After US election, it is China’s Party

S P SETH

By a strange coincidence, the United States and China have been going through a leadership transition at about the same time. And what a contrast! In the US where Barack Obama has been returned as President for another term of four years, the election was a high political drama played out in the public space with both rival candidates making their own pitch for popular mandate. It was a chaotic and boisterous affair with a long drawn-out pre-election battle, with neither candidate knowing for sure their political destiny until the end. 

In China, the meeting of the 18^th Party Congress to formally anoint a new leadership for the next 10 years was very carefully choreographed and controlled without popular participation and lacking any sense of political drama. It has been known for quite sometime that Xi Jinping, vice-president, will succeed Hu Jintao as the CPC’s general secretary and the country’s new president early next year, and Li Keqiang, a vice-premier, will replace Wen Jiabao as premier. And this has come to eventuate, as well as a 7-member standing committee (the country’s apex governing body), a new politburo and central committee. This is China’s top political structure for the next ten years.

China’s economy is now the world’s second largest though, in the last few years, its growth rate has slowed. The country’s frantic economic growth in the last thirty years, with many millions lifted out of poverty and a rising middle class, has created some severe structural and societal problems. Hu Jintao, the outgoing party general secretary, highlighted some of them in his work report to the Congress, with special emphasis on corruption in the higher echelons of the party.

He warned that, “If we fail to handle this issue well, it could prove fatal to the party, and even cause collapse of the party and the fall of the state.” And added, “All those who violate party discipline and state laws, whoever they are or whatever power or official positions they have, must be brought to justice without mercy.” Apart from being a general statement of intent, this seemed like a pointed reference to the case of the dismissed Chongqing party boss, Bo Xilai, who will soon be tried for corruption and other charges.

The pertinent question, though, is: why didn’t the outgoing party leadership deal with this issue during the last ten years they were in power, when Premier Wen Jiabao was singling it out as a major issue for some years now?  During all this time corruption has grown like a virus infecting the entire body politic of the country, suggesting a serious disconnect between rhetoric and action. Which would suggest that corruption is now deeply entrenched into the system at all levels, preventing any serious action to clean up the system.

Indeed, a recent investigative report in the New York Times has found that Premier Wen Jiabao’s family (without pointing a finger at the premier himself) has amassed nearly $2.7 billion worth of fortune through all kinds of direct or indirect business deals. Which, of course, has been vigorously denied, and termed as an attempt to destabilize the country. However, the Chinese authorities have blocked any access on the internet to the New York Times’ report. Similarly, it is reported that the new party general secretary, Xi Jinping’s family too have helped themselves to a billion dollar fortune.

Whether or not these reports are true or tendentious, the question of corruption in the party, as highlighted by Hu Jintao in his report, is a make or break issue not only for the party but also for the Chinese state. Xi Jinping, the CPC’s new general secretary (and the country’s new president from early next year) has also highlighted the danger from corruption for the party as well as the state. But he too hasn’t unveiled any new strategy to root out this monster.

Apparently, it is a very sensitive issue and any radical action might not suit all the stakeholders. But without an effective strategy, backed up with necessary institutional changes like greater political transparency and accountability, this is likely to aggravate social unrest in China. With economic growth slowing, even as the wealth gap widens between rich and poor and between urban and rural areas, the government cannot afford to let this issue become a trigger for spontaneous social combustion like the Arab Spring in the Middle East.

In whatever way the CCP tackles social, economic and political issues; China today is undoubtedly a powerful country. And this is due to the economic reforms, since the eighties, under Deng Xiaoping. What should be the next course of action to propel the country’s economy is a divisive issue in the party. The Bo Xilai affair was a manifestation of it, as he unfurled Mao’s red banner against economic liberalization. Wen Jiabao, the outgoing Premier, on the other hand, has been a strong proponent of further economic liberalization, as well as some political reforms. In his report to the Congress, Hu Jiantao too emphasized the need for economic and political reforms, but again without any clear direction.

However, there is one issue that broadly unites the country and that is to build up a strong military to assert China’s national power. And Hu Jintao stressed the need for China to build a “strong national defense and powerful armed forces.” Apparently keeping in view China’s maritime disputes with some of its neighbors, he didn’t mince his words when he said, “We should enhance our capacity for exploiting marine resources, resolutely safeguard China’s maritime rights and interests and build China into a maritime power.”

It is interesting that even though China’s finances are in a much better shape than the United States with foreign currency reserves of over 3 trillion dollars, it appears to be losing economic momentum, not knowing how to break the logjam between its competing political factions in the party. In an altogether different political landscape from China, and despite Barack Obama’s re-election as the country’s President, the United States is also stuck in a rot of sorts. Against this backdrop, when there are no easy solutions to internal problems, there is always a danger of hyper nationalism getting out of control, especially in the volatile Asia-Pacific region. And this is a challenge for both China and the United States.

Note: This article was first published in the Daily Times.

New challenges for China’s new leaders

By S P SETH

China is set to have a new leadership team for the next 10 years that will formally be announced at the 18^th Party Congress, starting early next month. The next general secretary of the Communist Party of China (CPC), who will also be the country’s president, has already been selected in behind-the-scene party conclaves as part of the factional deals. The Party Congress is expected to put an official stamp on it. By most accounts, the new president and the party general secretary (the latter title is more important because the party wields actual power) are Xi Jinping, presently vice-president, and Li Keqiang, a current vice-premier. The party standing committee, the governing body of 9 members, might be cut to seven in the new reshuffle. The new leadership line up will be known for certain at the 18^th Congress, slated to start on November 8.

