China’s slow but steady changes

By Tung Chen-yuan 童振源  / 

Thu, Nov 29, 2012 - Page 8

Following an eight-DAY public spectacle during which power within the Chinese Communist Party (CCP) was handed over, the fourth generation of Chinese leaders are ready to step down from their positions. Vice President Xi Jinping (習近平) has formally accepted his nomination as president and taken over the posts of CCP general secretary and Central Military Commission (CMC) chairman, while Vice Premier Li Keqiang (李克強) will take over as premier in March.

Xi and Li are taking over as the fifth generation of CCP leaders, putting them in charge of the Chinese political scene for the next decade. In the next few years, the system under Xi and Li is likely to be one that prioritizes domestic issues while emphasizing stability in China’s foreign and Taiwan policies.

With the fourth generation of leaders stepping aside, the new generation are set to take control. However, Xi has only been vice president for five years and vice chairman of the CMC for two years. He does not have particularly close relations with the other six members of the CCP’s Central Standing Committee, and the third and fourth generations of Chinese leaders are all still alive and well.

Since Xi needs time to consolidate his power, so he cannot be expected to propose any major reforms during this initial period. The incoming leaders will continue to lead in a collective way and build a collective consensus as a basis for deciding major policy issues.

With regard to economic policy, China will not make any drastic changes, but it will continue to face serious challenges. China’s 12th Five-Year Plan makes it plain that the nation’s model of economic growth can no longer be one that relies on exports and investment, and must shift toward internal consumption and demand as the main drivers of growth. The plan also states that China’s economic structure has to be adjusted from its current emphasis on manufacturing and toward a vigorous expansion of the service sector.

However, investment’s share of China’s GDP reached a new high of 49.2 percent last year, while the share represented by consumption stayed at a record low of 48.2 percent. Meanwhile, the service sector’s contribution to GDP remained at 43.3 percent.

Evidently, enacting reforms will be more easily said than done.

In the next few years, the Chinese government will pursue its main strategic goals of steady growth and structural adjustment. Maintaining social stability will also be an important task.

China will need to stop blindly chasing high economic growth rates, instead seeking to transform its economy and maintain sustainable development. China has set its target economic growth rate for the duration of the 12th Five-Year Plan at 7 percent, and it is likely to remain between 7 percent and 8 percent.

Unemployment and inflation, both of which have a strong influence on social stability, will therefore be important indicators for observing the direction of Chinese economic policy.

As for China’s policy toward Taiwan, Xi is set to pick up where Chinese President Hu Jintao (胡錦濤) left off, but some policies will be slightly adjusted:

First, the CCP was happy to see President Ma Ying-jeou (馬英九) of the Chinese Nationalist Party (KMT) re-elected in January. With Ma continuing in office, China can be expected to maintain current policies toward Taiwan.

Second, it should be remembered that former Chinese president Jiang Zemin (江澤民) and his successor, Hu, did not come up with new policy frameworks for Taiwan until they had been in power for two years. In the short term, Xi can be expected to act similarly by focusing most of his energies on solving internal problems and will most likely not come up with a new policy framework for Taiwan for some time.

Third, Hu’s political report at the CCP’s 18th Party Congress indicated that the party envisages the task of peaceful unification with Taiwan as being divided into two stages.

During the present stage, it will promote the peaceful development of relations between the two sides of the Taiwan Strait and strengthen the basis for cross-strait unification, including political, economic, cultural and social aspects. Therefore, future cross-strait negotiations will probably no longer be limited to economic matters, but rather involve talks on diverse issues.

Notably, Hu’s report said that expanding cross-strait cultural exchanges can enhance a common sense of national identity. Such exchanges are therefore likely to be one of the key elements of future negotiations.

Fourth, the CCP will want to use negotiations to promote the institutionalization of cross-strait relations. It will want to discuss cross-strait political relations under the special conditions that prevail while Taiwan and China are not yet unified, and to talk about a cross-strait mechanism of mutual trust in military affairs and negotiate a cross-strait peace agreement.

The Chinese government has repeatedly called for political negotiations, but the Ma administration has turned it down every time. Following Hu’s report, Ma reiterated that now is not the right time to push for a cross-strait peace agreement. The CCP will at least put pressure on the Ma administration to strengthen the two sides’ common understanding on upholding a “one China” framework, and to bring its political pronouncements and actions more in line with that framework.

Fifth, China will expect more equality and mutual benefit in cross-strait economic exchanges instead of always offering Taiwan one-sided preferential treatment. In his political report at the CCP’s 17th Party Congress five years ago, Hu emphasized that China would “make every effort to achieve anything that serves the interests of our Taiwan compatriots.”

However, in his report at this year’s Party Congress, Hu said that China would “make every effort to do anything that will promote the common well-being of compatriots on both sides of the Taiwan Strait.”

This adjustment from “Taiwan” to “both sides” was reflected in a comment made by Chinese Minister of Commerce Chen Deming (陳德銘) during a press conference following the 18th Party Congress. Chen said that he hoped Taiwan would allow imports from China of products that it already allows from other countries, in accordance with the most favored nation principle and the principle of equality.

The sixth and last point is that China will continue to interact with Taiwan’s main opposition party, the Democratic Progressive Party (DPP). At the CCP’s 17th Party Congress, Hu said: “We are ready to conduct exchanges, dialogue, consultations and negotiations with any political party in Taiwan on any issue as long as it recognizes that both sides of the Strait belong to one and the same China,” but at the 18th Party Congress, the wording had been changed to “any political party in Taiwan as long as it does not seek Taiwanese independence and recognizes the one China principle.”

This adjustment shows that the CCP has loosened its conditions a little.

China also welcomed a visit by former Taiwanese premier Frank Hsieh (謝長廷) shortly before this year’s party congress and gave him a grand reception. China’s Taiwan Affairs Office Minister Wang Yi (王毅) met face-to-face with Hsieh, who is a member of the DPP’s Central Standing Committee.

This indicates that China will continue it policy of maintaining contacts with the DPP following the 18th Party Congress.

Tung Chen-yuan is a professor at National Chengchi University’s Graduate Institute of Development Studies.

Translated by Drew Cameron