Leadership Transition in China: A New Beginning or the Beginning of the End?

After the presentation of the fifth generation of communist party leaders in China, my colleague Liz Economy noted that the 18^th Party Congress was a victory for the Party’s conservative clique in terms of personnel and policy. Liz was certainly not the only leading China hand who thought that the Party Congress was a heartbreaker. A former US government official recently even said to me that the late Hu Jintao era (which officially ends in March 2013) could be “the beginning of the end.” Many Chinese scholars were equally disappointed.  At a roundtable discussion held on November 16, Zi Zhongyun said that she felt “upset and hopeless” with the results of the Party Congress.  Another leading Chinese public intellectual even suggested that the Party might not be able to make it to the 20^th Congress.

Thanks to the Public Intellectuals Program (PIP) of the National Committee on United States-China Relations, last week I had the opportunity to travel with other PIP fellows to Washington to hear many other influential China watchers speak about the prospect of political change under Xi Jinping, the new party chief. While noticing the difference in personality between Xi and his predecessor Hu Jintao – Xi appears more easy-going and relaxed than Hu, who was more formal and rigid – most agreed that Xi has yet to reveal his true color.  Indeed, prior to the 18^th Party Congress Xi had sent out mixed signals. In July, Xi reportedly met in private with Hu Deping, a supporter of political liberalization and the son of the late reformist leader Hu Yaobang. But just one month earlier, during his visit to Renmin University, Xi stressed the need to read classic works of Marxism-Leninism, saying that Marx’s Capital “shines forth eternally.”

Few scholars or government officials in the United States write off the possibility of the new leadership undertaking major reform initiatives.  After all, prior to the 20^th Congress of the Communist Party of the Soviet Union no advance warning was given that Nikita Khrushchev was to give his “secret speech,” which kicked off the process of de-Stalinization. The good news is that we may not have to wait until the 20^th Party Congress of the Chinese Communist Party in 2022 to witness significant political change. According to the current “retire-at-70” rule, five of the seven members of the current Politburo Standing Committee (PBSC) will have to vacate their seats in 2017, leaving Xi Jinping and Li Keqiang as the only two members who will remain on the committee after that year. Those who had the opportunity to observe Xi closely suggested that he is eager to learn about the outside world, and that he is a quick learner. It is also worth noting that Xi’s father Xi Zhongxun was a liberal party leader who condemned the Tiananmen military crackdown in 1989 and was the only high official who protested the dismissal of Hu Yaobang in 1987. As a member of the “princelings” or the group of descendants of prominent and influential senior party officials, Xi may have sustained interest in maintaining the one-party dictatorship.  But like his father, he is a pragmatist. This is evidenced in his recent low profile visit to Shenzhen. By paralleling Deng Xiaoping’s 1992 tour that revived the stalled economic reform, Xi signaled that he would continue the process of reform and opening up. In the meantime, by making himself more approachable to bystanders and by minimizing traffic controls arranged for the trip, Xi showed his willingness to break with past protocol and shift to a new leadership style.  In view of Xi’s first moves as China’s leader, Premier-in-waiting Li Keqiang’s recent calls for a deepening of reforms, and the apparently stepped up efforts against corruption, a reform-minded triumvirate consisting of Xi, Li, and CPC watchdog chief Wang Qishan seems to be emerging in China.

However, even these so-called reformers will continue to be constrained by retired party elders and their conservative counterparts in the PBSC. As I noted in my piece posted on China-US Focus, the greatest dangers are the special interests that hijack China’s reform process. The clout of special interest groups has been reinforced by the marriage of power and wealth in China.  For example, repeated calls to reform state-owned enterprises in monopoly industries (e.g., banking, power, oil, tobacco, and telecommunication) have been stonewalled, in part because some former and current governmental leaders, who have family members involved in the business activities, do not want to see their own interests undermined by reform.

If powerful, vested interests are allowed to hijack economic reform, sooner or later the top leaders may face the tough choice between passing the buck to the next generation of leaders and implementing meaningful political reform to circumscribe the vested interests. The former will only exacerbate the mounting challenges and is a recipe for ultimate social and political breakdown. A leading China expert recently told me that if China does not reform the current economic model, it is going to collapse. Yet, as I suggested in my China & US Focus article, the latter choice is not necessarily a better one. Implementing serious political reform measures may intensify factionalism at the top (which is made more likely by the oligarchy where Xi is only the first among equals). As we have seen in the Bo Xilai scandal, the intensified factionalist politics may further undermine the power and legitimacy of the party-state. In absence of a functioning state apparatus, reform-minded leaders are unable to push reform forward. This in turn may worsen the economic situation and, given that the regime legitimacy depends on delivering robust economic growth, trigger a large-scale political crisis. As Steven Solnick illustrated in his book on the control and collapse of Soviet institutions, sensing the game might end soon, self-serving government officials and state managers may rush to “steal the state” (grabbing everything that is fungible). The state may fail as a result of this organizational equivalent of a huge bank run.