Brookings: Experts - Cheng Li

High Expectations for China’s National People’s Congress

Cheng Li — Fri, 01 Mar 2013 00:00:00 -0500

Editor's Note: In an interview with The Wall Street Journal’s Tom Orlik, Cheng Li provides his analysis on what to expect at the upcoming National People’s Congress, where China’s new leaders will be officially installed. Read an excerpt below.

Tom Orlik: Some people’s expectations for the NPC seem to be quite low, why is that?

Cheng Li: Many observers are cynical about any substantial policy changes. That’s due to resistance from powerful interest groups, lack of consensus in the leadership, and because Xi Jinping and Li Keqiang need time to consolidate their power and place their people in the right places.

In addition, some of China’s leaders may not want to generate high expectations prior to the NPC meetings. That helps reduce political pressure and could pleasantly surprise the public and business communities if there are major policy initiatives.

There’s also a historical precedent for having big policy decisions come at the third plenary meeting of the Central Committee of the Chinese Communist Party in October following the NPC meeting rather than at the NPC meeting itself.

Orlik: You have higher expectations?

Li: I believe that we will see the announcement of some important policy initiatives at the NPC, for several reasons:

First, there is a sense of urgency on the part of Mr. Xi to lift public confidence by initiating major policy changes, especially to please the middle class and to do so now rather than waiting another seven months.

Second, Mr. Xi is now in his “honeymoon period,” and he should cash in his political capital to carry out new policies promptly.

Third, in contrast to the previous 10 years when there was often policy deadlock resulting from the factional infighting of the top leadership, Mr. Xi now has a six-to-one concentration of power in the Politburo Standing Committee — a great advantage that should allow him to do substantive things .

And fourth, Li Keqiang is under tremendous pressure to demonstrate his leadership ability. Evidence seems to suggest Messrs. Xi and Li understand very well their need to support each other. Their different policy preferences can also complement each other, resonating well in different sectors and with different classes throughout the country.

Still, some eagerly awaited policy changes – like land and hukou reform – are not in the interest of the middle class, and so we may only see lip service paid to some of these policy areas. But from the perspective of the Chinese leadership, the interests of vast numbers of farmers, migrant workers and urban poor should also be addressed.

Read the rest of the interview at The Wall Street Journal »

Authors

Cheng Li

Publication: Wall Street Journal's China Real Time Report

Image Source: © China Daily China Daily Information Corp - CDIC / Reuters

China's New Leaders: Rule of the Princelings

Cheng Li — Sun, 10 Feb 2013 00:00:00 -0500

Editor’s note: This article first appeared in The Cairo Review of Global Affairs.

The much-anticipated 18th Party Congress of the Communist Party of China (CPC) in November unfolded according to that classic rhythm in the study of Chinese elite politics: predictability giving way to ambiguity, and optimism alternating with cynicism.

Prior to the announcement of the composition of the new guard, led by new party General Secretary Xi Jinping, many analysts both in China and abroad had believed that the new leadership would continue to maintain the roughly equal balance of power that existed between the Jiang Zemin camp and the Hu Jintao camp. Yet in the end, the results were a huge surprise: the Jiang camp won a landslide victory by obtaining six out of the seven seats on the Politburo Standing Committee (PSC) while only one leader in the Hu camp—Li Keqiang, now designated to become premier in March—was able to keep a seat on this supreme decision-making body.

In the wake of the recent Bo Xilai scandal and the resulting crisis of CPC rule, many had anticipated that party leaders would adopt certain election mechanisms—what the Chinese authorities call “intra-party democracy”—to restore the party’s much-damaged legitimacy and to generate a sense that the new top leaders do indeed have an election-based new mandate to rule. For example, some analysts had anticipated that the CPC Central Committee might use competitive (though limited) multiple-candidate elections to select members of its leadership bodies, such as the twenty-five-member politburo or even the PSC. Such high-level elections, however, did not take place. The selection of elites at this congress continued to be done the old fashioned way—through the “black box” of manipulation, deal-cutting, and trade-offs that occur behind the scenes among a handful of politicians (e.g., outgoing PSC members and retired heavyweight figures—most noticeably the 86-year old Jiang).

What is even more troubling is the fact that four out of the seven PSC members are princelings—leaders who come from families of either veteran revolutionaries or high-ranking officials. It has been widely noted that large numbers of prominent party leaders and families have used their political power to convert state assets into their own private wealth. The unprecedentedly strong presence of princelings in the new PSC is likely to reinforce public resentment of how power and wealth continue to converge in China.

Chinese politics thus seem to be entering a new era characterized by the concentration of princeling power at the top. This gives rise to important questions regarding the nature and implications of the new leadership. What caused the dramatic defeat of the Hu camp in this political succession? Does the six-to-one split of the PSC mean a shift from factional power-sharing to a new “winner takes all” mode of Chinese elite politics? Will the factional imbalance at the top seriously undermine leadership unity and elite cohesion, thus potentially threatening the sociopolitical stability of the country at large? What are the main characteristics of this new princeling elite? What should we expect in terms of economic policies, political reforms, and foreign relations under the Xi Jinping administration? And can the identities of newly promoted leaders help us understand where China is headed?

Because of the key role China plays in the global economy and in regional security, the international community needs to grasp these new tensions and dynamics in the Chinese leadership now emerging at a time when the Middle Kingdom is facing many daunting challenges. How the princelings govern China, especially how state-society relations unfold, will undoubtedly have profound ramifications far beyond China’s borders.

One Party, Two Coalitions

Though China is a one-party state in which the CPC monopolizes power, the party leadership is not a monolithic group. CPC leaders do not all share the same ideology, political association, socioeconomic background, or policy preferences. Two main political factions or coalitions within the CPC leadership have been competing for power, influence, and control over policy initiatives since the late 1990s.

This bifurcation has created within China’s one-party polity something approximating a mechanism of checks and balances in the decision-making process. This mechanism is, of course, not the kind of institutionalized system of checks and balances that operates between the executive, legislative, and judicial branches in a democratic system. But this new structure—sometimes referred to in China as “one party, two coalitions”—does represent a major departure from the “all-powerful strongman” model that was characteristic of politics in the Mao Zedong and Deng Xiaoping eras.

One of the two intra-party groups in China is the “elitist coalition,” which emerged in the Jiang Zemin era and used to be headed by Jiang and is currently led by Xi Jinping. The other is the “populist coalition,” which was led by President Hu Jintao prior to the 18th Party Congress and is now headed by his protégé Li Keqiang.

