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Power Shift in China – Part I

Leadership transition in China is an opaque process. New appointments to the powerful standing committee of the Politburo are anticipated in October, as President Hu Jintao relinquishes his post as general secretary of the Chinese Communist Party and hands control to Vice President Xi Jinping. The firing of an ambitious Chongqing party secretary and investigation of his wife for a murder of a British businessman put a spotlight on China’s succession process. This three-part YaleGlobal series analyzes China’s internal divisions and their implications for foreign policy. Chinese leaders roughly fall into two camps, populists who support social-justice initiatives and elitists who support economic growth. In the first article, Cheng Li, director of research at the Brookings Institution’s John L. Thornton China Center, points to three trends in Chinese leadership: Leaders are not as strong as their factions; powerful special interests erode governance; and while the country is strong the ruling party remains weak. Without organized opposition, the world’s largest political party could wallow in corruption, struggling to enact reforms. – YaleGlobal

Power Shift in China – Part I

Besieged by factions, China's leaders struggle with succession, reforms and worried foreign investors
Cheng Li
YaleGlobal, 16 April 2012
Strong country, weak party: Chinese People’s Liberation Army shows its muscles (top); protesters in south China’s Wukan village demonstrate against the party

WASHINGTON: The spectacular fall of Bo Xilai, a charismatic but notoriously ambitious Politburo member, is only the latest episode in the Middle Kingdom’s long history of power politics. Still, the prevailing views of overseas China analysts have changed dramatically in response. Prior to the Bo crisis, many believed that Chinese political institutionalization was sufficiently developed to make the upcoming leadership succession as smooth and orderly as the previous one in 2002. Now, as the crisis unfolds, many regard Bo’s dismissal as just another political purge, a restoration of the normal pattern of vicious power struggle.

Both views can be highly misleading, as neither adequately links its analysis of leadership politics to broader shifts of power in present-day China. The challenge for analysts is to provide a balanced, deep-rooted assessment of the trends underlying this recent drama. Three parallel trends in shifting power deserve special attention.

The first shift can be expressed as “weak leaders, strong factions.” Over the past two decades China has gradually left behind rule by an all-powerful leader such as Mao Zedong or Deng Xiaoping and embraced a collective form of leadership. Both Jiang Zemin and Hu Jintao were no more than “first among equals” in their respective third and fourth generations of PRC leadership. Their diluted power was partly due to their lack of revolutionary credentials, but mostly a result of changing public opinion and growing institutional constraints.

CCP leadership is structured around what can be called “one party, two coalitions” balancing each other’s power.

For example, Chinese bloggers have criticized Hu, fairly or not, for “inaction.” Some prominent Chinese intellectuals even describe his two five-year terms as “a lost decade.” Premier Wen Jiabao is also often considered “weak” and “ineffective.” These criticisms may, not necessarily represent the general public, but they nevertheless undermine the authority of the Hu-Wen administration. Incoming leaders Xi Jinping and Li Keqiang, owing to their lack of achievements and increasing competition from peers, are likely to be even weaker than their predecessors and forced to rely more on collective leadership.

Collective leadership naturally makes factional politics more dynamic. The Chinese Communist Party leadership is now structured around what can be called “one party, two coalitions” in which the two balance each other’s power. The two factions can be labeled the “populist coalition,” led by Hu, and the “elitist coalition,” which emerged in the Jiang era and is currently led by Wu Bangguo, chairman of the national legislature.

The elitist coalition consists of princelings – leaders who come from high-ranking official family backgrounds – and the so-called Shanghai gang, while the populist coalition consists of former Chinese Communist Youth League officials, known as tuanpai, who comprise Hu’s power base. These two coalitions have contrasting policy priorities. The elitist coalition tends to emphasize economic efficiency and GDP growth, while the populist coalition stands for social justice and social cohesion. In general, the elitist group dominates the economic sectors, representing the coastal region’s interests, while the populist group prevails in party organizations, claiming to voice concerns of the inland region.

