Beijing has delayed this year’s National Financial Work Conference, the South China Morning Post reported Wednesday.

Citing a vague comment from the National Development and Reform Commission, which historically has overseen the country’s economic and industrial policy, the report said the conference will now be held no earlier than late September.

The apparent delay of the conference, which takes place every five years and in the past has produced pivotal economic policy changes, lends credence to media speculation that China’s leaders are not of one mind when it comes to the economy.

The report also comes a day after Chinese authorities announced a plan to overhaul the leadership, personnel and organizational structures of the Communist Youth League.

Founded in 1920 to cultivate new generations of loyal cadres, the Communist Youth League has long been an important pipeline for future Party leaders and a powerful tool for dispensing Party patronage.

Former President Hu Jintao once served as its first secretary, and many of his most prominent allies and proteges — including Premier Li Keqiang — rose to power through its ranks.

For more than two decades, the coherence and influence of the youth league network has been such that outside observers regularly refer to it as the Youth League “faction,” or tuanpai.

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It stands out as being among a handful of national power bases, so its reorganization and streamlining — along with the downsizing of its committees on central and provincial affairs in order to focus on county and local affairs — marks an important step in President Xi Jinping’s effort to consolidate control over the Party.

Ostensibly, these two developments are unrelated. The reorganization does not bear directly on economic policy, let alone on the final date of a single conference. But viewed through a wider lens, it is hard not to see the reform and the delay as pieces in a larger, if still unsolved, puzzle.

It is widely understood that Xi is concentrating political power, sidelining key potential opponents and breaking up patronage networks he has not historically controlled.

Prominent among those opponents have been officials directly affiliated with the youth league and its intersecting networks, including Ling Jihua, Hu’s former right-hand man who was sentenced to life in prison for corruption last July.

Xi plans to secure both his position and his lasting policy influence by placing allies and proteges in key positions at next October’s 19th Party Plenum, during which a number of officials selected by Hu and former President Jiang Zemin will step down.

Removing political and institutional barriers frees Xi to implement the policies he thinks are necessary for China’s and the Party’s long-term survival.

Central among these are initiatives to reform the economy, thereby accelerating the “rebalancing” to a growth model less dependent on government spending and more reliant on innovation and private consumption.

As China’s leaders have long acknowledged, economic reform and restructuring are crucial to social and political cohesion and to China’s regional and global security ambitions.

Not surprisingly, policies related to these core initiatives will likely top the agenda of the now-delayed National Financial Work Conference. Historically, such issues have fallen under the purview of the State Council and its “super ministry,” the National Development and Reform Commission, entities both ultimately headed by Li.

But it has become increasingly clear in recent months that Xi and his allies are displeased with the lack of progress by the State Council, and the state as a whole (as opposed to the Party), with important economic reforms.

Since coming to power in 2012, Xi has sought to shift power over economic decision-making from the state back to the Party, and in particular to his core of advisers.

In doing so, he has brushed up not only against Li and his immediate allies but also against the networks of influence to which Li belongs. Key among them is the Communist Youth League.

Sidelining the youth league is thus part and parcel of Xi’s effort to seize control over economic policy from the state bureaucracy and return it to the Party and himself.

For as long as the youth league remains an influential patronage network independent of Xi, the Chinese president will struggle to eliminate its grip on key state or Party organs and, in turn, its influence over policy.

With the 19th Party Congress on the horizon, curbing alternative power networks such as the youth league — and thus securing his allies’ paths to positions of power next October — is more crucial than ever.

This does not mean that the league reorganization caused the work conference delay, but it does suggest that the timing of the two announcements was not coincidental.

 

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This article was originally published by Stratfor

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