The general secretary/president is generally also the chairman of the central military commission, combining both the executive political and military roles in his/her person, making him the most important Chinese leader. However, in the last leadership transition in 2002 when Hu Jintao became the party general secretary and the country’s president, the then president, Jiang Zemin, was keen to over-stay beyond his  agreed 10 years. It was eventually resolved with Jiang staying on for another two years as chairman of the military commission, which showed his political clout in the corridors of power. And his faction was also accorded some weighty representation in the powerful standing committee. Will Hu Jintao insist on remaining as head of the military commission, like his predecessor, for a period of time, to share power with Xi Jinping should be known soon at the 18^th Congress?

It is important to highlight such difficulties because of the lack of institutional mechanism for leadership succession from popular mandate. At some point China would need to work out a transparent succession mechanism to avoid, in future, factional power struggles between its leaders that can be quite disruptive and even dangerous, especially when, after Mao Zedong and Deng Xiaoping, China no longer has a supreme leader. Both Jiang Zemin and Hu Jintao had Deng Xiaoping’s imprimatur. Premier Wen Jiabao is on record to emphasize the need for popular participation when he said, “If we are to address the people’s grievances we must allow people to supervise and criticize the government.”

Take the recent case of Bo Xilai, the powerful boss of the Chongqing metropolis of 30 million people, who came close to threatening the stability of the system by raising the Red banner of Mao Zedong against corruption, and the widening gap in wealth between the country’s poor and rich with Party connections. In the end, he was deposed and expelled from the CPC and will soon will face trial for corruption and much more. His wife has been given a suspended life sentence for the murder of a British businessman, Neil Heywood, for a real estate deal gone sour. It is important to remember that Bo was not alone in his crusade for the poor and had attracted some important party and military functionaries around him, equally dissatisfied with the state of affairs at high level.

This is not the first time that the CPC has faced purges as part of a power struggle at the top, going back to the time when Mao was the supreme leader. His Great Cultural Revolution (1966-76) was a period of great disorder and large scale political purges in China. The 1989 students’-led democracy movement, crushed by the People’s Liberation Army (PLO) at the behest of the CPC under Deng’s direction, was another watershed moment. Zhao Jiang, the then general secretary of the CPC and an appointee of Deng Xiaoping was purged because he was sympathetic to the students’ aspirations and spent rest of his life in house arrest till he died some years ago.

Be that as it may, China has gone on to make rapid economic progress, kick started by Deng Xiaoping since 1979-80, and resumed in 1992 after a couple of years of interruption from the democracy movement of 1989. Indeed, in terms of its economic growth, China has sprinted over the last three decades at an average rate of 10 percent, until now. After the global financial crisis of 2008-09, China faced economic sluggishness with millions of jobs lost due to recession in the US and Europe. China’s economic growth had been fuelled by cheap exports to the US, Europe and other countries, making it the factory of the world. And when the global economy nose-dived, China suffered. But with a large stimulus package of about $600 billion, investing into construction work across the board (infrastructure, housing, local level projects with banks asked to lend generously to local and regional governments and so on), China was able to keep up the economic momentum.

But this also caused problems, like inflationary pressures, mounting internal debt (according to some estimates, it is close to 100 per cent of GDP), excess housing and production stocks causing bubbles in sectors of the economy. Which, in turn, led the government to curb unwarranted spending to control the situation. China’s economic growth has slowed down to about 7.5 per cent, still quite healthy but not like 10 to 12 per cent in the years before. The government is now initiating a less ambitious stimulus program to maintain economic momentum. In other words, the authorities are trying to engineer a soft landing for the economy to contain any major eruption of social unrest.

China’s economy is at a critical point, requiring “structural reforms” as Prime Minister Wen Jiabao told China’s National People’s Congress in March. And political reforms are a pre-requisite for that. According to Wen, “Without political restructuring, economic restructuring will not succeed and the achievements we have made… may be lost.”

What it means is that China’s new leadership has a hard task ahead to create new pathways. That won’t be easy because of the vested interests of the country’s ruling class in the status quo. But to avoid a spontaneous outbreak of social unrest, as has happened during the Arab Spring (with the Chinese banning any internet access to key words there), the government would need to address large scale corruption in the country, as well as the  widening gap between the rich and poor and between the urban and rural areas. The migration of millions of rural workers into urban industrial economy has created its own problems, with urban crime increasingly blamed on rural immigrants.

On the positive side, though, China’s rapid economic development has lifted millions of its citizens from poverty and made China the world’s second largest economy and, at times, the envy of the world for its economic growth. But China now needs a new path and a new national consensus for a new century. Will the new team of its leaders be able to do what Deng Xiaoping did in another era? He charted a new course of economic growth based on the slogan that “to be rich is glorious?” That might not work now because China needs a new political and economic pact based on social harmony that President Hu Jintao promised but was unable to deliver. In the next ten years and after, it will be interesting to see if China will once again surprise the world!