These two coalitions represent different socioeconomic and geographical constituencies. Most of the top leaders in the elitist coalition, for instance, are princelings. Many of these princelings began their careers in the economically well-developed coastal cities. The elitist coalition usually represents the interests of China’s entrepreneurs and emerging middle class. Most leading figures in the populist coalition, by contrast, come from less-privileged families. They also tend to have accumulated much of their leadership experience in the less-developed inland provinces. Many advanced in politics by way of the Chinese Communist Youth League and have therefore garnered the label tuanpai, literally meaning “league faction.” These populists often voice the concerns of vulnerable social groups, such as farmers, migrant workers, and the urban poor.

Some clarifications about China’s intra-party factionalism are in order. Factional politics and political coalitions in present-day China, although not really opaque to the public, still lack transparency. With a few noticeable exceptions—such as former party chief of Chongqing Bo Xilai and party chief of Guangdong Wang Yang, both of whom conducted distinct self-promotion campaigns a couple of years prior to the 18th Party Congress—a majority of political leaders in China usually take a low-profile approach, lobbying for promotion in a non-public manner. Unlike the decades of Liberal Democratic Party hegemony in Japan (1955–94), for instance, factional politics within the CPC have not yet been legitimated by the party constitution. A few leaders may have dual identities as both princeling and tuanpai, although one can usually identify their factional affiliations by the channel through which they are promoted and who their patrons are.

Leaders of these two competing factions differ in expertise, credentials, and experience. Yet they understand the need to compromise in order to coexist—especially in times of crisis. By and large, these two competing camps have maintained a roughly equal factional balance of power over the past decade. The previous nine-member PSC, for example, was characterized by a five-to-four split, with five seats held by the elitist coalition and four by the populist coalition.

The Hu Camp’s Waterloo

This factional balance of power now appears to be broken. There were three eligible candidates who served on the previous politburo and met the age requirement but failed to be elevated to the PSC at the 18th Party Congress—all were tuanpai leaders. These include the only woman candidate, State Councilor Liu Yandong, and two rising stars, the aforementioned Wang Yang, and former head of the CPC Organization Department Li Yuanchao. All three, especially Wang and Li, are regarded as staunch advocates of political reform.

The Chinese public will likely understand why Wang was not elevated: many conservative leaders saw him as a threat. Wang’s main political rival was Bo Xilai, and the two tended to balance each other in terms of power, influence, and policy agenda. Now that Bo is out of the political game, the conservatives do not want Wang to remain in it. That Li Yuanchao was not elevated, however, was surprising. In charge of personnel promotion within the CPC over the past five years, Li carried arguably the strongest weight in selecting delegates to the 18th Party Congress. An instrumental voice for rule of law, governmental accountability, and intra-party democracy, Li has many supporters, especially among liberal intellectuals. He has also played a crucial role in recruiting foreign-educated returnees and promoting college graduates who work as village cadres.

Furthermore, at the congress Hu Jintao ceded his military position instead of following the practice of his predecessor Jiang Zemin, who retained the chairmanship of the powerful Central Military Commission (CMC) for two years after resigning from the formal party leadership. Now the number of princelings in this supreme military leadership body is unprecedentedly high. Four of the eleven members of the CMC are princelings, doubling the representation of princelings since the formation of the previous CMC five years ago.

This outcome is particularly startling when one considers the fact that Hu Jintao and his ally Wen Jiabao decisively expelled Bo, a notoriously ambitious princeling, from the party in 2012. This occurred in the wake of the dramatic incident in which former Chongqing police chief Wang Lijun defected to the United States Consulate in Chengdu, and the subsequent revelation of the murder of British businessman Neil Heywood, carried out by Bo Xilai’s wife. By levying a long list of criminal charges against Bo (presently awaiting trial)—including obstruction of justice, abuse of power, violation of party rules, bribery, and other crimes—Hu and Wen seemed to have won a landmark political battle.

The Bo Xilai scandal was a huge blow for the princeling faction. How is it possible that leadership infighting has taken yet another dramatic twist since his downfall? What has caused this profound change in the power equation? Though full answers to these politically sensitive issues will perhaps take time to emerge, clues have already surfaced.

The first relates to the now well-known Ferrari crash that occurred in Beijing on March 18, 2012, three days after the Chinese authorities fired Bo Xilai as Chongqing party chief. The crash immediately killed the driver, who was the son of Ling Jihua, the then director of the CPC General Office and Hu Jintao’s chief of staff. It also critically injured two young female passengers, one of whom died mysteriously at the hospital months later. It was believed that Ling not only managed to hide his son’s death from the leadership but also asked the CEO of the China National Petroleum Corporation to pay a large sum of money to the families of the two women in exchange for their silence, and even ordered the Central Guard Bureau, China’s secret service corps that manages the top leaders’ security, to handle—and cover up—the incident.

There have been two main rumors explaining how Ling Jihua sought to cover up the crash. One is that Ling helped fabricate information about the incident, which spread by social media, stating that the dead driver was a son of then PSC member Jia Qinglin. Upon hearing such rumors, an outraged Jia brought his grievance to the top leadership, including former party chief Jiang Zemin. The other rumor is that Ling attempted to make a deal with a prominent princeling, then PSC member and police tsar Zhou Yongkang, who was involved in the Bo Xilai scandal. The deal was simple: Zhou would help Ling cover up the car crash incident, and in return Ling would refrain from investigating Zhou’s involvement in the Bo case.

Regardless of which rumor holds the most truth, the Ling scandal was the second earthquake to rock Chinese elite politics last year, second in magnitude only to the Bo crisis. Ling has long served as Hu’s closest confidant and “political fixer.” This episode has severely damaged the authority and credibility that Hu Jintao wields in the leadership. The PSC’s decision in July to remove Ling from his post as director of the powerful General Office and to instead appoint him to a less important post was seen by many as a prelude that the Hu camp would be far less competitive in the power jockeying of the fall congress than had been previously thought.

The second incident was the accusation that Premier Wen Jiabao’s family was corrupt. This charge was widely circulated both by Chinese social media and in the foreign press, notably by the sensational story published by the New York Times in October charging that Wen’s relatives have controlled assets worth $2.7 billion. Whether or not Wen and his immediate family have been involved in illegal business activities is not clear. What is also not clear is whether this accusation against Wen was initiated by his political rivals.

