Climbing a muddy mountain slope, Li Keqiang sighs to himself, "it's too sparse here. There's too little land in the mountains. It's going to be hard for people here to increase production."
This scene unfolded in Enshi, a mountainous, poor region inhabited by the Tujia people in Hebei Province, on December 29, 2012, during Li's official visit as a vice premier and one of the seven Politburo Standing Committee members.
Three months later, during the 12th National People's Congress (NPC), the 57- year-old was appointed premier of the State Council.
Li was born in Dingyuan County, Anhui Province, where his childhood played out amid the most tumultuous years of the Cultural Revolution. He was an "educated youth," one of the young people sent to the countryside during the period. Once the university entrance examination system had been reinstated in 1977, he tested out of a people's commune of Fengyang County in Anhui into the law department of the prestigious Peking University.
Li's course has taken him from the grassroots to the center, from the head of the agricultural province of Henan, to the industrial province of Liaoning, and eventually to the very top of Chinese leadership. His career trajectory and his policies in these provinces provide some clues as to where China is heading in the coming years.
Seeds of Prosperity
When the Communist Party's Central Organization Department decided to send Li to Henan and then to Liaoning to be party chief, on both occasions recommendation letters offered the praise: "clear thinking, and he gets a good grasp the key issues."
On July 14, 1998, Li was appointed vice secretary of the Henan Provincial Party Committee, and on February 7 of the following year he was appointed provincial governor. At 43 years old, Li became the youngest provincial governor at the time. This was his first stop from the central government in Beijing to head a local government.
At the time, China's economy was at a low in the wake of the Asian Financial Crisis. Economic growth in Henan had slowed from nearly 14 percent to 8.8 percent. In 1998, Henan's per capita GDP was a mere 4,976 yuan, placing it near the bottom of provinces. The most urgent task facing him was identifying an economic growth engine.
Henan has its advantages. In 1997, the province's grain output for the first time surpassed that of Shandong, placing it first in the nation. That said, the increased production did not become an important driver of economic growth. In Li's first few months in Henan, he made inquiries in many villages and enterprises and found that the crux of the problem lay in the fact that "Henan's products are of low quality and nearly all are identical."
(Read More: China's New Premier Pledges Reform)
Li found that profits on unprocessed grain were low and that the only way to gain an edge would be to produce more processed, value-added products.
High-quality, high-gluten and low-gluten wheat are necessary for the production of processed food products such as bread, cakes and crackers. But at the time most wheat in Henan was of medium-gluten content, suited to making noodles and steamed buns. Li organized research for promoting the planting of high-grade wheat. Soon, Henan saw the emergence of about a dozen processing and value-added wheat products.
Now the province is No. 1 in China in grain and meat processing and has the largest number of food brands of any province.
This was only one part of Li's strategy for the central province. In a speech at the Henan Provincial Economic Work Conference in December 2002, Li for the first time presented his concept of "accelerating industrialization and urbanization and promoting agricultural modernization."
At the time there was no consensus in the province on Li's thoughts. There were even heated disputes. Many experts, scholars and officials argued that since Henan was a major agricultural province, without agricultural modernization, the province would be unable to rise.
But Li had made his decision. He personally organized symposiums at which he explained that if farmers were to become rich, then there must be fewer farmers. He also promoted agricultural specialization, industrialization and intensification, and he explained that in order to achieve those goals, the only road was further urbanization.
In July 2003, the provincial party committee passed a guideline in which officials claimed that the fundamental path for Henan to completely building a well-off society would be accelerating industrialization and urbanization and promoting agricultural modernization.
Li's policy showed results. The per capita net income for rural citizens of the province in 2004 was 2,553.15 yuan, a 14.2 percent growth over the previous year. It was the first time in eight years that the figure had grown by double digits. It was also the first time in Henan that rural citizens' net incomes grew faster than urban citizens'.
In December 2004, Li was transferred to Liaoning to be party chief. At the time, the central government's strategy of "revitalizing the northeast" had been in place for only four months. The major task facing Li was how to take advantage of opportunities arising from the central government's new policies in Liaoning, a province traditionally dominated by heavy industry.
Beginning in the 1990s, Liaoning, formerly a bastion of the planned economy, was falling further into a quagmire. State-owned enterprises (SOEs) were losing money, and hundreds of thousands of workers were unemployed.
Li's plan for reforming SOEs was to develop the mixed ownership economy by introducing private owners. Within two years, he ushered in joint-stock reforms of large SOEs and finished property rights reforms for small and medium-sized SOEs.
(Read More: China Showing Symptoms of Financial Crisis)
Li proposed in a policy paper that "other than large coal companies that must be directly held by the state, equity ratio limits must be removed for local SOEs in all other areas and industries; let the markets make decisions based on the requirements of growth."
At the end of 2007, the Liaoning Provincial Revitalization Office published research indicating that 29 of the province's 40 major industrial SOEs had completed joint-stock reforms.
Over the course of Li's career, he showed he could quickly identify a development strategy that was in tune in with the national development plan.
In 1999, the central government began advocating for major development of the country's western regions. Li's strategy for Henan's development was called "drawing from the East and advancing toward the West."
This meant attracting industry, technology, capital, talent, projects, and management experience and mechanisms from the east, while participating in the campaign of development of the west, strengthening economic and technological cooperation with western provinces, and increasing the share of Henan-made products in western markets.
Henan's comprehensive economic strength increased significantly. Between 1997 and 2002, provincial GDP climbed from 407.9 billion yuan to 616.3 billion, an annual growth rate of 8.9 percent, 1.3 percent higher than the national average over the same period.
In March 2003, Li unveiled his concept of "the rise of the Central Plain" in an interview during the NPC.
Li pointed out that that the Chinese economy at the time was shifting from the east toward the west, and globalized industries were shifting from the eastern seaboard to the interior. Thus Henan, in the middle of the country, should take full advantage of this opportunity.
Li said that there were three measurements to look for in the rise of the Central Plain. First, Henan's level of economic development should reach the national average over nearly 20 years. Second, the entire economy should be fundamentally industrialized, meaning that by 2020, non-agricultural labor should comprise 60 percent or more of the labor force, and the urban population should comprise 50 percent or more of the total population. Third, Henan should lead in economic indicators compared to central and western provinces.
His idea was recognized by the central government. In March 2004, then premier Wen Jiabao proposed the important strategic concept of "promoting the rise of the central regions."