Special Reports






China passes on the Mandate of Heaven, but not quite…
For only the second time since the Communist Revolution, China has successfully conducted a peaceful leadership transition.

The 18th Party Congress held in Beijing in November appointed a new generation of leaders that, barring unforseen events, will govern China for the next ten years. While little is known about the policies and attitudes of the new leadership team, the hand of former leader Jiang Zemin appears prominent in the appointments and for the moment, political conservatives appear to have the upper hand.

The new leadership will oversee the world’s second largest economy; although, by the time of the next scheduled leadership change in 2022 China will most probably have overtaken the United States and for the first time since the Industrial Revolution, the world’s economic leader will not be founded on democratic values.

Plenty of uncertainty remains. Despite the tremendous economic progress that has been made since the reform measures began in earnest in 1992, China is beset by a host of problems. Economic growth has led to a growing disparity between urban and rural incomes and while China now boasts the largest number of US-dollar millionaires in the world, many areas of the country remain locked in grinding poverty and depleted of young people, who have emigrated to the cities in search of a better life. It is important to realise that more than 150 million people in China still live on less than $1 a day.

China’s new leaders remain committed to the idea of a one-party government although there is recognition that if corruption is not reined in, the party could be in danger of collapse. While the leadership grapples with this and other pressing economic issues, political reform is likely to be confined to a broadening of the consultative process. This at least, is a sign of a return to traditional Chinese values.

We begin this essay with a look at the origins of how the Peoples Republic of China has emerged from its Maoist roots and morphed into its own particular brand of socialism, balancing the needs to govern (what is essentially) a continent, with the demands of producing a modern economically empowered society. We then look at those factors that are influencing the new generation of leaders and how they are likely to respond.

The origins of market reforms in China
After the collapse of China’s Cultural Revolution, the death of Mao Zedong and the overthrow of the ‘Gang of Four’ in 1976, the economic and political reform process in China was introduced with the ‘second revolution’ launched by Deng Xiaoping in 1978. Deng is remembered by many for his immortal phrase ‘it doesn’t matter whether a cat is black or white as long as it catches mice.’ Pragmatism was about to take hold.

Designed to lift the Chinese masses out of the abject poverty that Mao Zedong relished, for more than a decade, the reform remained vulnerable to attack by Maoist conservatives within the Communist Party. This led to the ouster of the popular Hu Yaobang as General Secretary of the Communist Party in early 1987. Hu was widely regarded as being an advocate of more freedom and democratic values.

The crisis between ideology and pragmatism came to a head in 1989 following the sudden death of Hu with the riots in Tienanmen Square which led in turn, to the ouster of Hu’s replacement as Party Secretary. Zhao Ziyang was deemed too sympathetic to the protestors, mostly students, who were calling for further political reform to go hand-in-hand with economic reform. In the aftermath of the rebellion, orthodox hardliners within the Party again gained the upper hand for a time and further progress towards a market economy was, for that time, in jeopardy.

The defining influence of Jiang Zemin
Zhao’s replacement, Jiang Zemin, served as General Secretary of the Communist Party from 1989 until retiring in 2002. He also served as President of the PRC from 1993 to 2003 and as Chair of the party’s Central Military Commission from 1989 to 2004. As Deng Xiaoping’s grip on power waned with age, so Jiang’s power grew and even today, despite being out of government for almost 10 years, he remains a significant power broker within the innermost circles of the Chinese Communist Party.

Jiang was, by profession, an electrical engineer and had little by way of economic expertise. Nevertheless, while remaining a political conservative, he supported the market reforms of Deng and it was he who cemented the economic reform process, which has informed China’s development since 1992.

Jiang is also the last of the Communist Party leaders to add his own theories to those of Mao Zedong and Deng Xiaoping, who both sought to adapt Marxism-Leninism to the Chinese experience. In February 2000, Jiang articulated his theory of the ‘Three Represents’ (Sāngè Dàibiǎo). The theory of the ‘Three Represents’ states that the Chinese Communist Party must show leadership in representing economic production, cultural development and the interests of the people. Put simply, Jiang sough to replace ideology with practicality as the way forward for the party, by identifying the Communist Party as the catalyst of reform.

Despite being controversial to many, the ‘Three Represents’ were written into the Party Constitution in 2002.

China in the new millennium
In one sense, Jiang Zemin theory has redefined yet again the role of the Chinese Communist Party. Under Maoist theory, the party was for the peasants and the working class; those within the bourgeoisie who were not recidivists were to be harnessed through United Front tactics. Under Jiang’s theory, the CCP adopted a ‘one party suits all’ approach.

And this is the approach that informed the Hu Jintao leadership from 2002 to the present and which the new leadership will inherit.