The ideological differences between Wen on one end of the factional spread and politically conservative leaders in the Jiang camp on the other, however, are widely known to the Chinese public. Over the past several years, Wen has consistently emphasized the universal value of democracy, the political bottlenecks that undermine Chinese economic development, and the necessity for fundamental political transformation in the country. In contrast, Wu Bangguo, the second-highest ranking leader in the previous PSC and a heavyweight leader in the Jiang camp, rejected Wen’s call for democratic reform by claiming that the Wen’s appeals (for elections, constitutionalism, and media supervision) would lead the country into an uncharted sea of drastic political change or even chaos, and thus should be resisted at all cost.

The timing of the latest wave of criticism against Wen that circulated in both the Chinese social media and overseas mainstream news outlets has effectively undermined the premier’s reputation and sabotaged his well-known political reform agenda. Wen, potentially the strongest supporter of like-minded political reformers in the fifth generation (such as Wang Yang and Li Yuanchao), was thus forced to fall largely silent during the most crucial period of the leadership succession.

Third, even without these two incidents, the Hu-Wen administration has confronted an increasingly profound sense of public disappointment and criticism as the Hu era wound to a close. Hu has been criticized by the political and economic elites in the country, including the middle class, for his “inaction” (wuwei), a frequently used term in both Chinese blogs and daily conversations in the country. Some critics also portrayed Wen Jiabao as an ineffective premier who is famous for crying in public but not for getting things done. Some prominent Chinese public intellectuals have openly called the two five-year terms of the Hu leadership “the lost decade.”

For many critics, Hu’s rhetoric of a “harmonious society” (a buzzword in the Hu era for the principal policy objectives of reducing social tensions and economic disparity) resonates poorly (and ironically) given that the country’s Gini Coefficient, the standard measurement of the income gap, has worsened. Since 2002 it has risen to 0.48 in 2009 and to 0.61 in 2010, according to two recent studies conducted by the World Bank and China’s Southwestern University of Finance and Economics respectively, far exceeding the 0.44 figure that scholars say indicates the potential for social destabilization. Furthermore, the country’s spending on internal public security has skyrocketed in recent years, for the first time overtaking spending on national defense in 2010 to the tune of $84 billion.

On the foreign policy front, critics have argued that Hu’s “good neighborhood policy” has largely failed because China seems to have generated serious tension or distrust with virtually all of its neighboring countries, including a number of flash points along China’s borders and seas. China confronts an increasingly complicated and challenging international environment yet, despite its growing power and influence on the world stage, has few friends.

Disillusionment over Hu’s leadership is arguably most salient among the vast number of the country’s middle class. Members of this stratum often complain that they (rather than the upper class) shoulder most of the burden incurred by Hu’s harmonious society policies that are targeted at helping vulnerable socio-economic groups. Another thing angering the middle class is the high unemployment rate among college graduates, who often come from middle class families: nearly two million each year fail to find work. The admission rate for civil service exams has fallen remarkably low, reaching just 1.9 percent this year, in sharp contrast to ten years ago when government employees were leaving to “jump into the sea of the private business sector” (xiahai). This change reflects the shrinking of the private sector in recent years.

However, it is too early to hand down a definitive verdict regarding the legacy of the Hu era. For instance, many of the issues that emerged or were not resolved during Hu’s administration may have structural or cyclical origins and thus were beyond his control. The above criticisms also reflect only the views of certain groups such as opinion leaders and the middle class. Hu and Wen may remain popular among the vast number of peasants and migrant workers; and Wen may still have strong support from liberal intellectuals in the country. Many problems might also be attributable to policy deadlock—and political gridlock—caused by the factional jockeying as played out in the collective leadership. It is possible that the situation could have been even worse without Hu and Wen’s efforts to constrain the powerful elitist coalition. Nevertheless, the fact that Hu has been in charge during the past decade has made him the natural target for blame.

More importantly, the argument that factional deadlock was at the root of the Hu-Wen administration’s ineffectiveness has now apparently played into the hands of Jiang’s camp. If a more balanced factional composition at the PSC has often led to policy deadlock, why shouldn’t the 18th Party Congress have a leadership lineup where power is concentrated in the hands of the new top leader Xi Jinping and his team? This is another important factor behind the six-to-one split of the new PSC.

This does not mean, however, that the winner now takes all in Chinese elite politics. Hu’s protégés are still well represented in other important leadership bodies. Although the Jiang camp has dominated the new PSC, the balance between the two camps in the 25-member politburo, the Secretariat (the organization that handles daily administrative affairs), and the CMC have largely remained intact. In fact, many tuanpai leaders have made it into the new 376-member Central Committee. This writer’s research indicates that tuanpai leaders now occupy ninety-six seats in the new Central Committee constituting 25.5 percent of this very crucial decision-making body, a steep uptick when compared with the tuanpai’s eighty-six seats in the previous 371-member Central Committee (23.2 percent).

Prominent tuanpai leaders such as the aforementioned Li Yuanchao and Wang Yang will still be eligible in terms of age for the next PSC in five years. If the “one party, two coalitions” dynamics is a new experiment in Chinese elite politics, the CPC can also experiment with a new mechanism of “factional rotation” (paixi lunhuan). This may explain why the Hu camp quietly acquiesced to its political Waterloo in the latest leadership succession.

Xi’s Mandate

Xi Jinping has had an auspicious beginning as China’s new leader. He enjoys a majority in the PSC and is the top leader in the wake of a complete succession in both the party and military leadership. Xi thus has obtained the power and authority to initiate his new policy agenda. His predecessor’s unpopularity among opinion leaders and the middle class has also enhanced Xi’s public support—giving a sense that he has a new mandate. In the wake of the recent Bo Xilai and Ling Jihua scandals, all party elite regardless of factional affiliation will unite, at least for the time being, under Xi’s leadership in order to maintain CPC rule.

Most importantly, the new leadership seems to be very capable on the economic front and it has strong policy preferences for accelerating market reforms (see chart). Four princeling leaders on the PSC—Xi Jinping, Zhang Dejiang, Yu Zhengsheng, and Wang Qishan—all have decades of experience and high levels of competence in economic and financial affairs. Some Chinese analysts argue that due to their princeling background, these leaders have more political capital and resources than did their predecessors Hu Jintao and Wen Jiabao (who came from humble family backgrounds) in terms of running the Chinese economy and coordinating various governmental agencies.

