Uncertain transition

Print edition : October 19, 2012

PRESIDENT HU JINTAO (LEFT) AND PREMIER WEN JIABAO at the opening ceremony of the National People's Congress in Beijing on March 5, 2007. The fifth generation of leadership will assume charge at the 18th Congress to be held in October.-REUTERS PRESIDENT HU JINTAO (LEFT) AND PREMIER WEN JIABAO at the opening ceremony of the National People's Congress in Beijing on March 5, 2007. The fifth generation of leadership will assume charge at the 18th Congress to be held in October.

As Hu Jintao and the fourth generation of the CPCs leadership prepare to step down at the 18th Party Congress, there is little trace of any celebratory spirit in Beijing. On the contrary, the mood in the capital city can best be described as a mix of caution and concern.

IN the decade since Hu Jintao took over as Communist Party of China (CPC) General Secretary in the autumn of 2002, the fourth generation of the Chinese leadership has presided over many firsts for the Peoples Republic of China. Under the Hu Jintao-Wen Jiabao administration, China grew into the worlds second-largest economy. The countrys gross domestic product (GDP) increased by an extraordinary five times. When Hu came to power, China had only just acceded into the World Trade Organisation (WTO). Under his charge, China became the worlds biggest exporter, overtaking Germany, with its share of world exports rising from around 4 per cent in 2002 to more than 10 per cent. China, today, is the richest nation in respect of foreign reserves, which have grown to more than $3 trillion. More meaningful economic indicators, such as per capita GDP, are no less impressive: in the past decade, per capita annual income increased from $800 to $4,000. The Hu decade will, perhaps, be remembered most for heralding Chinas rise as a global economic, political and military power, with Chinese influence in all three spheres rising considerably in the period.

Yet, as Hu Jintao and the fourth generation of the CPCs leadership prepare to step down at this years 18th Party Congress, there is little trace of any celebratory spirit in Beijing. On the contrary, the mood in the capital city can best be described as a mix of caution and concern. Even the rare string of blue sky days that it saw in recent weeks as it welcomed the autumn brought unease and not cheera sure sign, its residents say, of an unexpectedly prolonged slowdown in the smoke-billowing industries of nearby Hebei and Shandong. This cautionary mood was notable in an important speech delivered by Hu to ministers and provincial leaders at a workshop held in July in preparation for the Party Congress. We must not be afraid of any risks, and not be confused by any distractions, Hu warned.

While Hu did not specify what those distractions were, it is clear that there have been many for the CPC in recent weeksdistractions that have, according to some party insiders, complicated this years leadership transition. At the time of writing (September 23), the party was, unusually, yet to announce the dates of the opening of the 18th Party Congress. The meeting is expected to be held in mid-October, possibly in the week after the country returns from its week-long national holiday. The dates for the 17th Party Congress, held five years ago, were, contrastingly, announced more than two months in advance. The reluctance to finalise the dates has even triggered speculation among some Chinese political analysts about a possible delay. This, they suggest, could be a reflection of a particularly complicated bargaining process between competing interest groups, which has delayed finalising the list of members of the next Politburo Standing Committee (PBSC), the partys most important body.

Unresolved challenges

According to two party insiders, the secretive week-long discussions that were held in the seaside resort of Beidaihe, near Beijing, in August to resolve outstanding issues before the Party Congress were far from conclusive. As is the tradition, 24 members of the Politburo, 300 or so officials of the Central Committee and a small group of still influential retired leaders attended the unofficial conclave, which is held every five years. There appeared to be at least three major issues that the deliberations grappled with, according to a scholar who was told about the proceedings: finalising the size and composition of the next PBSC; dealing with the scandal surrounding the purged Politburo member Bo Xilai; and pushing forward a number of administrative, political and economic reforms.