During the nineteen-nineties under Jiang, China emerged on the world-stage as a global centre for low-cost manufacturing but it was over the past 10 years under Hu, that China has begun to challenge the economic and trade supremacy of the United States. China has become a global investor and has begun to flex its military muscle. Yet, while economic liberalisation has gone full steam ahead, the political model of the one-party state has adapted to the times but without fundamental change; the bulk of the population remains politically disenfranchised. Does this matter? It is a question we shall return to later in this essay.

China’s new collective leadership, elected at the 18th party Congress held in November is due to take over the reins of government in March of next year. It faces a range of critical issues not least of which is the problem of corruption within the party.

Corruption is nothing new in China. Party leaders have long been able to amass private fortunes and there have been plenty of warnings before about the damage being done to the credibility of the party through corruption and nepotism. But the advent of social media over recent years has been a game-changer and as much as the leadership continues to censor and block unfavourable public comment; it can no longer do so entirely. These days the population, especially the middle-class, is far better informed and is now a much more significant segment of the entire population.

In the months preceding the Congress, the Chinese leadership was rocked by scandal involving Bo Xilai, a former Politburo member and Party leader in Chongqing province who had been widely tipped for a senior position on the Politburo Standing Committee in Beijing. But his Maoist rhetoric, his own self-aggrandisement, and cultivation of a personality cult in true Maoist style. proved his undoing. Bo has been kicked out of the Communist Party and is due to stand trial on corruption charges. Bao’s wife, Gu Kailai, in an extraordinary series of events has been jailed for the murder of a British businessman.

Hu Jintao came out of the Bo case looking good, but suffered a reversal of fortune when a close aide of his (and protégé) Ling Jihua, was implicated in a scandal involving the cover up of his son’s death in a motor accident. The real problem was that it was not just a run-of-the-mill motoring accident; Ling Gu, the 23-year-old offspring, crashed his Ferrari after a night of partying. He died in the crash and his two female companions were hospitalised, one of whom later died. It was not the accident itself that caused Ling Jihua’s problem, but rather the attempted cover-up that included post-accident social media posts, purportedly from the dead Ling Gu, on a Chinese social networking site later exposed as a sham, posted by someone using his alias. Not only that, the families of the two women were paid hush money to keep them from talking, and the resources of the Public Security Bureau were harnessed to falsify the names on the crash incident report. The incident became public in all its ramifications and the profligate lifestyle of leaders and their families was exposed for all to see.

This case was significant because China watchers believe it hastened the demise of Hu Jintao and altered the proposed new leadership line up. In China’s faction-ridden Communist Party, Hu’s own faction suffered a significant reversal of fortune in the lead-up to the Congress, losing out to those who have remained loyal to Jiang Zemin.

So who are the new leaders?
The selection of China’s leaders remains an opaque process to all but those within the senior echelons of the Communist Party. Power remains with the 25-person Politburo and, in particular, with the seven-person Standing Committee.

According to a recent analysis by Cheng Li, senior fellow of the Brookings Institution, that appeared in Foreign Policy (November 16. 2012), the new Politburo remains balanced overall between the two major political factions with 12 members identified as associated with the Jiang camp and 11 with the Hu camp (the loyalties of the remaining two are unclear).

However, in stark contrast, among the all-important seven-person Standing Committee, six are identified with the Jiang camp and only one (Li Keqiang) is part of the Hu faction. Some analysts warn that this imbalance could prove to be unhealthy over the longer-term and lead to power struggles developing. This remains conjecture however. We shall stick to what we know and what we know is not all that much. Here is what we do know (order of precedence as provided by Xinhua Newsagency in announcing the appointments on 15 November 2012).

The clear winner is Xi Jinping. Aged 59, a chemist by training and a ‘princeling’ (his father was a revolutionary hero). Xi has already replaced Hu as General Secretary of the Communist Party and will become national (state) president when the latter steps down in March next year. Significantly, coincident with his ascent to the top party position, he has also taken over as Chair of the Central Military Commission, the body that controls the Peoples Liberation Army, a position that Hu did not achieve until Jiang Zemin relinquished his position (reluctantly by all accounts) only in 2005.

That Hu has relinquished both party positions (it should never be forgotten that the PLA is the army of the Communist Party not of the state), in favour of Mr Xi is seen as further evidence of efforts to institutionalise the transfer of power rather than leaving loose ends that could cause the succession to unravel at a later time.

As Xi is a protégé of Jiang, it can be expected that for the present at least he will not stray too far from the ‘Three Represents’ even as he forges his own leadership style.

Second in command is Li Keqiang (57), the only Hu loyalist within the inner circle. Li becomes Xi’s deputy within the party and in March he will take over the position of premier within the government from Wen Jiabao. Li is currently a first vice premier and has a reputation as a cautious reformer. He is well educated holding both a law degree and a Ph.D. in economics. He has been a member of the Standing Committee since October 2007.

