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A man walks in the Central Business District on a rainy day, in Beijing, China, July 12, 2023.
Beijing announced that Lan Fo’an, currently provincial party secretary in Shanxi, will succeed Liu Kun at the Ministry of Finance, signaling a commitment to tackling the country’s mounting debt problem. China’s debt-to-GDP ratio has reached 280%, most of it held by local governments who borrowed heavily to fund development projects.
Lan has a reputation for being a whiz at reducing debt accumulation from his time as governor in Shanxi. He was praised by state media at the time for helping the province transform from a coal-mining to a manufacturing- and services-based economy even though Shanxi’s overall economic growth lagged behind the national average.
That’s just the kind of CV they’re looking for in Beijing these days. Lan is likely to continue his predecessor’s efforts to audit local government debt and push them to manage their own problems — but bailouts may be tempting if defaults spike.
One more thing: Don’t confuse Finance Minister Liu’s retirement with the recent ouster of former Foreign Minister Qin Gang and some military figures. Liu is above the normal retirement age for high party officials and was kept on after the National People's Congress session in March to signal policy stability. Lan will probably succeed him at the next National People’s Congress Standing Committee session before the end of the year.