A proposal to reduce the size of the PBSC to seven from the current nine is likely to be approved at the Party Congress, according to the scholar. The move will look to make the body more efficient and nimble; the positions of propaganda chief and head of the security apparatus are likely to be removed from the next PBSC, if the move goes through. The current administration saw an unprecedented expansion of the powers of the security chief, who supervises the partys Political and Legal Committees which control the judicial system and controls the domestic and external security apparatus. The budget for weiwen, or internal social and political stability, last year even exceeded the defence budget for the Peoples Liberation Army (PLA) for the first time. The move to reduce the powers of the security chief will look to assuage some concerns that the stability apparatus under the current PBSC member and security chief, Zhou Yongkang, had become too vast and powerful, with insufficient oversight. If the move is approved, the next security chief will be a representative of the 25-member Politburo and will have to report to the PBSC.

The trickier task of agreeing the composition of the next PBSC will also have to be decided at the Party Congress, with the Beidaihe meetings appearing unable to reach a consensus. Vice-President Xi Jinping is expected to replace Hu Jintao as party General Secretary at the Congress, and as President following next Marchs meeting of the National Peoples Congress, or Parliament. Vice-Premier Li Keqiang is likely to succeed Wen Jiabao as the Premier and head of the State Council, or Cabinet. Xi and Li are the only members of the current PBSC who will retain their positions following the transition. The remaining five spots are expected to be split between officials who rose under the leadership of previous President Jiang Zemin and those with ties to the Communist Youth League, where Hu has allies. Two officials who are likely to make the next Standing Committee are Wang Qishana Vice-Premier in charge of economic affairs, a champion of market reforms and a princeling close to Jiang and Li Yuanchao, a Hu ally and the head of the Organisation Department, which is tasked with the key responsibility of deciding personnel appointments.

The Bo Xilai distraction

The second major challenge facing the CPCand the biggest distraction it has dealt with in the months leading up to the leadership transitionis the case of the suspended Politburo member Bo Xilai. Dealing with Bo, said one official, had consumed too much of the Politburos attention and energies at a time when more pressing challenges on the economic front, on account of a continuing global slowdown, remained unaddressed. Bo was sacked as Chongqing Party Secretary in March and suspended from the Politburo in April for serious disciplinary violations. His wife, Gu Kailai, was found guilty of poisoning British businessman and Bo family associate Neil Heywood and given a suspended death sentence, with a two-year reprieve, on August 20 ( Frontline, September 21). Bos former right-hand man and police chief in Chongqing, Wang Lijun, stood trial on September 17 and 18. He did not contest charges of initially covering up the murder of Heywood, bribery and defection. Wangs flight to the U.S. Consulate in Chengdu on February 6, when he feared for his safety after falling out with Bo, brought the scandal into the public domain and embarrassed the party ahead of the transition.

In the first indication that Bo may face criminal charges, prosecutors at Wangs trial on September 18 suggested that Bo had helped cover up the murder. When Wang confronted him with evidence about the role of Gu Kailai in Heywoods death, Bo had angrily rebuked and slapped Wang, according to an official account of the trial. Prosecutors also praised Wang for providing important clues for exposing serious offences committed by others and playing a key part in the investigation of these cases, hinting that a case was being built against Bo. Bo is likely to be, at the very least, expelled from the CPC at the seventh, and last, plenary meeting of the 17th Central Committee, which will be held sometime before the Party Congress.

The CPC will have to tread carefully in pursuing a criminal case against Bo. At the Beidaihe meetings, some officials had called for a strict punishment for Bo, who has many allies among fellow princelingshis father, Bo Yibo, was an influential former leaderand on the Left, where his Chongqing model of welfare-focussed and state-driven growth won praise. Those calling for a criminal trial have cited the cases of the previous two Politburo members who were expelled as a precedentthe former Beijing Mayor Chen Xitong was given a 16-year jail term by Jiang Zemins administration, and the former Shanghai party chief and Jiang ally, Chen Liangyu, was jailed for 18 years shortly after Hu came to power. Bos case, however, is far more complicated, given his princeling status and wide connections. Joseph Fewsmith, professor of Chinese studies at Boston University, wrote in a recent essay for China Leadership Monitor that Bos case was also of a different order than the cases of Chen Xitong and Chen Liangyu. Those cases, he argued, presented challenges to the leadership, especially to the persons of Jiang Zemin and Hu Jintao, respectively. But they did not present challenges to the rules of the game.