Zhang Dejiang, another party princeling, becomes Chair of the National People’s Congress and has a reputation in crisis management, especially when it is a crisis that affects the CCP’s grip on power. It was Zhang who was despatched to Chongqing to clean up the aftermath of the fall of Bo Xilai. In official order of precedence his position ranks below that of state president and CPC general secretary, but above that of premier.

Another princeling in the Politburo’s Standing Committee is former Shanghai party chief Yu Zhengsheng who becomes chair of the Chinese People’s Political Consultative Conference (CPPCC). Ostensibly the vehicle for managing the United Front strategy by providing a means for non-CCP members to have a voice in national affairs, in practice it is of course a body controlled by the Communist Party. It has sometimes been described as an ‘upper house’ to the legislature. Yu is strongly supportive of the private sector, of social reform and also the rule of law. Aged 67, it is widely rumoured that Hu Jintao wanted to have him retire ahead of the Party Congress, but it appears that Jiang ensured his services would be retained for the foreseeable future.

Liu Yunshan, a former journalist and public relations expert has been appointed to the Standing Committee in the twin roles of vice president of the PRC; and executive secretary of the party secretariat. Although he has journalistic credentials he is not regarded as a liberal. Prior to his latest appointment, Liu was China’s chief censor. It was his task to control the media and advise which stories could be covered and how they should be presented. He has also been behind the push to expand the overseas presence of China’s state-owned media. He appears destined to become the government’s mouthpiece.

One surprise was the appointment of Wang Qishin, a history graduate with a background also in banking and finance, as head of the party’s Central Commission for Discipline Inspection (CCDI). It had been expected that Wang would take on a key economic role in the new leadership but instead has been put in charge of rooting out corruption.

The final person in the power line-up is Zhang Gaoli, the party boss of Tianjin and a close friend of Jiang Zhemin. Little is known about him other than that he has helped develop a number of coastal cities into economic success stories. However, this was achieved it seems by massive investment made possible by heavy debt. Zhang takes on the role of executive vice premier vacated by Li Keqiang.

Aside from the allegiance of six of the seven to Jiang Zhemin and their assumed political conservatism, another defining characteristic of the new leadership is their age. The new line-up does not really represent generational change. Because of the rule that cadres cannot stand for office once reaching age 68, most of the Standing Committee will be eligible for only one five-year term.

Missing out on key positions are two well-known ‘liberals’ who, prior to the loss of influence of Hu Jintao, were widely tipped to get key positions on the Standing Committee. These are Li Yuanchao and Wang Yang. Both are members of the Hu Jintao faction who appear to have lost out because of the influence of Jiang Zhemin who wanted his own people in positions of control.

Li is a popular figure, who has been the voice of liberal intellectuals championing the rule of law, governmental accountability and intra-party democracy. Under Hu Jintao, Li was head of the Chinese Communist party’s Organization Department. This little-known body is nevertheless of utmost importance because it not only keeps tabs on all party members, it also influences the jobs they are assigned. It is not known whether he still retains this position.

Wang Yang, another reformer and the head of Guangdong province apparently frightened many conservative elders because of his reform-oriented policies in Guangdong and his insistence that the party should not become involved in the lives of ordinary people. What may be good for Guangdong may not necessarily be good for the whole of China – at least that appears to be the view in some quarters. While Bo was in contention for a position, Wang was seen as a counter-balance to Maoist influence. Once Bo was out of the running, Wang, it seems, was no longer called upon to play that role.

Nevertheless, both Li and Wang remain on the Politburo. For the immediate future, Li is being widely tipped to take a senior government position when the legislative positions change next March – either vice chair of the NPC or the vice presidency. Wang is likely to get a vice premiership.

The challenge ahead
The setback for the reformists may be only temporary. Only Xi Jinping (59) and Li Keqiang (57) will be eligible for a second five-year term on the Standing Committee. While dealing with corruption issues is a pressing concern, there may have been real unease among the old guard about allowing in too many reformers too soon. It seems to have been distinctly uncomfortable for many party elders. Li Yuanchao and Wang Yang will be waiting in the wings and their time may yet come. The immediate danger is that the checks and balances between the rival factions that has operated in recent years and which has kept a measure of harmony in place, has now been lost – at least in the all-important Standing Committee and many reformists may not be prepared to wait that long for further change.

It is early days yet and until March next year, the transition will remain incomplete but already Xi and his colleagues are proving to be adept at projecting a new and improved image to the people. This, at least, is a start.

Xi and his colleagues have also shown signs of reinvigorating the fight against corruption, although it is expected that the most senior party leaders will immunise themselves against possible investigation.