Factional politics, by no means new in the PRC, is no longer a winner-take-all zero-sum game. These two political camps are almost equal in power. They have divided up the seats in the top leadership organizations to reach a near-perfect balance. They also complement each other in terms of expertise. The meteoric falls of two rising stars in the Politburo in recent years – Shanghai Party Chief Chen Lianyu in 2006 and Chongqing Party Chief Bo Xilai in 2012 – are testimonials to the phenomenon of “weak leaders, strong factions.” Factional leaders with scandals can easily be dismissed, but factions are too strong to be dismantled. The leaders replacing Chen and Bo come from the same camps as their predecessors.

Never in the six-decade history of the PRC have interest groups been as powerful as they are now.

The second power shift can be described as “weak government, strong interest groups.” The PRC has tremendous financial and political resources, and yet the government faces daunting problems such as economic disparity, inflation, growing local debts, rampant corruption, environmental degradation, resource scarcity, public health insecurity, and ethnic tensions in Xinjiang and Tibet.

The State Council has become less effective in controlling provinces and even key state-owned enterprises. A barb recently circulating online, that “the premier cannot control a general manager,” sums up this problem of the central government’s weakness. Tensions between the two coalitions tend to make the decision-making process lengthier and more complicated, and could at some point even result in deadlock.

More importantly, never in the six-decade history of the PRC have interest groups been as powerful as they are now. For example, various players associated with property development have emerged as one of the most powerful special-interest groups, explaining why it took 13 years for China to pass the anti-monopoly law, why the macroeconomic control policy of the last decade was largely ineffective, and why the widely perceived property bubble was allowed to expand.

Perhaps the most controversial shift in power is the third one, “weak party, strong country.” The CCP is the world’s largest ruling party, consisting of 3.9 million grassroots branches and 80 million members. In the absence of organized opposition, the party seems unchallengeable. But a close reading of the CCP’s official discourse reveals a sense of imminent crisis of legitimacy. The directives adopted at the Fourth Plenary Session of the 17th Central Committee in 2009 explicitly acknowledged that many problems internal to the party are exacerbated by new domestic and international circumstances, “severely weakening the Party’s creativity, unity and effectiveness.” These directives described intra-party democracy as the “lifeblood of the Party.”

Outflows of capital, presumably from corrupt officials, indicate a lack of confidence among
party elites.

China’s political reforms, including intra-party democracy, have made almost no progress in the past three years. This may be attributed to two factors: First, the 2008 global financial crisis tarnished the Western brand, leading some left-wing Chinese intellectuals to claim credit for superiority of one-party rule in China. Second, the Arab Spring rattled the party leadership, who worry about similar protests at home.

That China’s spending on “maintaining social stability” in 2009 was almost identical to the country’s total national defense budget is a sign of weakness. Coupled with the Bo episode, the party’s reputation is damaged. Large-scale outflows of capital, presumably from corrupt officials, in recent years further indicate a lack of confidence among party elites. On top of that, the recent demand for constitutionalism among liberal intellectuals, as well as several military officers’ call for a state army rather than a party army, constitute new challenges to CCP rule.

Troubles within the CCP leadership do not indicate that China as a whole is weak. Among the profound differences between the Tiananmen incident in 1989 and the Bo crisis is that in the latter case, at least so far, China’s economy and society have been hardly disrupted. This reflects the maturity of Chinese society and the country’s strength.

Although these shifts in power have caused new tensions in the PRC’s governance and a sense of uncertainty, viewed from a broader perspective they should be considered encouraging developments. Factional checks and balances within the leadership, dynamic interest groups, and the widely-shared perception of China as a rising power could all become factors in a democratic transition. In the near future, the focus of China analysts should not only be on how effectively the CCP leadership uses legal procedures to deal with the Bo case, but also whether the leadership can boldly adopt more electoral mechanisms in its selection of senior leaders and search for new sources of legitimacy.


