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Sunday 27 September 2009
Beijing’s man for tight economic calls
Quiet and modest Liu He helps shape key policy
Two days after the collapse of Lehman Brothers Holdings a year ago, an adviser sent by Premier Wen Jiabao met with a group of Harvard University scholars to help shape China’s response.
Two days after the collapse of Lehman Brothers Holdings a year ago, an adviser sent by Premier Wen Jiabao met with a group of Harvard University scholars to help shape China’s response.
On March 30, United States Treasury Secretary Timothy Geithner and National Economic Council director Lawrence Summers separately made time for Liu He on the day the Obama administration forced General Motors Corp chief executive Rick Wagoner to step down.
Top-level access in Washington and Beijing gives Liu, a 57-year-old graduate of Harvard’s Kennedy School of Government, a pivotal role in the US-China economic relationship. His mission was to convey American sensibilities on the depth of the US financial crisis to Wen, said Anthony Saich, a professor at the Kennedy School who attended the meeting on September 17 last year in Cambridge. It was part of a fact-finding tour that included stops in New York, Washington and San Francisco.
“He’s a very sophisticated thinker, very analytical,” said Saich, who said the meeting included Harvard economists such as Jeffrey Liebman, now a White House budget official. “He’s a key person in preparing reports that are not only going to the premier but also to the general secretary of the party [President Hu Jintao].”
When Liu returned to Beijing from the trip, his report was made available to senior leaders, a person familiar with the situation said.
While it is not known what Liu reported, China soon responded to the crisis. On November 9, Beijing announced a 4 trillion yuan (HK$4.54 trillion) stimulus, which helped the economy ride out the worst of the financial turmoil.
“Liu He is one of only a few Chinese officials who can speak the language of international finance,” said Brookings Institution senior fellow Li Cheng, who met Liu in March. “He’s China’s Larry Summers.”
Unlike Summers, a frequent guest on US television talk shows, Liu avoids publicity, operating within a secretive decision-making apparatus in Beijing’s Zhongnanhai leadership compound. At least 10 people who know him say he is quiet and modest.
Liu’s title since 2003 has been deputy director of the office of the Central Leading Group on Financial and Economic Affairs. Participants include Wen, Vice-Premier Wang Qishan and People’s Bank of China governor Zhou Xiaochuan.
To generate ideas for the leading group, Liu calls meetings of economists, bankers and government officials to hash out options on everything from pensions to the value of the yuan, a Chinese economist said. He described the sessions as freewheeling and devoid of ideology.
“They will pick some hotel in a suburb of Beijing, all these people will show up, and Liu will say ‘We’re interested in exchange-rate policies, talk’,” said Victor Shih, a professor at Northwestern University in Illinois and author of the 2008 book Factions and Finance in China.
The leading group makes recommendations to the State Council, the full 25-person politburo or its elite nine-member standing committee, led by Hu, on whether to pull the trigger on government policies, the Chinese economist said.
Liu, who holds the rank of vice-minister, also gathers ideas from the Chinese Economists 50 Forum, a non-governmental group he founded in 1998 that parlays academic research into policy solutions.
Liu spent much of his career in the State Planning Commission, according to his online biography. It now writes industrial policy under a new name, the National Development and Reform Commission.
A former soldier and factory worker who was sent to Manchuria in the midst of the 1966-76 Cultural Revolution, Liu helped draft the five-year plans that underpinned China’s economy. He has been a Communist Party member for more than 30 years, the biography says.
In a chapter from a 2008 book Liu wrote assessing China’s 30 years of economic openness, he praised the “grey area” the country has found, moving towards a market economy without “blindly” mimicking Western models.
“Liu’s economic philosophy is pragmatism,” the Brookings Institution’s Li said. “He will not be obsessed with two extremes. One is market fundamentalism and the other is the previous planned economy, which completely failed.”
He has that in common with Summers’ great rival, Joseph Stiglitz, a Nobel-prize winning economist at New York’s Columbia University who served as the chairman of the Council of Economic Advisers under president Bill Clinton. Stiglitz has praised China for its crisis response.
Liu entered Beijing’s People’s University in 1978, earning a master’s degree in economics, his biography said. He studied management at Seton Hall University in South Orange, New Jersey, in 1992-93 and spent the next two years at Harvard, earning a master’s degree in public administration in 1995.
“One got the sense of an individual whose entire resume had prepared him for his difficult tasks,” said Dennis Wilder, who until January was Asia director at the White House National Security Council.