Table 1: Policy Priorities and Preferences of China’s Top Seven Leaders (New PSC Members)

Xi has long been known for his market-friendly approach to economic development for domestic and foreign businesses alike. Xi’s leadership experience in running Fujian, Zhejiang, and Shanghai, three economically advanced regions in the country, has prepared him well for pursuing policies to promote the development of the private sector, foreign investment and trade, and the liberalization of China’s financial system—all of which have experienced serious setbacks in recent years under the previous administration. Another good example of effective leadership is Wang Qishan, the newly appointed anti-corruption tsar. Over the past few years Wang has served as a principal convener for China in the Sino-U.S. Strategic and Economic Dialogue. Wang, whose nickname is “the chief of the fire brigade,” is arguably the most competent policy maker in economic and financial affairs in the Chinese leadership. The Chinese public regards Wang as a leader who is capable and trustworthy during times of emergency or crisis, whether it be China’s response to the 1997 Asian financial crisis, the 2003 Severe Acute Respiratory Syndrome (SARS) epidemic, or China’s ongoing rampant official corruption. Based on his previous leadership experiences and policy initiatives, Wang will most likely promote the development of foreign investment and trade, the liberalization of China’s financial system, and tax-revenue reforms, which are all crucial for the maintenance of smooth central-local economic relations.

In spite of (or because of) their weaknesses and liabilities in terms of fundamental political reforms, the new leaders will likely opt for bolder and more aggressive economic reforms to lift public confidence. The upcoming economic reforms will probably prioritize three sets of policies. First, the new leaders will work hard to please the middle class. Such policies would include tax cuts, more loans to private small and medium enterprises (SMEs), and more preferential policies to the services sector. A richer and larger middle class in China would also help to stimulate domestic consumption, the next driver for China’s economic growth. Second, the new leaders will promote financial liberalization by inviting more foreign competition to the Chinese banking sector. Finally, they will accelerate urbanization, especially in second- and third-tier cities, by reforming policies involving both rural land reform and the urban household registration system (hukou).

Xi Jinping’s first domestic trip after becoming the party general secretary was to Shenzhen, the point of origin for Deng Xiaoping’s “reform and opening” policy in the late 1970s. China’s stock market, after two years of sluggishness, rebounded very strongly after Xi’s symbolic trip. The central question, however, is whether or not Xi and the princeling-dominated PSC can achieve sustainable economic development without pursuing systemic political reform. Can China really adopt an innovation-driven economy while the country’s political system remains as it is?

Daunting Challenges

The ascent of the princelings has occurred at a time when public criticism of rampant official corruption is unprecedentedly high. Some Chinese public intellectuals use the term “statist crony-capitalism” (quangui zibenzhuyi) to refer to the growing phenomenon in which senior leaders and their families control some state-monopolized industries or major state-owned enterprises (SOEs) for their own profit. This cronyism is especially noticeable in the major business domains such as railways, petroleum, utilities, banking, and telecommunications.

The remarkable growth of some SOEs such as China Mobile, for example, has primarily been attributed to the company’s monopoly on telecommunications in the Chinese domestic market. This has two troubling consequences. First, there is no incentive for these flagship companies to pursue technological innovation. While China’s large SOEs have dramatically increased their profitability and standing among the Global Fortune 500 over the past decade, no single Chinese brand has truly distinguished itself in the global market. Second, the real beneficiaries of China’s economic rise on the world stage are not the Chinese people, but merely a small number of corrupt officials and their families.

The state-of-the-art high-speed train system is often seen as the symbol of China’s economic take-off, but the country’s railway industry has been running a budget deficit. China’s official media recently reported that a bureau-level official in China’s Ministry of Railways held Swiss and American bank accounts with assets of $2.8 billion. What is even more astonishing has been the scandal involving the former minister of railways, Liu Zhijun. Liu’s nickname—“Mr. Four Percent”—derived from his reputation for demanding a personal cut of every business deal in the industry. According to the Singapore media, Liu intended to spend two billion yuan ($320 million) to “purchase” the post of vice premiership, and even a seat in the 2012 politburo, before he was arrested on corruption charges in February 2011. Almost two years after the arrests of the bureau-level official and the minister, the two cases have not yet been tried.

According to an internal report by the CPC Organization Department, of the 8,370 senior executives in China’s 120 flagship state-owned companies, 6,370 (76 percent) have immediate family members who live overseas or hold foreign passports. It is also widely noted that a significant number of children and siblings of senior CPC leaders live, work, and study in Western countries. The Chinese public has often linked this trend to the large-scale outflow of capital in recent years. According to a 2012 report released by Washington-based Global Financial Integrity, cumulative illicit financial flows from China (primarily by corrupt officials) totaled a massive $3.8 trillion from 2000 to 2011.

Since a top priority of the CPC leadership is the maintenance of its own rule, it is no surprise that the police have become more powerful, not only in terms of their input into socioeconomic policies but also in terms of budget allocation. For example, the total amount of money used for “maintaining social stability” in 2009 was 514 billion yuan—almost identical to China’s total national defense budget (532 billion yuan) that year. The Chinese government budget for national defense in 2012 was 670.3 billion yuan, while the budget for the police and other public security expenditures was 701.8 billion yuan (an 11.5 percent increase).

Two factors have contributed to the growing power of the police force. First, the Arab Spring led CPC leaders to fear that they could face an outcome similar to that, for example, of the Hosni Mubarak regime in Egypt. Second, business elites—especially those who work in state-monopolized industries—have often bribed government officials including police officers and formed a “wicked coalition.” This coalition constantly talks about the need for stability in the country but in fact is more concerned about maintaining its own interests.

The oligopoly of SOEs not only jeopardizes the commercial interests of foreign companies but also hurts the country’s own private enterprises, thus detracting from the long-term potential of China’s market economy. A study conducted by Chinese scholars shows that the total profits made by China’s 500 largest private companies in 2009 were less than the total revenues of two SOE companies, China Mobile and Sinopec. Ironically, the private sector’s net return on investment was 8.18 percent, compared to the 3.05 percent return of SOEs in the country in 2009.

All this not only shows that China’s future economic development will increasingly depend on much-needed political reforms, but also reveals the enormous challenge for the new leadership in its pronounced commitment to crack down on official corruption. This commitment is as essential as it is dangerous, because the sociopolitical demands unleashed will be overwhelming. Ultimately, it is a test of Xi Jinping and Wang Qishan’s anti-corruption campaign. Is it driven merely by factional interest in getting rid of political rivals? Will it primarily target “small potatoes”? Will it simply be adopted as a temporary tactic instead of pursuing the institution building necessary to effectively control corruption?

It is interesting to note that within a week after Xi and Wang made their speeches calling for a tougher crackdown on official corruption, journalists in the commercial media and netizens using social media leveled accusations against three senior leaders—one new politburo member and two ministers—of nepotism in elite recruitment, fake academic credentials, womanizing, and corruption. Social media has become so influential that Chinese authorities often shut down domestic micro-blogging services.

