China‘s economic growth will accelerate because the country will finally get leaders who aren’t scared, a former adviser to China’s central bank said Wednesday.

“The most important reason is that there is a new group of officials being appointed … (who will emerge) around the 19th Party Congress which will be in mid to late October,” said Li Daokui, who is now Dean of the Schwarzman College at Tsinghua University in Beijing.

Speaking to CNBC on the sidelines of World Economic Forum’s annual June meeting in Dalian, Li said the Chinese economy will grow 6.9 to 7 percent by 2018 from 6.7 percent in 2017. China posted 6.7 percent GDP growth in 2016, the slowest in 26 years.

“These (new) officials have been carefully, carefully scrutinized before they are appointed so they are clean. They are not worried about becoming targets of anti-corruption investigations,” he added.

The major political event will also usher in a new era of leaders who are likely to spearhead bold reforms of state-owned enterprises, in contrast to incumbents who are “very, very tentative” and “scared” as they do not know if their past dealings are now acceptable.

Since assuming power in 2012, President Xi Jinping has embarked upon a sweeping campaign against corruption, taking down once-untouchable party, military and business leaders and their networks.

Last week, the market was rocked by news of an ongoing probe into several of China’s largest overseas asset buyers including high profile Chinese companies such as billionaire Wang Jianlin’s Wanda Group, Anbang Insurance and Fosun.

Li said the outcome of the investigation is likely to reveal few cases of misconduct as the huge investments under scrutiny were carried out in a “highly, highly intense political environment”.

“They were already very careful to begin with. These investments were not done 10 years ago. They were done in the past two years when the anti-corruption (drive), when the party disciplinary pressures were already there,” he said.

If the probe reveals widespread cases of wrongdoings, “then that is a big blow to the big decision makers, not these private enterprises,” Li added.

The news followed an earlier announcement in June from Anbang Insurance that its chairman, Wu Xiaohu, was no longer able to fulfill his duties. The brief statement cited unspecified personal reasons for the move, and it came after the China Insurance Regulatory Commission said in April that its head, Xiang Junbo, was being investigated for suspected disciplinary violations.

In May, Anbang was suspended from issuing new products for three months over concerns about the design of one of its product offerings.

Tsinghua’s Li said a new “super agency” is likely to be set up after the party congress as the Chinese financial system is now too complicated and intertwined.

“It doesn’t doesn’t make sense to have segmented regulations. They should have a single agency overseeing everybody,” he said.

Facebook Comments