The most powerful and autocratic leader in China since Mao, Xi Jinping, may just have become President for life. Over the weekend, it was announced that the constitutional two-term limits on the President, introduced after Mao to prevent another Mao, will no longer apply. This is a major, if not totally surprising, change for the worse in China’s governance.
It comes at the start of a week of important meetings in Beijing. What, then, is happening, and what should we look out for?
Normally at this time of year, the Party holds its “two sessions” (liang hui). These are the Chinese People’s Political Consultative Conference and the National People’s Congress, which kick off on the 3rd and 5th March, respectively.
The former is a gathering of many political groups, at which diverse economic, political and social issues are discussed, but it has no policy-making function.
The latter is an annual legislative session that reviews the government’s annual Work Report, along with its economic plans.
This year, though, China watchers’ tongues are wagging for three reasons. First, the two sessions follow on from last October’s 19th Communist Party Congress, which bestowed significant status on to President Xi, and showcased a more authoritarian and confident China to both its citizens and to the world.
Xi was proclaimed as “core leader” and Xi Jinping Thought was enshrined in the Party constitution alongside that of only Mao and Deng Xiaoping. All this, of course, at a time that China, and many others, perceive as one of American weakness and withdrawal.
Second, the abandonment of the two-term limit means that Xi Jinping could and most likely will stay on after 2022. At this stage, we can only speculate for how long, but theoretically for life.
This a retrograde step in China’s governance regime, and may be interpreted just as easily as signalling a lack of confidence as an expression of power. It certainly throws the institutionalisation of orderly succession out of the window, and may, in time, lead to greater factional instability as Xi’s opponents contemplate the implications.
Lastly, a third plenum meeting of the Party’s 400-odd Central Committee members is taking place at the start of this week.
Third plenums can be significant. The most important were those of the 11th Congress in 1978, at which the “Reform and Opening Up” movement was hatched, and the 14th Congress in 1993, which heralded the “Socialist Market Economy.”
In 2013, the third plenum of the 18th Congress was held amid much fanfare as the Party launched hundreds of reform measures, but except for financial reform, most of the more important initiatives have succumbed to inertia or weak implementation.
*** This week, therefore, is significant for Xi Jinping and the Party. The implications of Xi staying in office for a long time could overshadow much else, but substantial personnel changes are expected.
The governor of the People’s Bank of China, Zhou Xiaochuan, who has served since 2002, is expected to finally step down. The gossip is that the position may go to Xi’s close adviser, Liu He, though there are other candidates including the current head of the Banking Regulatory Commission, Guo Shuqing.
Liu recently became a member of the Politburo of the Communist Party, and it is thought he may be sent to Washington DC this week as an emissary to talk trade politics with the US. He was also thought likely to be the next head of the recently formed Financial Stability and Development Committee.
All of this begs the question as to what is to become of Premier Li Keqiang, who is supposed to be the principal economic authority, but who has been sidelined by his boss for some time.
Wang Qishan, until recently head of the anti-corruption campaign, is also like to be given an important role, perhaps in external relations, especially vis a vis the US.
*** Xi Jinping’s future aside, the meaty bits of the week will be policies. Remember that at the 19th Congress, President Xi laid great emphasis on the change in the “central contradiction” facing the Party. In a nutshell, this meant that in future, China would pay more attention to a better quality of growth for its citizens, than the amount of growth itself.
The major concerns for the Party are income and regional inequalities, a stronger social safety net, environmental degradation and pollution, industrial restructuring including capacity cutbacks in old industries and a new innovation-oriented focus, and deleveraging.
Because many of these might lead to or entail lower economic growth, there is, therefore, a big focus on the government’s long-established habit of announcing a GDP growth target, which local and provincial governments aim to meet even at the cost of commercially unsound investments and misallocated resources. Indeed, this lies at the heart of China’s unhealthy accumulation of debt, that continues regardless.
The government is expected to back away from announcing growth targets, but this may not be until 2020. Even then, we don’t know how tolerant it would be of lower growth. Suppose growth dropped away to 5 per cent or less, as is quite possible from time to time. Would the authorities stand by? It is doubtful.
There are other contradictions. For example, the conflict between “letting the market play a decisive role in resource allocation,” and “developing a better and stronger role for the Party and government” is deep.
The conflict between a China that proclaims to be a defender of globalisation but behind strict outward capital controls and controversial barriers to trade and investment is anomalous.
The conflict between the government’s roles as owner, participant and regulator in the economy is irreconcilable outside a legal separation of powers, which won’t happen.
Last but not least, at some point, the tension between a rising and more educated middle class, and an increasingly authoritarian government and more remote and unresponsive governance may become more evident.
These won’t be discussed by Party members this week, at least not in public, but they are as much part of the narrative of Xi’s China as everything else that emerges. And they matter not just to China, but to all of us.
