Looking Forward to the 18th Party Congress: Signs of Reform?. Institute of International and European Affairs 2012.

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2 The Institute of International and European Affairs Tel: (353) Fax: (353) Web: 8 North Great Georges Street, Dublin 1, Ireland Looking Forward to the 18th Party Congress: Signs of Reform?. Institute of International and European Affairs Written by Eoin McDonnell. The Institute of International and European Affairs does not express any opinions of its own. The words and opinions expressed in this document are the sole responsibility of the author. Photo on front cover Creative Commons, Wikimedia Commons.

3 From 8 November 2012 the world s attention will be drawn to Beijing for the 18 th National Congress of the Communist Party of China (CPC); in the lead-up to the Congress, held every five years, much of the global media focus has been on the historic shift in the top leadership, with Vice-President Xi Jinping expected to succeed President Hu Jintao as Party General Secretary and head of the Politburo Standing Committee (PSC) at the Congress, and as President early next year. Similarly, Vice-Premier Li Keqiang, is expected to replace Premier Wen Jiabao on the Politburo Standing Committee, the CPC's top decision making body, before also succeeding Wen as Premier next spring. However, it should also be noted that every new member of the PSC will indicate the direction in which the CPC has decided to lead China over the coming years; conversely, those candidates who fail to appear on the PSC after the Congress will represent policy paths or options which the CPC has now abandoned, or temporarily shelved. In the lead-up to the Congress, policy decisions are being mooted in the official media in China, and clues have been identified from the parsing of speeches and official reports by Western-based analysts. The decisions made by the CPC leadership over the term of this Congress will have global effects, and may possibly bring significant change to the way China approaches the economic and political challenges it faces. While we cannot anticipate before the Congress what choices have been made at the top ranks of the CPC prior to the Congress, we can already identify the potential debates, options and challenges confronting the CPC, and therefore consider the evidence currently available for the possibility of reform arising out of the 18 th Party Congress. Possible Politburo Line-up While the ideological underpinnings of the modern CPC will guide China s future development, the Politburo Standing Committee (PSC) members are the individuals who will actually have to put CPC policies into action; as such, elevation to the PSC is an indication of an individual member s competence as an organiser and statesman. However, beyond this, the ascent of certain individuals to the PSC also offers an indication of the CPC s general attitude to reform; the elevation of members who have a track record of taking a new approach to political and economic questions at the provincial level might suggest that the CPC is willing to make significant changes over the term of this Congress. Similarly, the make-up of the next PSC will also reveal the results of the internal struggles taking place between different factions within the CPC. Although we will only know the composition of the PSC for certain when the new Committee is formally announced, there have been some claims in the media that the lineup has already been decided. The most significant claim is that the members of the PSC will be cut from nine to seven; it has been suggested that this is in part to ensure that it is easier to achieve consensus among the PSC members. The position with responsibility for security could be downgraded from the PSC to the Politburo; this could be in response to fears which arose during the Bo Xilai scandal that the then PSC member with responsibility for security, Zhou Yongkang, might use his position to back Bo. The position with responsibility for propaganada may be downgraded for similar reasons. 1