Cheng Li is director of research and senior fellow at the Brookings Institution’s John L. Thornton China Center. This article is based on his presentation at the first annual conference of the Johnson Center for the Study of American Diplomacy, held in honor of Henry Kissinger at Yale University in March 2012. Li’s most recent book is The Road to Zhongnanhai: High-Level Leadership Groups on the Eve of the 18th Party Congress (Mirror Books, 2012, in Chinese).

Rights:Copyright © 2012 Yale Center for the Study of Globalization

Comments on this Article

20 April 2012
Interview with Cheng Li
-YaleGlobal , New Haven
19 April 2012
I think you've brought up an interesting topic - how social stability is defined and managed and in what way these two very different governments go about assuring their timely delivery. With the masses crashing into the cities in China to take their piece of the pie, food prices have gone bananas (pardon the pun). Nevertheless, the price of food remains very affordable to even the lowest paid factory worker and I can't even begin to imagine how they've kept the prices *relatively* under control given the runaway inflation. Maybe it is because there are still 600 million rural farmers/workers with no opportunities in the cities.
As for the U.S., I think the food stamps program is a must these days because nothing will cause social disruption and backlash against the government like starving people. We can do without our TV, computers and cameras (can we?), but when a man's children are starving, trouble is sure to brew. More of this is surely in the works as the so-called recovery proves a complete farce. The question is, wouldn't it be better to promote a return to farming for those who'd be willing to undertake the work than to hand out food stamps? One thing is for sure: though both China and the U.S. go about different ways of managing social stability, the necessity for doing so will grow out of these tough times and I think one is more sustainable than the other.
Thanks, Bruce.
-Mike , Luoyang
19 April 2012
Dear Mike, Thank you for the very interesting comments from first hand experience. Here in the US the government provides food stamps to people with income below a certain level. They take the food stamps to the store and use them like money to get food. During the recent recession and increase in unemployment, many more Americans received and used food stamps. I guess this could be seen as a government action to maintain social stability, although if is not commonly discussed in those terms. I am interested to see what Cheng Li says about these things.
-Bruce , New Haven, CT
19 April 2012
I won't even begin to make assumptions based on your first posted comment. All I can say is that I live in a place where there is a rather large military contingency and it has grown considerably since I first arrived in 2007. Take that as you may.
As for your second question, one of the major ways in which the government has maintained social stability has come in the form of subsidies for housing. It's no secret that housing is out of control in China, even in third/fourth tier cities like this one. Simply put, housing is just unaffordable for the average person and I can't even count how many multi-generational homes there are around me as a result of this. As a way to alleviate some of this pressure, the government has worked diligently to construct new apartment buildings which are offered at a substantial discount. But, there's a catch: It is first come, first serve. Basically, there may be 500 units for sale and more than 5000 people will enter the lottery and hope their number is picked. This comes at a considerable cost to the government who could have sold that property to developers outright and pocketed a fortune. In essence, that cost has to be figured somewhere in the budget.
Though I am doubtful that the government here subsidizes food costs, and I'm certainly not aware of any programs, I do know that they are pretty forthcoming whenever farmers start to horde certain commodities (salt, cotton,oil) in order to reap a bigger profit. Just last year, garlic was a big issue and the government had to step in a virtually issue an edict to all farmers to stop warehousing the staple herb because it had caused a dramatic rise in prices. Whether or not there is compensation involved or not, I cannot say.
I wish I had more time to discuss this, but I'm afraid this isn't the place.
Mike, Luoyang, China
-Mike , Luoyang, China
17 April 2012
Another question: How does the Chinese national defense spending compare to that of the U.S. in total dollars,percent of government spending and percent of GDP? (also, how confident are we in the figures on Chinese defense spending? does the Chinese government provide them?)
-Bruce , New Haven,CT
17 April 2012
I am interested in the fact that China's expenditures on "maintaining social stability" almost equaled the national defense budget. What were the major components of those expenditures? Could some be considered social welfare programs? I have previously heard Chinese government initiatives cited as efforts of the party to maintain its power that appear similar to programs in the US that we consider progressive social programs.Is there truth to that?
-Bruce , new haven,ct