“He would be an extremely strong player in the game of bilateral poker: well grounded in the technical issues, non-polemic and with an in-depth understanding of the US.”
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Beijing’s man for tight economic calls
Quiet and modest Liu He helps shape key policy
Bloomberg in Washington
26 September 2009
Two days after the collapse of Lehman Brothers Holdings a year ago, an adviser sent by Premier Wen Jiabao met with a group of Harvard University scholars to help shape China’s response.
On March 30, United States Treasury Secretary Timothy Geithner and National Economic Council director Lawrence Summers separately made time for Liu He on the day the Obama administration forced General Motors Corp chief executive Rick Wagoner to step down.
Top-level access in Washington and Beijing gives Liu, a 57-year-old graduate of Harvard’s Kennedy School of Government, a pivotal role in the US-China economic relationship. His mission was to convey American sensibilities on the depth of the US financial crisis to Wen, said Anthony Saich, a professor at the Kennedy School who attended the meeting on September 17 last year in Cambridge. It was part of a fact-finding tour that included stops in New York, Washington and San Francisco.
“He’s a very sophisticated thinker, very analytical,” said Saich, who said the meeting included Harvard economists such as Jeffrey Liebman, now a White House budget official. “He’s a key person in preparing reports that are not only going to the premier but also to the general secretary of the party [President Hu Jintao].”
When Liu returned to Beijing from the trip, his report was made available to senior leaders, a person familiar with the situation said.
While it is not known what Liu reported, China soon responded to the crisis. On November 9, Beijing announced a 4 trillion yuan (HK$4.54 trillion) stimulus, which helped the economy ride out the worst of the financial turmoil.
“Liu He is one of only a few Chinese officials who can speak the language of international finance,” said Brookings Institution senior fellow Li Cheng, who met Liu in March. “He’s China’s Larry Summers.”
Unlike Summers, a frequent guest on US television talk shows, Liu avoids publicity, operating within a secretive decision-making apparatus in Beijing’s Zhongnanhai leadership compound. At least 10 people who know him say he is quiet and modest.
Liu’s title since 2003 has been deputy director of the office of the Central Leading Group on Financial and Economic Affairs. Participants include Wen, Vice-Premier Wang Qishan and People’s Bank of China governor Zhou Xiaochuan.
To generate ideas for the leading group, Liu calls meetings of economists, bankers and government officials to hash out options on everything from pensions to the value of the yuan, a Chinese economist said. He described the sessions as freewheeling and devoid of ideology.
“They will pick some hotel in a suburb of Beijing, all these people will show up, and Liu will say ‘We’re interested in exchange-rate policies, talk’,” said Victor Shih, a professor at Northwestern University in Illinois and author of the 2008 book Factions and Finance in China.
The leading group makes recommendations to the State Council, the full 25-person politburo or its elite nine-member standing committee, led by Hu, on whether to pull the trigger on government policies, the Chinese economist said.
Liu, who holds the rank of vice-minister, also gathers ideas from the Chinese Economists 50 Forum, a non-governmental group he founded in 1998 that parlays academic research into policy solutions.
Liu spent much of his career in the State Planning Commission, according to his online biography. It now writes industrial policy under a new name, the National Development and Reform Commission.
A former soldier and factory worker who was sent to Manchuria in the midst of the 1966-76 Cultural Revolution, Liu helped draft the five-year plans that underpinned China’s economy. He has been a Communist Party member for more than 30 years, the biography says.
In a chapter from a 2008 book Liu wrote assessing China’s 30 years of economic openness, he praised the “grey area” the country has found, moving towards a market economy without “blindly” mimicking Western models.
“Liu’s economic philosophy is pragmatism,” the Brookings Institution’s Li said. “He will not be obsessed with two extremes. One is market fundamentalism and the other is the previous planned economy, which completely failed.”
He has that in common with Summers’ great rival, Joseph Stiglitz, a Nobel-prize winning economist at New York’s Columbia University who served as the chairman of the Council of Economic Advisers under president Bill Clinton. Stiglitz has praised China for its crisis response.
Liu entered Beijing’s People’s University in 1978, earning a master’s degree in economics, his biography said. He studied management at Seton Hall University in South Orange, New Jersey, in 1992-93 and spent the next two years at Harvard, earning a master’s degree in public administration in 1995.
“One got the sense of an individual whose entire resume had prepared him for his difficult tasks,” said Dennis Wilder, who until January was Asia director at the White House National Security Council.
“He would be an extremely strong player in the game of bilateral poker: well grounded in the technical issues, non-polemic and with an in-depth understanding of the US.”
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