There is little doubt Lou Jiwei, China’s finance minister until November, was more constrained than many global peers. In Chinese politics, the party is almost everything — and President Xi Jinping is everything else.
That makes it all the more impressive that Lou emerged as a savvy, reform-minded finance minister in three years in office. He was pivotal in an overhaul of the tax system, and when bedraggled investors needed reassurance, he gave it.
Lou’s outspoken persona drew headlines at July’s G20 gathering in the Chinese city of Chengdu. Unsurprisingly, Lou pitched the strengths of China at the meeting, arguing the government still had plenty of leeway on fiscal policy and promising tax cuts to small businesses he said would fuel innovation.
But he also reassured investors on the state of the global economy, playing the global statesman — a role Chinese officials will need to become comfortable with.
Lou proved willing to increase the fiscal deficit target, from 2% in 2013 to 3% last year. That might usually sound alarm bells, but it appears smart when facing a structural slowdown.
Lou was also well-regarded by foreign investors, despite a straight-talking style that saw him brand US President Donald Trump ‘an irrational type’, fire back at criticism from former US treasury secretary Jack Lew, and take aim at Moody’s for a negative ratings outlook.
But he has not been without critics.
Some economists complain policy stimulus has come at the cost of a further build-up in leverage. The IMF — while including local government financing vehicles and other off-budget activities — says government debt rose to 55.8% of GDP in 2015 from 45.8% in 2011. It thinks the figure was 60.4% last year.
But Lou will be missed. Perhaps not by political rivals he criticised in speeches, but at least by investors. He was a bold reformist in a country now remarkably important to the global economy.
We are releasing the results of our Finance Minister of the Year study day by day. Next, we get to the top four, starting with a newcomer who is emerging as a voice of reason.