Our Finance Minister of the Year study includes plenty of old stagers who've been in their jobs for years. There are also newcomers just settling into office. But today's entry stands out: having taken office as recently as November 2016, he's already been replaced.
RANKED 5TH: XIAO JIE, CHINA
It’s hard to provide a thorough assessment of China’s former finance minister, given his short tenure and the increased concentration of political power under President Xi Jinping. As bluntly described by the State Council, “the Ministry of Finance’s remit is smaller than its counterparts in many other countries.”
Unlike his outspoken predecessor Lou Jiwei, Xiao Jie kept a low-profile and had a more measured tone addressing the public. He apparently did enough in a year or so in office to earn a promotion, becoming secretary-general of the State Council, effectively China's cabinet.
Xiao smokes the cheapest cigarettes so he can’t be bribed with more lavish varieties, underlining his frugal image. Xiao previously served as deputy secretary-general of the State Council, and before that he was tax head and deputy minister of finance.
A long-time advocate for tax reform with more than two decades working at the Ministry of Finance, Xiao was made his official debut as finance minister last March at China’s ‘two sessions’ state meetings – the most important annual bellwether for assessing government policy. According to the attendees, he reportedly made “the most vivid and understandable explanation” of the complicated personal income tax reform. In an article published in People’s Daily, the ruling party’s flagship newspaper, in December, Xiao advocated that China should finish the legislative procedures for the new taxation system by 2019 and complete the reform of law-based tax collection for all kinds of taxation by 2020. In particular, Xiao wrote that China’s residential property tax would be based on appraisal values, giving the long-delayed and much-debated property reform a momentum.
Last year also saw the continued reinforcement of value-added tax (VAT) in place of business tax, which started nationwide in May 2016. According to Ministry of Finance data, more than Rmb1 trillion ($158 billion) was shaved off corporate tax burdens through the VAT reform in 2017.During his term, the ministry has also sold $1 billion of five-year notes and the same amount of 10-year debt – China’s first sovereign dollar bonds since 2004, helping to set fresh pricing benchmarks for Chinese foreign currency bonds.
In line with Xi’s order in 2015 to eliminate poverty in China by 2020, Xiao last year allocated Rmb86.1 billion in the budget to subsidise local poverty-reduction funds – 30.3% more than in 2016. The focuses include education and healthcare infrastructure investment, agricultural subsidies, and discounted loans in the rural regions. Xiao has maintained an expansionary fiscal policy to continue economic stimulation since he took the office, but also moved to tackle the risk of growing debt, one of the most concerning issues on China’s economy. Among others, he stepped up the inspection of irregularities in local financing while facilitating replacement of existing debt with low-interest, long-term bonds. In 2017, China issued a total of Rmb4.36 trillion in local debt, according to Wind data, including Rmb2.77 trillion for existing debt replacement, which is in line with the government’s plan.
It is fair to say that Xiao, despite having less power than many of his peers in the region, did a reasonable job of implementing policies in line with national goals.
He retains the fifth place held by Lou Jiwei last year. Perhaps Liu Kun, named to replaced Xiao in March, will stick around long enough to claim a higher place in this list.
TOMORROW: A minister who can't let elections blunt his focus.