4 If such a cut does take place, of the remaining seven positions, both Duowei (a Chinese political affairs website) and sections of the international media have listed the following as the likely members of the 18 th PSC: Xi Jinping, Li Keqiang, Wang Qishan, Zhang Dejiang, Li Yuanchao, Zhang Gaoli, and Liu Yunshan 1. The inclusion of Xi Jinping and Li Keqiang has been long-heralded. Wang Qishan, at 67, is a long-time member of the Politburo, and is seen as a tough negotiator and financial pragmatist; his inclusion could be viewed as an indicator that the new PSC will prioritise financial reforms. While Zhang Dejiang, who replaced Bo Xilai as Party chief in Chongqing, is seen as being relatively conservative, Li Yuanchao has introduced meritocratic reforms in the Organisation Department, and studied public administration at Harvard. Zhang Gaoli, the Party chief in Tianjin, is seen as being in favour of market-oriented economic reforms. Finally, Liu Yunshan could, according to these reports, be elevated to the PSC, and would probably take on a new portfolio, leaving aside his current work on propaganda. If the reported inclusion of Wang Qishan, Zhang Gaoli and Li Yuanchao all prove to be true, this would suggest that organisational and economic reforms, and possibly more meritocratic promotional measures, could be introduced by the CPC. However, even at this late stage, there are no guarantees regarding the final line-up. In recent days, reports have also surfaced suggesting that Li Yuanchao may miss out, as political opponents are attempting to link him with Ling Jihua, the Hu Jintao ally who was effectively demoted following a scandal involving his son s death while driving a Ferrari with two female companions. If these reports prove true, the sidelining of Li would represent a political victory for those factions in the CPC leadership aligned with Jiang Zemin, such as the princelings and the Shanghai clique. Also viewed as a victory for Jiang s allies would be the fact that current reports suggest that Wang Yang, the Guangdong Party Secretary, has not made the cut for the PSC at this Congress. This would also add to the indications that for the 18 th Party Congress political reforms are less of a priority than economic reforms. Wang developed a reputation for taking a new approach to political questions following his introduction of small-scale elections into the village of Wukan in Guangdong province in 2012 in response to villagers protesting against corrupt cadres. On the other hand, reports also suggest that the new PSC will not include Meng Jianzhu, who has served as Minister of Public Security on the State Council, and who was seen as a protege of Zhou Yongkang, a key Jiang ally. It is therefore clear that the bargaining and competition between the various factions within the CPC is still ongoing. Far from the orderly handover many were expecting, it is reported that internal political wrangling is still a major factor in the leadership transition process. Currently, we can only surmise based on the information surfacing in the media, but as the Party Congress progresses a clearer picture should begin to emerge over who shall ascend to the PSC. Those who enter the inner-sanctum of Chinese political power will be handed tremendous influence over China s future; consequently, one of the earliest indications of the 1 3.0, 维 闻, 13 September / all.html 2

5 direction in which the CPC wishes to take China will be the records and reputations of those individuals the Party chooses to lead the nation. Potential Economic Reform Given that there seems greater impetus for economic rather than political reforms, what changes in China s economy could the CPC bring about following the 18th Party Congress? In an effort to ensure that the reform debate is as wide as possible ahead of the Party Congress, the State Council (the Chinese state cabinet) has requested policy think-tanks throughout China (interestingly, beyond the Beijing institutions that are typically consulted on such matters) to consider what reforms China must introduce in order to ensure that its economy keeps on growing and providing the necessary economic opportunities to help bring a greater share of China s population out of poverty. Indications suggest that China s leaders are particularly keen to examine ways to limit excessive government interference in the economy. In particular, issues such as the state s involvement in credit extension by banks, and the State s ownership of all land and basic resources, are both seen as limiting growth in China s private sector. Additionally, China s State-Owned Enterprises (SOEs) are seen, both in China and abroad, as having an excessively dominant role in the Chinese economy, with preferential access to government contracts and bank lending. Many argue that major reform is also needed in China s tax system, where a serious imbalance exists between revenue collection (the majority of which goes to the national exchequer) and public spending (which is mainly focused at the provincial level). All of these reforms have been mooted in both the popular press and academic journals, both in China and abroad, as steps that need to be taken to unlock domestic demand as a growth driver in China. That the State Council is so openly soliciting opinions on these issues suggests that there is top-level commitment to reform, possibly due to the pressure which has mounted in recent months as China s economy has slowed down. At the same time, given that the past few weeks have offered some evidence of China s economy picking up, there is the possibility that Chinese leaders will lose the stomach for major reforms, particularly as such reforms, by necessity, will be painful to some sections of the Chinese public. Passing over the opportunity to reform will, however, be detrimental to the Chinese economy in the long-term; even if China can maintain economic growth in the short-term through investment and exports, developing the internal consumer market, with all the subsequent opportunities that would create for domestic firms to make high-quality goods, would seem the best long-term option in ensuring China escapes the undermining influence of sluggish economic growth in Europe and the US. Downgrading Maoism/Reaction to Bo Xilai Scandal One of the most intriguing possible reforms, albeit hardest to quantify, which the CPC may be considering is the downgrading of Maoism in the CPC lexicon. In the most recent edition of the CPC s journal Qiushi ( Truth Seeking ) on 16 October 2012, an article entitled 3