China’s various new economic and sociopolitical forces are also becoming increasingly protective of their interests. For example, a manual labor shortage in some coastal cities in recent years has reflected the growing political consciousness of the younger generation of migrant workers to protect their own rights. Migrants, effectively second class citizens in China, are resentful over all manner of discriminative policies. They have moved from one job to the next in order to receive a decent salary. Due at least partly to their repeated demands, China has recently witnessed a dramatic increase in wages.

More broadly, as the American political scientist Minxin Pei has observed, the Chinese citizenry now routinely challenges the party on a wide range of public policy issues, including environmental protection, public healthcare, food safety, social welfare, social justice, rural land reforms, urban development, religious rights, and ethnic tension. Official statistics report that there are on average 500-plus mass protest incidents each day.

The lack of a legal channel for public participation combined with tight police control has created a vicious circle in which the more fiercely the police suppress social protests, the more violent and widespread the protests become. There is a similar vicious circle in the realm of the media: the more that sensational rumors in social media are suppressed by the government, the more influential they become.

Meanwhile, growing popular nationalistic sentiment, particularly xenophobic views against the Japanese government (and perhaps the United States government as well) over the territorial disputes on the East China Sea, also constitutes a major political challenge for the Xi administration. Contemporary Chinese history shows that the practice of trying to distract the public from domestic problems by playing up foreign problems has often ended with regime change. Xenophobic public sentiments can quickly transform into an anti-government uprising. Yet CPC leaders may be cornered into taking a confrontational approach to foreign policy due to the nationalistic appeal from both the Chinese military and left-wing opinion leaders.

All of these sociopolitical challenges are reinforcing the necessity and urgency for profound democratic political reforms. A democratic system, of course, can neither solve social tensions nor the problem of extreme nationalism. Yet, it does provide a much better chance to channel social conflicts through the legal process and provide open debate in search of a more rational foreign policy.

The sense of urgency was bluntly explained on the eve of the 18th Party Congress by Zhang Lifan, a well-known public intellectual in Beijing: “If the next generation of leaders does not pursue political reforms in their first term, there is no point in doing so in their second term.” In his words, “China should witness either reforms in the first five years, or the end of the CPC in ten years.” Interestingly enough, in speeches given after becoming party general secretary, Xi Jinping also talked about the possible collapse of the CPC if the leadership failed to seize the opportunity to reform and revitalize the party.

Some Chinese liberal intellectuals explicitly regarded Xi as mainland China’s Chiang Ching-kuo. Also a princeling (the son of Generalissimo Chiang Kai-shek), Chiang Ching-kuo surprised many in the mid-1980s with his bold and historical move to lift the ban on opposition parties and media censorship in Taiwan, initiating the island’s transition from authoritarianism to democracy.

The next few years will likely tell whether Xi will be a transformative leader, or merely a transitional leader.

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Authors

Cheng Li

Publication: The Cairo Review of Global Affairs

Image Source: © David Moir / Reuters

China's Political Transition: A Balanced Assessment of its Problems and Promises

Cheng Li — Thu, 07 Feb 2013 00:00:00 -0500

Editor's Note: In testimony to the U.S.-China Economic and Security Review Commission's hearing on "China’s New Leadership and Implications for the United States," Cheng Li gives his assessment on China's leadership transition, and the problems and promises the country faces as it enters a new political era.

Seldom in history has the attention of the world been so closely focused on political succession in the People’s Republic of China (PRC) as it was during the 18th National Congress of the Chinese Communist Party (CCP) held last fall. The international community’s strong interest in the event should not be surprising for four main reasons. First, this is the first CCP leadership transition taking place at a time when China has fully emerged as a global economic powerhouse. In China, as elsewhere in the world, new leadership often means new policies. The policies––be they monetary, trade, industrial, environmental, or energy related–– of the incoming top leaders in China have the potential to make a major impact on the global economy.

Second, the significance of the leadership change in China goes well beyond the economic realm. As the PRC now carries more weight on the world stage, the Chinese government’s handling of domestic political issues, from human rights and religious freedom to ethnic tensions and media censorship, is increasingly in the international spotlight. Foreign commentary and criticism, especially that which originates in the United States, is often interpreted in China as a U.S.-led conspiracy to curtail China’s rise. The Chinese leadership has therefore tended to adopt a nationalistic foreign policy toward the United States, other Western countries, and some neighboring countries with which is has territorial disputes. Whether China’s new leadership will become more militant and confrontational in its foreign policy has become a central concern in the Asia-Pacific region, especially in the wake of recent tensions with Japan.

Third, there were several scandals and political crises on the eve of the 18th Party Congress last year, most notably the dramatic downfall of Bo Xilai, who was the former Party chief of Chongqing and a rising star in the top ranks of the CCP. These events exposed the deep flaws of China’s political system. Although the CCP has been guilty of political repression and has made grave mistakes during its long rule, senior Party leaders have generally not been known for gangland-style murders. But now Bo’s wife has been convicted of having plotted the murder of a British business associate while Bo’s former lieutenant, the police chief of Chongqing, has also been found guilty of abusing his power. The public is left wondering: What expectations of impunity moved Bo to engage in the misdeeds, including obstruction of justice, alleged on his long charge sheet? The astonishingly great amount of bribery in the case of the Bo family and also in the cases of other national and local leaders––e.g., recent cases involving former top officials in the Railways Ministry taking bribes totaling several billion U.S. dollars—has vividly portrayed to the world the unprecedented scale of official corruption. These scandals have profoundly undermined the legitimacy of CCP rule, thus constituting an overwhelming challenge for the new leadership. The sense of political uncertainty––and fear of disruptive social uprising in the world’s most populous country––is on the rise.

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Cheng Li

Publication: U.S.-China Economic and Security Review Commission

Image Source: © Carlos Barria / Reuters

China in Revolution and War

Cheng Li — Thu, 17 Jan 2013 00:00:00 -0500

Several serious problems in China could trigger a major crisis, potentially igniting either a domestic revolution or foreign war. Cheng Li wrote this memorandum to President Obama as part of Big Bets and Black Swans: A Presidential Briefing Book.

What challenges does the Chinese Communist Party face?
What does the Chinese Politburo need to do about these challenges?
How can the United States prevent any Asian states from engaging in the use of force?

