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Edelman China
Public Affairs Update March 2013
FACING THE ROAD AHEAD: TRANSITION AND CHANGE DURING THE FIRST
PRELIMINARY SESSION OF THE 12TH
NATIONAL PEOPLE’S CONGRESS
On March 14th
, CPC General Secretary Xi Jinping was elected President of China and on March 15th, CPC
Standing Committee member Li Keqiang was appointed as Premier during the first preliminary session of the
12th
National People’s Congress (NPC). These two events marked the end of a significant leadership transition
in China which had started in November with the 18th
CPC National Congress.
This transition comes at a crucial time for China as it continues to experience significant growth and
development, and responds to the pressures of delivering on economic, environmental and social priorities
under deeper scrutiny from the public.
With the whole world watching, it remains to be seen how China’s new government will respond to current
needs and deliver on crucial issues. And, for Multi-National Companies (MNCs), the challenge exists in
understanding exactly how they can continue to find opportunity and success in China’s changing world.
A CONFIDENT AND COMPETENT LEADERSHIP
In a keynote speech during the Congress closing, Xi repeatedly used the term “China Dream” to illustrate the
opportunities on China’s horizon. More importantly, he also referred to taking a uniquely Chinese approach in
achieving this goal by mentioning a “Chinese road.”
While Xi talked about “what” China can aspire to achieve, Li provided more of the detail on “how” China will
do it by outlining the government’s three key
priority tasks and providing proactive answers
to the problems of food safety and
environmental pollution.
These coordinated efforts helped the two
new leaders present a unified partnership to
their people and the rest of the world.
But, in remaining consistent with the
recommendations outlined in outgoing
Premier Wen Jiabao’s 2012 work report and
the goals outlined in NDRC’s draft Economic
and Social Development Plan, they also
communicated a larger message that China’s
new government already has a larger plan in-
hand for the country.
Xi Jinping (R) shakes hands with Li Keqiang (L) during China’s 12th
National People's Congress (NPC) held at the Great Hall of the
People in Beijing. (Image via: Xinhua/Li Tao)

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A PRAGMATIC APPROACH TO REFORM
During his first press conference, Li said the government will continue making economic, social and political
reforms, despite potential challenges and difficulties that will take the conviction of “chopping off one’s own
arms.”
To support this, Li pointed to specific measures that will be immediately implemented, including: a freeze on
government spending and hiring, stricter accountability for public funds, and reducing the amount of
administrative approvals by one-third.
These points came just after China’s legislative
body approved a cabinet restructuring plan
designed to reduce the number of ministries
under the state council from 27 to 25.
With these specific examples, Li presented the
image of a new administration that will push
through major changes in a “plain and simple”
approach already championed during the 18th
Party Congress, and reinforced through the
Party’s current focus on frugality and anti-
corruption.
MNCS: TIME TO MAKE AN EXTRA
EFFORT
MNCs entering into or hoping to expand in China must make extra efforts to participate in China’s changing
world, specifically:
UNDERSTAND THE BIGGER PICTURE: There is a reason Xi used “China Dream” in his closing speech. In the
coming years, much of what the government says or does will focus on achieving this goal by driving
economic growth, changing consumption patterns and addressing the issues that come with both. Before
offering to work with China, MNCs must first understand what the country wants to achieve and the
challenges it might face.
KNOW HOW THE GOVERNMENT OPERATES: Many international companies take great pains to learn about
the officials and ministers in charge of specific areas. However, while it’s important to understand ‘who’s
who’ in China, success can only be achieved if an MNC understands how the overall government operates.
Before getting involved, understand the government’s priorities and strategy, and how this drives its
institutions.
BE IN IT FOR THE LONG-TERM: China’s government has been very clear that it will focus on driving domestic
growth and consumption. It will also take a tougher stance on addressing social and environmental issues,
and will do all this in a uniquely “Chinese” way. The likely impact is that the government will be more
selective with what kind of investment it will welcome in China, and will set even higher standards and
expectations for MNCs. To succeed, develop a long-term strategy and align your business goals with
helping China achieve its goals.
Premier Li Keqiang waves to journalists as he and four vice-
premiers arrive for the news conference following the conclusion of
the annual national legislative session on Sunday. (Image via: China
Daily/Xu jingxing