6 "Sparing No Effort to Push Forward Reform and Opening Up" appeared, based on a speech by President and CPC General Secretary Hu Jintao on 23 July 2012, which underlined how the reform and opening-up policies pursued by the CPC have been, in fact, a continuation of socialism with Chinese characteristics. As has been noted in the Western media, however, Qiushi s article featured a curious omission 2. Typically, speeches by CPC officials and articles in CPC journals on China s progress share a common feature: the almost mantra-like repetition of the ideologies which have acted as the foundation of the modern CPC. Beginning, of course, with Marxism-Leninism, official commentary then typically notes Mao Zedong Thought, Deng Xiaoping Thought, the Three Represents (associated with former President Jiang Zemin) 3 and the theory of scientific development associated with current President Hu Jintao. However, the October Qiushi article followed this familiar pattern, with the exception that no reference to Mao was made. An earlier Qiushi essay, also based on President Hu s speech mentioned Mao only once, while Hu s speech in July 2012, only referenced Mao once 4. Similarly, commentators have noted that references to Mao were also missing from state news agency Xinhua s reports, from 28 September 2012, announcing the date of the 18 th Party Congress and that disgraced former Chongqing CPC Secretary Bo Xilai would be expelled from the CPC 5. Again, all the other touchstones of CPC ideology were mentioned. There has been some speculation that the removal of references to Mao in official reports may represent a downgrading of Maoism, or indeed, of Marxism-Leninism in the CPC s ideological canon. However, this theory is somewhat undermined by the references to Mao made in speeches by Vice-President, and likely next President and CPC Party Secretary, Xi Jinping over the course of June and September This view, that the removal of references to Mao from official statements and communications is only a temporary measure, and that the Party has no intention of jettisoning such an important element of its ideological basis, has been supported by a number of Western-based analysts 6. Another possibility is that the sudden disappearance of references to Mao is less a reflection of ideological change within the CPC, and more a result of the fallout from the Bo Xilai 2 奋 进, 求是, 16 October 2012, 3 President Jiang Zemin outlined the Three Represents saying that the Party must always represent (i) the development trend of China's advanced productive forces, (ii) the orientation of China's advanced culture and (iii) the fundamental interests of the overwhelming majority of the Chinese people. The Reform of Chinese Political System, Address to Europe-China Forum in Ireland on 5 September 2003, Professor Liu Ji, Executive President, China Europe International Business School 4 坚 发 义, 求是, 1 October Bo Xilai expelled from CPC, public office, Xinhua, 28 September Will Mao Zedong's philosophy live on in party constitution?, South China Morning Post, 25 October 2012, 4

7 scandal. Bo had developed for himself a personality cult in his southwestern base of Chongqing, in part by appealing to old Maoist ideals and beliefs. Such an individualistic approach to leadership went against the grain of China s modern leadership model, and fears about Bo s personal power may have been as much an impetus for his downfall as his alleged corruption. The association of modern Maoism with Bo s personal leadership style may explain the subtle shift away from the mention of Mao in the CPC s official statements as soon as Bo was expelled from the Party. Such concerns were hinted at even before Bo s fall from grace, with Premier Wen Jiabao expressing concern over the remnants of the Cultural Revolution 7. The shift away from mentioning Mao might also possibly represent continuing leadership concerns about the growing dissent emerging on the left-wing of the Party, based around traditional Maoists. At the same time, some analysts have claimed that considering the chaotic nature of internal Party politics following the Bo scandal, the CPC would be well advised to return to its ideological roots, in an effort to heal divisions 8. In such a situation, Maoist terminology, however apparently anachronistic it may appear, may represent a soothing element for those who feel Bo was hard done by, or that the Party has strayed too far from its roots. We will be in a better position to judge over the coming months, when it will become more apparent whether the removal of Mao from official communications is a temporary phenomenon, or whether it represents of a wider change in the view which the Party wishes to project of itself. Conclusion As the 18 th Party Congress approaches, all eyes will be on who will lead China for the next decade, and on China's strategy for development for the coming years. Current indications would suggest that the new party functionaries, who are expected to take over the reins of power under Xi, are advocates of a play safe policy in respect of political reform. The proverb from Confucius s Analects Haste does not bring success ( 则 达 ) is perhaps a good indication of the mindset guiding China s new leaders; hence economic and political stability, and not political experimentation, will be their objective. At the same time, it should be recognised that this new, 5 th Generation of Chinese leaders will be in office until at least the 19 th Congress in 2017 (and most likely until the 20 th Congress in 2022) it is impossible to rule out any reforms over the course of a decade in a China that is still rapidly changing, no matter how unlikely such changes may seem today. 7 The Battle for China s Top Nine Leadership Posts, Cheng Li, The Washington Quarterly Winter Why the CCP Won t Abandon Mao Zedong Thought, The Diplomat, November 1,

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