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TO: President Obama

FROM: Cheng Li

China poses a major policy challenge to the United States largely because of the unpredictable trajectory of both its domestic transformation and foreign relations. While there has been much attention paid to China’s rapid economic rise and growing international clout, two other scenarios have been overlooked: domestic revolution and foreign war. There are many serious problems in China that could trigger a major crisis, including slowing economic growth, widespread social unrest, rampant official corruption, vicious elite infighting, and heightened Chinese nationalism in the wake of escalated tensions over territorial disputes with Japan and some Southeast Asian countries. This suggests that your administration should not easily dismiss the possibility that revolution or war might occur. Either event would be very disruptive, severely impairing global economic development and regional security in the Asia-Pacific; a combination of the two would constitute one of the most complicated foreign policy problems of your second term.

Recommendation:

The best way to prepare in advance for either likelihood is for this White House to cultivate a deeper relationship with Xi Jinping and his new leadership team, maximizing cooperation in various areas. In establishing a constructive relationship with the new Chinese leadership, the United States should be fully aware not only of the daunting challenges that Xi and the Chinese Communist Party (CCP) confront on both domestic and international fronts, but also the uncertain nature of Xi’s policy trajectory and of Chinese public opinion about the new Party boss.

There are two particularly undesirable outcomes. One is a situation in which the vast majority of the Chinese public becomes both anti-CCP leadership and anti-American. The other is a situation in which Xi derives his popularity from a strong endorsement of Chinese militarism.

To avert the first you should, while engaging with the Chinese leadership, more explicitly articulate to the Chinese people both the longstanding goodwill that the United States has towards China and America’s firm commitment to democracy, human rights, media freedom, and the rule of law, which the United States believes are fundamental to the long-term stability of any country.

To decrease the likelihood of the second — a conflict in the region that could involve the United States directly — you should more consistently exert American influence on U.S. allies or partners (including China) in the Asia-Pacific region to prevent the use of force by any party. Simultaneously, promoting military-to-military ties with the new PLA leadership should be a top priority.

Background:

China in Revolution: Anti-CCP, Anti-America

The scenario of abrupt bottom-up revolution occurring in China has recently generated much debate within that country. One of the most popular books in elite circles today is the Chinese translation of Alexis de Tocqueville’s 1856 classic The Old Regime and the Revolution. Senior leaders of the CCP (most noticeably Premier-designate Li Keqiang and new member of the Politburo Standing Committee Wang Qishan) were reported to have strongly recommended that officials read the book. In speeches given after becoming Party General Secretary, Xi warned that the Party could collapse if the leadership failed to seize the opportunity to reform and improve governance.

The fear and anxiety on the part of the CCP leadership seem well grounded given the daunting challenges the Party confronts:

• China’s GDP growth target of 7.5 percent for 2012 was the lowest since 1990 (in the aftermath of the Tiananmen incident). This downturn is not only the result of flagging exports in the wake of the Eurozone crisis, but also the country’s own political bottlenecks. This slowdown will, in turn, further reveal flaws in the Chinese authoritarian system and thus could become a trigger for political crises.

• Economic inequality is increasing substantially. The Gini coefficient rose to 0.47 in 2009 and then to 0.61 in 2010, far exceeding the 0.44 threshold generally thought to indicate potential for social destabilization.

• China’s official data reveal that there are roughly 180,000 mass protests annually, or about 500 incidents per day. According to the Chinese official media, these protests have become increasingly violent in recent years, especially in ethnic minority regions.

• Corruption is out of control. The latest report by Washington-based Global Financial Integrity (GFI) shows that cumulative illicit financial flows from China (primarily by corrupt officials) totaled a massive $3.8 trillion from 2000 to 2011.

These problems have generated even more public resentment due to the unprecedented predominance of “princelings” in power — leaders who come from families of high-ranking officials. Four of the seven Politburo Standing Committee members, including Xi Jinping, are princelings. Large numbers of prominent Party leaders and their families have used their political power to convert state assets into private wealth; this includes transfers to family relatives who live, work, or study in the United States and other Western countries. The dominance of princelings in the new leadership is not only undermining elite cohesion and the factional balance of power, but is also generating cynicism among the Chinese public regarding any promises on the part of the leadership to tackle corruption. Furthermore, it may add ammunition to the sensational accusation that the United States provides a haven for corrupt CCP officials.

China in War: The Rise of Chinese Militarism under Xi

From the Chinese perspective, the first scenario of domestic revolution could result from a failure of the Xi Jinping leadership to adopt effective political reforms to prevent crisis; the second scenario —that of China in war — may be considered one possible “successful” attempt by Xi to consolidate power. This does not necessarily mean that the Chinese leadership intends to distract domestic tensions with an international conflict; contemporary Chinese history shows that the practice of trying to distract the public from domestic problems by playing up foreign conflicts has often ended in regime change. Yet Xi may be cornered into taking a confrontational approach to foreign policy in order to deflect criticism of his own strong foreign connections.

You need to be alert for warning signs that might point in this direction, especially the increasing anti-American rhetoric in both the Chinese official media and in diplomatic channels. Xi can be quite assertive in his approach to the United States. This was evident during his visit to Mexico in 2009 when he criticized what he termed the “bored foreigners, with full stomachs, who have nothing better to do than point fingers at China.”

Even more importantly, your administration needs to pay attention to the emergence of militarism among some military officers, especially the princelings within the PLA. Chinese analysts have observed that these military princelings are interested in bolstering the military’s power in the upcoming Xi era. Such a move would have the potential to increase the risk of both military interference in domestic politics and military conflicts in foreign relations.

Conclusion:

It is not in U.S. interest to see China’s transition to a constitutional democracy proceed in a manner overwhelmingly destructive to China’s social stability or its peaceful relations with any of its neighboring countries, which would risk leading the United States into war. Clarifying to the Chinese public that the United States neither aims to contain China nor is oblivious to their national and historical sentiment would help reduce anxiety and possible hostility across the Pacific. Second, enhanced contact between U.S. and Chinese civilian and military policymakers can help us better understand the decision-making processes and domestic dynamics within China. It can also aid us in heading off a regional conflict. Finally, when done within a broader strategy with all U.S. allies and neighbors in the region, it could reassure China that the United States is not only firmly committed to its regional security framework in the Asia-Pacific, but also genuinely interested in finding a broadly acceptable solution to the various disputes.

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Cheng Li

Image Source: © China Daily China Daily Information Corp - CDIC / Reuters

China at the Tipping Point: Top-Level Reform or Bottom-Up Revolution?

