budget, so that the fiscal deficit continued the slip below 1% of GDP that started last year. Although China’s growth has slowed for four consecutive quarters, it is still an impressive 10.1%.
As the slowdown in growth began to bite in July, after these successful first seven months, China’s policymakers maintained their pro-growth bias without stoking inflation too much by implementing a series of measures to shore up commercial development and consumer spending. The government relieved small businesses of the duty of paying administrative taxes, costing it Rmb20 billion, and in August the People’s Bank of China raised loan quotas to further help these smaller enterprises. National commercial banks received a 5% increase, while local banks were able to lend 10% more.
So far the policy has succeeded in balancing the economy to the satisfaction of many China watchers. "They have addressed extraordinary challenges around growth versus inflation," says the head of investment banking, Asia, at a Wall Street investment bank. Inflation for the fourth quarter was projected to slow by about 1% to 5.4%, suggesting that China has been successful in sustaining economic growth in recent months without creating dangerous inflationary pressure. There is a similar balancing act to manage with the currency, since while Xie’s German counterpart, Peer Steinbrück, echoed the sentiments of many of his peers this month by urging China to allow the renminbi to appreciate, Chinese exporters are suffering from currency appreciation and the global slowdown. Export tax rebates have been increased in an effort to shore up the exports that drive so much of China’s growth, while the promotion of domestic business has helped the government’s plans to diversify the economy and rely more on internal demand. Figures from the National Bureau of Statistics show that urban fixed-asset investment rose 27.3% year on year in the first seven months of 2008, showing that production capacity in Chinese cities is still expanding and that internal demand is keeping pace.
Bearish China watchers view the decline of the stock market, the slowing economy, the bursting of the property bubble and the persistent undervaluation of the renminbi as troubling indicators that the great Chinese growth story might be about to suffer a big setback. The ministry of finance is considering economic stimulus packages of up to Rmb400 billion in an effort to manage this slowdown. In awarding him the title of Finance Minister of the Year, Euromoney recognizes the scale and complexity of the issues facing Xie Xuren and his office, and the impact the handling of those issues will have on the rest of the world. The past 12 months have been a difficult period for China’s policymakers in which they, like the country as a whole, have been under more global scrutiny than ever before. Nonetheless the country has grown faster than any of the world’s other top 20 economies, and for maintaining this rate of development while implementing policies to control and direct growth, Xie Xuren deserves to be recognized.