Xi has made a number of public appearances projecting an easy-going and affable image. Much of the pomp and ceremony that has been the hallmark of many appearances by the top leaders in the past, has been done away with. The press has given him high marks for his relaxed demeanour and willingness to engage people, including foreigners, in discussion. This same relaxed style has filtered down to others. Premier-in-waiting Li Keqiang has opened up meetings he chairs to real discussion and questioning. Party disciplinarian Wang Qishan, has apparently done the same. Party hacks may be in for a rough ride.

All of these are encouraging signs designed to defuse much of the criticism of government that has been building for several years now, and which earlier this year threatened to boil over. The new administration is acutely aware that the investment-based growth model that has served China so well over the past twenty years is no longer sustainable, and that a new model based on domestic consumption needs to take hold. This will not be easy unless the regime is willing to open up the possibility of some political relaxation. There is no sign as yet that this is even on the table for discussion.

In the short term, few people are anticipating a fundamental shift in economic policy, although the realities of China’s aging population are starting to bite. China’s one-child policy may have reined in unbridled population growth but labour scarcities are developing in many areas (particularly rural areas), and are forcing up wage rates in the cities, while at the same time hastening the need for ‘safety nets’ for China’s elderly. China has moved away from the extended family as the social unit, to that of the nuclear family, as in the West.

Aside from the corruption issue, economic management is likely to focus on reversing the rural-urban income gap, and creating domestic consumption as a prime driver of future growth. China needs to nurture its middle class if domestic consumption is to thrive.

Commitment to one-party government remains strong and for the foreseeable future, any move towards democratic ideals will only come within the present party system. Opaque as the system is, there are signs that internally at least there is some lip-service being paid to creating more candidates than positions – at least in institutions that do not matter so much. Perhaps more important is the new found willingness to recognise that social media has been a game changer. As much as the party would like to control access to what people read and say, this is no longer possible. Hence, the new mood of listening and engaging; consensus and harmony has always been of prime importance in China and it seems that this is now being adopted by party leaders at the grass roots level. This in itself will be a significant shift if it takes hold.

Regionally and globally, China has already emerged on the world stage and barring any self-destruction, this process will continue. Indeed by the time of the next leadership formations due in 2022, China may well have eclipsed the United States in terms of gross GDP and trade volume. It is already a force to be reckoned with and wants to be recognised as such. The Chinese have not forgotten the lessons of the past and how in the 19th century, the bullying western empires sought to carve up China. This memory remains deeply embedded in the Chinese psyche.

With China’s continued emergence, how will the world of 2022 view democratic vs. authoritarian values? This is a question we hinted at early in his essay and it is the issue we will end with. At its most simplistic level, it reduces to weighing up the value of individual freedom against that of the collective good. Has the democratic process, as it is understood in the western democracies, outlived its usefulness? Certainly, as the world grapples with complex and long-term issues such as the consequences of globalisation, that of climate change, or even the trivialisation of politics through social media, democratic governments appear increasingly hard-pressed to take decisions that are other than short term. Party politics as practised in the west, seems to have become hostage to expediency.

Most democratically elected governments work on a four-year cycle. (Australia is unfortunate in going to the polls every three years.) With voters interested only in short-term hip-pocket issues, taking the long-term perspective and ‘doing what is right,’ can be extremely costly as the Gillard government in Australia is finding out. International treaties and conventions, which were intended to provide a framework for long-term legislative action, are, these days, more honoured in the breach than observance, as evidenced most recently by the failure of the Kyoto Protocol. Even when survival of the species is at stake, governments feel unable to act.

The adversarial two-party system acts often acts against rationality. In today’s complex world, would consensus politics do any better? Can China and its system of (currently) semi-benign authoritarianism, produce a more workable model of government for the future? Evidently, the Chinese believe so.

Of course, stories of human rights abuses in countries such as China and Vietnam (and others) are used by western human rights activists to support their claim to the superiority of the democratic system. All other things being equal, they are correct. But the issue here is not what the present systems threw up over time, but how they are likely to evolve in the future. The evidence so far is worrisome.

Western democratic governments often appear paralysed, dysfunctional and unable to take the tough decisions needed to force real change, that is for the long-term good of the nation or humankind. China by contrast appears to be evolving into a society where hard decisions can be taken even if the short-term rights of the individual has to be subsumed into the longer-term good of society. But for those who have studied Chinese history, this is nothing new. Rather, China is reverting to a system of government that has stood it in good stead for thousands of years – the concept of the Mandate of Heaven. Rulers are allowed to be autocratic, but they must always act in favour of the long-term benefit of the society they govern. As long as they do so, they retain the Mandate of Heaven; if they do not do so, the Mandate passes to new leaders.

Two hundred years ago before the Industrial Revolution, China was the world’s largest economy. As the Asia-Pacific century moves forward, China is set to regain that position. Once it does so, it may no longer be exporting revolution but by its results, it may be seen by many as a preferred alternative system of government to that of liberal democracy.

The pendulum is moving and we in the West need to recognise that fact.

                                                                                  Mike Clancy