Bo, however, has challenged the rules of the game by bringing into the public domain ideological differences within the CPC, breaking with the leadership by consensus framework that the party has followed strictly since 1989. Then, liberal leaders and conservatives clashed openly during the Tiananmen Square student demonstrations, which saw the purging of liberal leader Zhao Ziyang. While state media outlets have portrayed Bos case as a straightforward corruption issue, it is apparent that it has been viewed by the party as being far more complicated. Premier Wen Jiabao hinted at the ideological problems surrounding Bo when he met with journalists in his annual press conference in March, which took place a day before Bos removal as Chongqing Party Secretary. Replying to a question about Bo, Wen appeared to hit out at Bos Mao Zedong-inspired policies in Chongqing, which some have seen as an unwanted invocation of the Cultural Revolution (1966-76). Wen stressed that the CPC had adopted a consensus in its third plenum in 1978 on certain historical questionsinvolving the mistakes made during the Cultural Revolutionand would carry forward reforms, suggesting that Bo had violated that consensus.

Calls for unity and reforms

The concern about preserving unity in the party in the wake of the purge of Bo has been evident in recent writings and speeches by outgoing President Hu Jintao and his successor, Xi Jinping. In his speech to officials at the July workshop, Hu called on officials to unite all forces that can be united and stressed the need for the CPC to close ranks. Xi, in an August essay in Qiushi (which means seeking truth), a magazine published by the CPC which discusses political theory and is circulated among party members, pointedly hit out at officials who were pursuing personal political performance. Bos open campaigning for a seat on the PBSC and his promotion of the Chongqing model annoyed many officials in Beijing, who saw him as breaking unwritten party rules of keeping a low profile and following the consensus adopted by the central government.

A bigger concern for the CPC is that the reason for Bos popularity in Chongqing and with the Left was his successful tapping of public anger towards two issues that are seen as the most serious threats to the partys legitimacy: corruption and rising inequality. A massive corruption crackdown that netted 1,500 officials and a focus on social welfare were the two pillars of the Chongqing model. Zhang Gaoli, the Tianjin party chief, who is seen as a front-runner for a seat on the next PBSC, was recently asked if there was a Tianjin model, referring to the citys emergence as a high-technology hub. There is no Tianjin model, Zhang replied, adding that it is not appropriate to promote such a kind of model. We are just doing concrete work in accordance with the Scientific Outlook on Development, he said, referring to the ideology promoted by Hu. The message for Bos supportersand any aspiring Bo Xilais among CPC cadrewas all too clear.

In a speech delivered on the CPCs 90th anniversary in July last year, Hu outlined the major challenges facing the party and the need for reforms ahead of the transition to the fifth generation of its leadership. As the ruling party in China, the General Secretary said, the CPC is confronted with growing dangers that include a lack of drive, incompetence, alienation from the people, a lack of initiative, and corruption. He described the fight against corruption as serious and still arduous. The partys development over the past 90 years, he said, has told us that firmly punishing and effectively preventing corruption is key to the winning or losing of peoples support and the life or death of the party. The party, he said, was facing long-term, complicated and severe tests in implementing reforms.

Hu repeated his warnings in his address to the preparatory workshop in July. He reiterated the importance of tackling corruption and building flesh and blood relations between the party and the people. He also made a strong call for political and administrative reformsreforms which, many of his critics say, have not progressed fast enough under his watch. Hu said that political reforms need to integrate the position of the people as masters of the country and develop a more wide-reaching peoples democracy. He also called for paying more attention to exerting the important role of rule of law in the administration of the country and the society, safeguarding the integration, dignity and authority of rule of law and social justice, and ensuring the peoples extensive rights and freedom according to law.

Deng Yuwen, an editor of Study Times, a newspaper published by the Central Party School, which trains CPC leaders, outlined 10 grave challenges facing the party ahead of the transition, in an essay that was published in the widely circulated pro-reform Caijing magazine. Deng was critical of the Hu-Wen decade for missing the opportunity to push economic restructuring and address income disparities. The biggest and the most pressing issue for the party, he wrote, is the crisis over the legitimacy of its rule due to its failure to address the widening wealth gap and worsening corruption, to carry out effective social integration and to meet the public demands for greater democracy. Echoing recent warnings from Premier Wen Jiabao on the need to push reforms stalled by various interest groups, Deng wrote that the over-concentration of government power without checks and balances is the root cause of so many social problems.

