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Li Keqiang and simplifying governance / by Chen Boyuan, April 3, 2014 Adjust font size:

The March 19 address was not the first time Premier Li underscored decentralizing power. Earlier, during this year's National People's Congress, the premier did not mention "curbing housing prices," in part because he had demanded that the Government Work Report drafting team did not "make empty promises."

Instead, Li and his administration are focusing on building the affordable housing market. As a Ph.D. graduate in economics from the prestigious Peking University, Li is adroit in keeping a balance between market efficiency and fair play on society.

In 1990, Li, who at that time was Secretary of the Chinese Communist Youth League Central Committee, wrote that "China’s agricultural production has been very unsatisfactory since 1988, and is deteriorating." He proposed "perfecting market functions, increasing input and developing mixed agricultural ownership."

Two decades on, Li is still upholding such opinions. The "land transfer" mentioned in the "No. 1 Central Document" targeting rural reforms, issued in recent years, is the latest development of the land ownership system.

During his years working as the Party chief in Henan and Liaoning provinces, Li put into practice his own principle -- talk less, do more.

In the face of the sluggish economy and an HIV/AIDS epidemic, Li resorted to industrialization, urbanization and agricultural modernization to look for a way out.

But what has made him stand out in the inter-provincial GDP race was that he had already started to pay attention to issues related to the quality of growth -- such as environmental protection. Li oversaw the shutdown of high-polluting thermal power plants, and the installation of desulfurization equipment in all remaining power plants.

Li's bold action was hailed by central authorities as the "Henan Model" to be promoted nationwide. His policies are still in place today.

The shantytown was a major challenge for Li during his term as the Party chief in Liaoning Province. According to official statistics, up to one million people were living in shantytowns when Li took office in 2004.

Within two years, the province dismantled 12.12 million square meters of slum housing, while building new houses with a gross floor area of 19.315 million square meters, effectively putting 1.2 million people from 345,000 families in new homes.

In this case, his simplification became “addition,” in that he improved social security while reducing redundancies.

After entering the State Council and serving as vice premier and premier, Li has shown his support for the corporate sector by establishing free trade zones, relaxing controls, and meeting iconic entrepreneurs.

The current wave of reform in China bears Li’s strong personal traits. The Financial Times, among other renowned international media, coined the word “Likonomics” to refer to Li's ideas on economics.

There have been various interpretations of “Likonomics,” but the common theme is “simplification” to stimulate market vitality, and removing the two-track system dominant in the old planned economy.

Premier Li is aware that he is facing slower growth in the Chinese economy. His administration is ready to accept this, in order to allow for restructuring.

Tuning down growth expectations is easy, but feeding a huge, aging population is not. The government still faces huge financial burdens in solving the old problems left in social welfare. That is why the government needs to cut administrative expenditures, which might be more popular than curbing house prices through administrative bans.

This January, the premier received four business leaders, including two from Internet companies. During the meeting, Ma Huateng, complained about the government’s excessive controls over his new taxi app, saying it was jealous to see his mobile software attracting business.

"The taxi booking app fills the vacant taxies on the streets, and reduces air pollution. But since its launch, regulators started to interfere," said Ma, founder of Tencent.

Li instantly required the officials in the same meeting to "offer an explanation."

"There is indeed a mismatch between the government and the things it needs to supervise. We tend to intervene too hastily," the premier said.

The premier is a master in keeping balance. While allowing the market to play a bigger role, he never forgets the government has to ensure fairness and justice, because this is a task the market is unable to perform on its own.


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