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HOW IT WORKS: ELECTIONS & APPOINTMENTS OF THE NPC
One of the most significant agenda items of this year’s session of the National People’s Congress (NPC) was
the election of China’s President and Vice President, and the appointment of China’s Premier and his Cabinet.
While all bodies are nominated for positions, the voting process for state leaders (e.g. President) and council
members (e.g. Premier) is different.
First, the President and five other leaders are nominated by a leadership group within the NPC, called the
Presidium. Members of the NPC (called deputies) vote for or against a nominee, and can provide alternate
nominations if they want.
However, before the Presidium makes its nominations for state leaders, the CPC Central Committee first
recommends who should be nominated.
Once elected, the President nominates the Premier, and the Premier then nominates the rest of his Cabinet.
Deputies vote for or against these nominations, with a nominee receiving more than 50% approval to assume
the position.
While candidates are never voted down, the voting process has not always remained unanimous – in the past,
some nominees have received low approval votes (though high enough to pass). To avoid this, most
nominations and work reports are vetted with NPC members before the voting process starts.

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Click on the above snapshot to take a closer look
at China’s history of government reform, via
China Daily
GOVERNMENT RESTRUCTURING IN CHINA
This year marked the seventh major restructuring effort by the
Chinese government in the past three decades, with the aim of
consolidating the responsibilities and authority of certain
ministries to improve regulation and enforcement. It is also
intended to reduce the role of government in certain functions,
allowing the market and private bodies to step in more.
The current restructuring was not as broad as earlier
speculated, indicating that there are already challenges and
barriers to driving change at a faster speed.
With the completion of this leadership transition, China’s
government ministries have been cut from 27 to 25 and several
departments and agencies have been restructured or merged.
Additionally, nine new ministers have been appointed, while 16
current ministers remain.
HOW IT WORKS:

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GOVERNMENT RESTRUCTURING IN CHINA, cont’d

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THE IMPACT OF SOCIAL MEDIA
Signs from this year’s NPC indicate that China’s new leadership has started to embrace important changes
that will make them more relevant both at home and abroad.
The Government Work Report, NDRC’s Economic and Social Development Report and China’s budget
report were all circulated in Chinese and English to media before the Opening of the NPC; a “plain and
simple” style was embraced by most attendees; and social media was used by both the government and the
public to communicate about the sessions.
For example, nearly 14,000
“tweets” on Weibo were related to
Premier Li Keqiang’s press
conference, with almost half
tweeted during the week leading up
to the conference and another half
posted within 24 hours following it.
“Meet China’s New Premier” was a trending hot topic immediately
after Li addressed the press, and the topic of China’s “Two Sessions”
(the popular name for the two-week long meetings of the National
People’s Congress and the Chinese People’s Political Consultative
Conference) ranked 19th
out of 100 for the week, with more than
5,296,000 comments tweeted or re-tweeted during the week leading
up to the Congress.
And it’s not just China’s netizens who are getting involved – China’s
government has also recently taken to Weibo, with an estimated
60,000 government-related accounts on Sina Weibo currently
dedicated to ministries or officials.
China’s State Council, currently uses Weibo to publish legal updates
and announcements to more than one million followers. And, although
it doesn’t currently interact with fans, this could one day change with
Weibo’s dedicated section for government communications.
Perhaps in a sign of the times, one of Weibo’s most rapidly-growing
accounts is dedicated to tracking Xi’s public
appearances. The fan-created account, named
学习粉丝团 (“Learn from Xi Fans Club”), was
created just days into Xi Jinping’s role as CPC
General Secretary and has since racked up nearly
13 million fans.
These small but significant changes indicate that China’s government is trying to maintain its relevance with a
much more engaged Chinese population. It also shows that the country’s leaders are becoming more aware
of the role of social media in public opinion, and the crucial need to actively participate in this space.