Cheng Li — Fri, 11 Jan 2013 11:58:00 -0500

Introduction:

The People’s Republic of China (PRC) has been troubled of late by widespread social unrest, slowing economic growth, and rampant official corruption as revealed by the Bo Xilai scandal. Less obvious to the outside world, however, have been the two sharply contrasting and controversial perspectives on the country’s near- to medium-term future that are now locked in mutual contention. These two rival scenarios reflect fundamentally different assessments of the socioeconomic situation and likely political trajectory of the world’s most populous country.

The first scenario envisions an abrupt bottom-up revolution. This assessment has recently generated much heated intellectual and political debate in the PRC. In December 2011, the thirty-year-old best-selling author Han Han (China’s most popular blogger whose site has registered well over 580 million hits) posted a now-famous essay titled “On Revolution.” Although Han argues that “revolution is hardly a good option for China,” his intriguing view of the choice between reform and revolution has pointedly reflected—and greatly enhanced—the public awareness of the risk of revolution in the country.

Additionally, one of the most popular books in PRC intellectual circles today is the Chinese translation of Alexis de Tocqueville’s 1856 classic The Old Regime and the Revolution. One frequently quoted passage is Tocqueville’s argument that revolutions usually occur not when the old regime resists change, but rather when it begins to attempt reform only to find expectations outstripping any possible rate of improvement.

The second scenario is reform from above, which Chinese Communist Party (CCP) elites often refer to as “top-level reform” or the “top-level design of reform” (gaige de dingceng sheji). The latter term was first heard at a top CCP leadership meeting in October 2010. It is related to the leaders’ newfound understanding that China is now in “deep water” with regard to reform, and can no longer afford to “cross the river by feeling the stones,” as the Chinese expression goes. Improvised reform, in short, needs to give way to a more methodical and more profound set of changes. Moreover, with so many of China’s present-day socioeconomic problems growing out of impasses and obstacles within the political system, basic political reform will have to be part of the agenda as well.

According to those who call for top-level reform, China needs better coordination between socioeconomic policy and political development, along with structural changes that are more coherent. The older, bottom-up approach that stresses grassroots elections must yield, they say, to a new roadmap that includes intra-CCP elections to choose national-level Party leaders, enhanced institutional checks and balances, and judicial reform.

It is critically important for foreign analysts to grasp the ongoing Chinese discourse in three key areas: 1) the impact of the Bo Xilai crisis on China’s political trajectory, 2) possible triggers for sociopolitical uprisings and initiatives, and 3) institutional safeguards with which the CCP leadership may open the way to systemic change. Foreign analysts need to rethink the thesis of “authoritarian resilience,” a predominant view in overseas studies of Chinese politics which argues that Chinese authoritarianism is “resilient” or “strong.” This view underestimates both the inherent vulnerability in the one-party system and the growing resentment that the public feels over CCP leaders’ enormous power and wealth.

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Authors

Cheng Li

Publication: Journal of Democracy

Image Source: © Petar Kujundzic / Reuters

A New Cold War? The Future of U.S.-China Relations

Cheng Li — Thu, 13 Dec 2012 00:00:00 -0500

Editor's Note: In a video interview with the Woodrow Wilson Center for International Scholars Cheng Li talks about his view on U.S.-China relations and how the leaders on both sides should move the relationship forward after a fierce presidential campaign in the United States and the once-a-decade leadership transition in China.

Wilson Center: Is it useful to use the “Cold War” metaphor when discussing the possibility of a negative turn for China-U.S. relations?

Cheng LI: The idea of the Cold War is a conception. It depends on how you look at that, how much you believe that. Certainly the Cold War was real during the 1960s, 70s, etc. But now it’s very problematic because by definition the Cold War is confrontation of two blocks on ideological and military fronts. You can say on the military front, there is stlll some tension between countries like China and the United States. But ideologically I don’t see that China has that ideology [of] deliberately trying to challenge the United States. But most importantly, during the Cold War, there’s no global economy. The Soviet block was not part of the global economy. But now we see a really globalized economy. China is part of that. And if [in] the United States the economy is not doing well, China also suffers. And vice versa. So this tells us we’re really in a new era, in a new world.

Now Einstein once said the release of the atomic bomb has changed everything except the way of thinking. We can borrow that: the economic globalization has changed everything except the way of thinking. If you’re still preoccupied [by] the old idea of the Cold War, or 19th century world view, that two major powers can only be conflicting, then you will buy that argument. But I personally think it’s completely irrelevant in today’s world. The danger is some of our policy makers, whether in China, Untied States, or elsewhere, still hold that view.

Authors

Cheng Li

Publication: Woodrow Wilson Center for International Scholars

Image Source: JASON LEE

Rule of Law in China: Prospects and Challenges

Wed, 28 Nov 2012 13:00:00 -0500

Event Information

November 28, 2012
1:00 PM - 5:30 PM EST

Falk Auditorium
Brookings Institution
1775 Massachusetts Avenue NW
Washington, DC 20036

As China’s newly appointed politburo begins the transition to political leadership, they will confront a host of critical policy issues, few of which are easy to resolve. The development of China’s legal system is arguably the most consequential issue confronting China’s new leaders, and the direction of future legal reforms will have deep reverberations in matters of human rights, sociopolitical stability, the transformation of the political system, and prospects of the country’s economic growth.

On November 28, the John L. Thornton China Center at Brookings hosted the launch of In the Name of Justice: Striving for the Rule of Law in China (Brookings Press, 2012), a new book by Professor He Weifang, one of China’s most influential legal thinkers. The discussion brought together prominent American legal scholars to present a critical assessment of the development of China's legal system and concluded with a discussion between U.S. Supreme Court Associate Justice Stephen G. Breyer and John L. Thornton, chairman of the Board of Trustees of Brookings, on the significance of the ongoing search for constitutionalism in China.

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20121128rulelawchina

America and China in the Aftermath of Election and Succession: Paths and Pitfalls

Mon, 19 Nov 2012 09:15:00 -0500

Event Information

November 19, 2012
9:15 AM - 12:00 PM EST

Falk Auditorium
Brookings Institution
1775 Massachusetts Avenue NW
Washington, DC 20036

The reelection of President Barack Obama and the convening of China’s 18th National Congress only days later highlight converging political calendars that may set the contours of U.S.-China relations and East Asian politics for years to come. However, uncertainties remain, with China’s political, economic and strategic trajectories subject to major internal and external pressures. At the same time, the United States confronts a daunting, long deferred set of fiscal challenges that could reshape U.S. foreign and security policy options.

On November 19, the John L. Thornton China Center at Brookings hosted a discussion assessing possible developments in Chinese foreign and domestic affairs in light of the political transitions in both countries.