Economic challenges

On the economic front, Deng warned, the government had not done enough to fulfil its long-stated ambition to rebalance the economy away from investment-led, government-supported growth to a demand-driven economy. In 2008, China weathered the global recession by unveiling a four-trillion-yuan ($635 billion) stimulus plan, which outlined investment in infrastructure projects. The current downturn, Deng and others have warned, has posed more difficult problems. The government has ruled out, despite growing calls, another stimulus measure after growth fell to 7.8 per cent in the second quarter of this yearthe lowest in three years. The 2008 stimulus, officials have said, worsened already severe imbalances in the economy and made the transformation more difficult as they look to strike the right balance between long-term restructuring and maintaining steady growth.

The Hu-Wen decade has, by most accounts, been good for rural China. The Hu Jintao administration has devoted more attention than the previous Jiang Zemin government to rural development, embarking on a New Socialist Countryside development programme to boost infrastructure in rural areas. Surveys carried out by Ethan Michelson, a professor at Indiana University, found declining rural unrest between 2002 and 2010 in five districts in southern Jiangsu in northern Shaanxi and in the central provinces of Henan and Hunan. One major reason was the abolition of agricultural taxes in 2006. The infrastructure investment under the New Socialist Countryside programme, increases in agricultural subsidies, free and compulsory nine-year education, and subsidies for the purchase of home appliances were cited by Michelson as other factors. The expansion of health coverage in rural areas, he noted, had also been significant in the past decade. Health insurance coverage dropped from 80 per cent to 7 per cent between 1980 and 1998, but increased to close to 90 per cent of rural residents by 2011.

The New Socialist Countryside programme has, however, also appeared to spark new land conflicts. In north-eastern Shandong and northern Hebei, where the programme was first implemented on a trial basis before being expanded to other areas, a policy to move residents into apartment buildings to consolidate land holdings has been unpopular, as this correspondent found on visits to more than a dozen villages. Local governments that are facing growing fiscal deficits on account of spending on stimulus infrastructure projects are ever more dependent on land sales for their revenues, triggering new conflicts. According to Yu Jianrong, a leading expert on rural unrest and a scholar at the Rural Development Research Institute of the Chinese Academy of Social Sciences (CASS), around 65 per cent of mass incidents today are triggered by land disputes.

RESIDENTS OF WUKAN VILLAGE protest outside the provincial party office in Guangdong province on September 21 against the role of local party officials in a land dispute. The "New Socialist Countryside" programme of the Hu Jintao administration vastly improved the rural infrastructure but sparked land conflicts.-REUTERS

Rising income gaps between urban and rural China have also reignited debates on pushing reforms of the household registration, or hukou, system. A resident in urban China today earns more than five times what a rural Chinese takes home, according to a study published in August by the CASS. The urban-rural income gap last year, the study estimated, was 68 per cent higher than in 1985. The study said the next five to 10 years would be a key period for China to turn from a village-based to a city-based country and enhance the quality of urbanisation.

Last year, Chinas urban population for the first time exceeded its rural population, with the countrys urbanisation rate reaching 51.27 per cent. The key to bridging the gap, this and other studies have said, is to expand access to social services for rural-registered residents who lose social benefits when they move to cities. Deng Yuwen warned in his essay, The delay of residence permit reform has also radicalised conflicts between the countryside and cities, exacerbated government land sales and worsened the situation of landless farmers.

It remains unclear which of these challenges will be prioritised by the fifth generation of the leadership, expected to be led by Xi Jinping. Deng Yuwen, in his essay, argued that pushing political reforms within the party was the most challenging problem. One era is coming to an end, and another is beginning, he wrote. How the successors will proceed in dealing with these problems will determine Chinas peaceful rise and the speed of its rise, and even whether its rise can continue.

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