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!