Challenges for China’s new leaders

By Sushil Seth  / 

Tue, Oct 30, 2012 - Page 8

China is set to have a new leadership team for the next 10 years that will formally be announced at the 18th National Congress of the Chinese Communist Party (CCP), which starts early next month. The next general secretary of the CCP, who will also be the country’s president, has already been selected in behind-the-scenes party conclaves as part of factional deals. The Party Congress is expected to put an official stamp on it.

According to many accounts, the likely candidate for president and party general secretary (the latter title is more important because the party wields actual power), is Vice President Xi Jinping (習近平), with First Vice Premier Li Keqiang (李克強), likely to be made prime minister.

The party’s standing committee, the governing body of nine members, might also be cut to seven in the new reshuffle. The new leadership lineup will be known for certain at the 18th Congress, slated to start on Nov. 8.

The party general secretary and president is generally also the chairman of the central military commission, combining the executive, political and military roles in one person, making them the most important Chinese leader.

However, in the last leadership transition in 2002, when Hu Jintao (胡錦濤), became the party general secretary and the country’s president, then-president, Jiang Zemin (江澤民) was keen to stay on beyond his agreed 10 years. The situation was eventually resolved with Jiang staying on for another two years as chairman of the military commission, which demonstrated his political clout in the corridors of power, and his faction was also accorded some weighty representation in the powerful standing committee.

Whether Hu will insist on remaining as head of the military commission for a period of time, like his predecessor, to share power with Xi, should soon become apparent.

It is important to highlight such difficulties because of the lack of institutional mechanisms for leadership successions following a popular mandate. At some point China will need to work out a transparent succession mechanism, to avoid future factional power struggles between its leaders that can be disruptive and even dangerous. This is especially true when, after Mao Zedong (毛澤東) and Deng Xiaoping (鄧小平), China no longer has a supreme leader. Both Jiang and Hu had Deng’s imprimatur.

Premier Wen Jiabao (溫家) went 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 (薄熙來): The powerful boss of the Chongqing metropolis of 30 million people, came close to threatening the stability of the system by raising the red banner of Mao against corruption, and the widening gap in wealth between the country’s poor and the rich with CCP connections.

In the end, he was deposed and expelled from the party, and will soon face trial for corruption and more besides. His wife has been handed a suspended life sentence for the murder of a British businessman, Neil Heywood, over a real-estate deal gone sour.

It is important to remember that Bo was not alone in his crusade for the poor, and he had attracted some important party and military functionaries around him, equally dissatisfied with the state of affairs at the highest level.

This is not the first time that the CCP 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 (1966-1976) was a period of great disorder and large-scale political purges in China. The 1989 student-led democracy movement, crushed by the People’s Liberation Army at the behest of the CCP under Deng’s direction, was another watershed moment. Zhao Jiang (趙紫陽), the then-general secretary of the CCP and a Deng appointee was also purged because he was sympathetic to the students’ aspirations and, for that, spent the rest of his life under house arrest.

Be that as it may, China has gone on to make rapid economic progress, started by Deng in 1979 to 1980, and resumed in 1992 after a couple of years of interruption caused by the democracy movement of 1989. Indeed, in terms of its economic growth, China has sprinted over the past three decades at an average rate of 10 percent growth.

After the global financial crisis of 2008-2009, China suffered from economic sluggishness, with millions of jobs lost due to recessions in the US and Europe. China’s economic growth had been largely fueled by cheap exports to the US, Europe and other countries, making it the “factory of the world,” and when the global economy nosedived, China suffered.

However, with a large stimulus package of about US$600 billion being invested in construction work across the board — infrastructure, housing, local-level projects, all with banks asked to lend generously to local and regional governments — China has been able to keep up its economic momentum.

However, this has caused some serious problems, such as inflationary pressures, mounting internal debt (according to some estimates, it is now close to 100 percent of GDP), excess housing and production stocks causing bubbles in sectors of the economy. In turn, this led the government to curb unwarranted spending to control the situation.

China’s economic growth has slowed to about 7.5 percent, still quite healthy, but not the 10 percent to 12 percent of previous years.

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 social unrest.

China’s economy is at a critical point, requiring “structural reforms” as Wen told China’s National People’s Congress in March, and for that, political reforms are a prerequisite.

According to Wen, “without political restructuring, economic restructuring will not succeed and the achievements we have made … may be lost.”

What this means is that China’s new leadership has a hard task ahead to create new pathways. That will not be easy because of the vested interests of the country’s ruling class in maintaining the status quo.

However, to avoid a spontaneous outbreak of social unrest, as happened during the Arab Spring, the government needs to address large-scale corruption in the country, as well as the widening gap between rich and poor, and between urban and rural areas.

The migration of millions of rural workers into the urban industrial economy has created its own problems, with urban crime increasingly blamed on rural immigrants.

On the positive side, China’s rapid economic development has lifted millions of its citizens out of poverty and made China the world’s second-largest economy and, at times, the envy of the world for its economic growth.

However, China now needs a new path and a national consensus. Will the new leadership team be able to do what Deng did in a previous 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 Hu promised, but was unable to deliver. In the next 10 years and beyond, it will be interesting to see if China will once again surprise the world.

Sushil Seth is a commentator in Australia.