By Sui-Lee Wee ,Reuters
March 16, 2013, 12:06 am TWN

The largely rubber-stamp National People's Congress, as expected, chose Li, 57, to replace Wen Jiabao.

Nearly 3,000 delegates gathered in Beijing's Great Hall of the People to vote on Li's appointment, putting the final stamp of approval on a generational transition of power.

Li drew only three no votes and six abstentions from the carefully selected parliament.

While President Xi Jinping is the country's top leader, Li heads China's State Council, or cabinet, and is charged with executing government policy and overseeing the economy.

German Chancellor Angela Merkel became the first foreign leader to call Li to offer congratulations, state media said. They also discussed the European debt crisis, state radio reported, without providing details.

As premier, Li is faced with one of the world's widest gaps between rich and poor, an economy over-reliant on investment spending and a persistently frothy housing market that has stoked resentment among the middle class.

“I believe that in this class (of new leaders), his intent to reform is quite strong,” said Chen Ziming, an independent political commentator in Beijing. “He has a close relationship with reform-minded economists. We've seen from his speeches after the 18th party congress that the gap between them and him isn't far.”

More than any other Chinese party leader until now, Li was immersed in the intellectual and political ferment of the decade of reform under Deng Xiaoping, which ended in the 1989 Tiananmen Square protests that were crushed by troops.

As a student at Peking University, Li befriended ardent pro-democracy advocates, some of whom later became outright challengers to party control. His friends included activists who went into exile after the June 1989 crackdown.

“He has a better understanding of how Westerners think,” a source familiar with China's foreign policy told Reuters.

Li, who has a degree in law and a doctorate in economics, will take the reins of an economy whose growth slowed in 2012 to a 13-year low, albeit at a 7.8-percent rate that is the envy of other major economies.

Lost Decade

Analysts have described the Wen years as a lost decade during which economic reforms slowed and state-backed industries tightened their grip on the economy.

Both Xi and Li will need to deliver a blueprint to stabilize the real estate market. They need to do this quickly to calm a market in which real estate prices have soared 10-fold in major cities during the last decade.

Despite his leanings toward reform, Li has been criticized by activists for helping to cover up the extent of an HIV/AIDS crisis in central Henan province while he was posted there from 1998 to 2004, and presiding over a crackdown.

“When the AIDS epidemic exploded, everything that Li Keqiang did was with the aim of covering it up,” said Hu Jia, one of China's most prominent dissidents.