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Opportunity Lost? Inside China's Leadership Transition

Cheng Li — Fri, 16 Nov 2012 00:00:00 -0500

For a country widely seen as the world's other superpower, we know shockingly little about the worldviews, values, and socioeconomic policies of the seven men just named the new leaders of China. Unlike American politicians, Chinese leaders carry out their campaigns largely behind closed doors, and they are not chosen by the people.

But this year's once-a-decade power transfer was particularly opaque, clouded by the recent eruption of unprecedented political scandals. One was the dramatic March downfall of Chongqing party boss Bo Xilai, an ambitious and charismatic political heavyweight, toppled amid a murder case involving his wife. Another was the sudden removal of Ling Jihua, President Hu Jintao's chief of staff, from the center of power on the eve of the 18th Party Congress. These astonishing events have heightened the risk of social instability in China and fueled uncertainty over the country's political trajectory. And the composition of the new Chinese leadership may even heighten that risk.

As China's new leaders are unveiled, we can begin to answer some important questions: Are there clear winners and losers? Can the identities of newly promoted leaders help us understand where China is headed?

Read the full article at foreignpolicy.com »

Authors

Cheng Li

Publication: Foreign Policy

Image Source: © Jason Lee / Reuters

Xi Jinping Can Send China in a New Direction

Cheng Li and — Fri, 16 Nov 2012 00:00:00 -0500

With China’s new leadership selected during the 18th Party Congress of the Chinese Communist Party, and with President Obama about to embark on a second term, the U.S. and China must consider a path forward for their sometimes bumpy but critically important relationship. Moreover, the U.S. must understand that China has to sort through a host of domestic issues as well.

Senior Fellow Cheng Li says from its slowing economy to middle-class unrest, China’s new leadership, headed by Xi Jinping, is facing enormous challenges. Reform can be slow in China, but with this new generation of realistic and pragmatic leaders, we can be optimistic.

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Xi Jinping Can Send China in a New Direction

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Cheng Li

Challenges for China's New Leadership

Cheng Li, Kenneth G. Lieberthal, Jonathan D. Pollack and Jeffrey A. Bader — Fri, 16 Nov 2012 14:48:00 -0500

China’s new leadership will take the reins of government early next year. This new collective, led by Xi Jinping, will have a slate of critical issues to address with China’s stagnating economy topping the list. Brookings experts Cheng Li, Kenneth Lieberthal, Jonathan Pollack and Jeffrey Bader delve into the issues that await China’s leaders and the likely action the group will take.

Cheng Li:

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Shadow of Former President Looms Over China's New Leaders

Cheng Li — Thu, 15 Nov 2012 11:13:00 -0500

Editor's note: In an interview with CNN, Cheng Li discusses the new generation of top leaders in China and possible implications for Xi's term as China's new president. Read an excerpt below.

CNN: What do you make of the new lineup?

Cheng Li: It is not a surprise but a disappointment. The disappointment is based on several reasons. First, apparently there was no intra-party multiple-candidate election for the politburo and its standing committee. They were still selected through the old way of "dark-box" manipulation by departing politburo standing committee members. Also, it's dominated by Jiang Zemin's protégés, especially the so-called princelings.

Despite a profound sense of disappointment, I should say there are some positive things coming out of this leadership transition.

One is that Hu Jintao stepped down as Chairman of the Central Military Commission, making the succession more institutionalized and complete. By and large, this leadership transition is another orderly transition in PRC history. The leadership change follows the rules and norms of age limits, and the turnover rates in all leadership bodies are all very high: 64% for the Central Committee, 77% for the Disciplinary Commission, 68% for the Secretariat, 71% for the PSC.

The size change (from nine to seven members of the PSC), including the elimination of the police czar and the propaganda czar, is a welcome development. These are all positives but, in my judgment, this leadership lineup does not generate an uplifting spirit for the nation; I think this is a major opportunity lost.

Read the full interview »

Authors

Cheng Li

Publication: CNN

Image Source: © China Daily China Daily Information Corp - CDIC / Reuters

Li vs. Pei: China’s Prospects for Political Reform, Final Round

Cheng Li and Minxin Pei — Tue, 13 Nov 2012 00:00:00 -0500

Editor's Note: In the midst of China's once-a-decade top leadership transition, The Wall Street Journal invited Brookings's Cheng Li and Minxin Pei of Claremont McKenna College to debate the chances for political reform. In the final round of the debate Li and Pei discuss whether China can tackle the vested interests blocking reform. Read an excerpt below. (Read also Part 1 and Part 2.)

China Real Time: Vested interests like state owned enterprises, local government and real estate developers are seen as a barrier to reform. Do you think China’s new leaders will be able to take them on?

Cheng Li: The state monopoly is the main problem of China’s political economy. It’s really out of control, and that’s a main cause of corruption. You can see that in recent cases in railroad, telecoms and oil sectors.

Worse, these monopoly industries also have less or even no incentive to innovate due to the monopolies. They hurt the Chinese private sector, hurt the middle class and also hurt foreign firms.

Solving that problem is tough, the state monopoly is powerful. But leaders need to make tough decisions because without a crackdown, China’s economy will not sustain the growth rate they hope for, and the middle class in the non-state sector will be on the verge of revolt.

The problem of state monopoly is tied to the real estate bubble. Chinese official studies indicate, in Beijing city, there are 3.8 million units empty. They already have owners, but they are empty for speculation.

Why is there so much middle class money going into property? It’s because of state control of large sections of the economy, especially the banking system. It means there are few other investment options. Breaking up state monopolies, along with reform of the banking system, would mean more opportunities for small business, more profitable investment options for the middle class and less risk in the property sector.

Read the full debate »

In Part 1 of the debate Li and Pei explained what sort of reform they thought China needed and argued over whether China’s incoming leaders should be considered reformers. In Part 2, they addressed whether or not the Communist Party system itself will allow for reform.

Authors

Cheng Li
Minxin Pei

Publication: The Wall Street Journal

Image Source: © Jason Lee / Reuters

Will There Be More Freedom and Reforms in China's Future?

Cheng Li — Fri, 09 Nov 2012 00:00:00 -0500

Editor's Note: In an interview with CNN International's Christiane Amanpour, Cheng Li talks about the potential of political reforms in China for more democracy and sustainable economic growth under the new generation of top leaders.

Christiane Amanpour (CA): First to China. So will there be more political freedom and reform in its future? I’m joined by Cheng Li, senior fellow at the Brookings Institution; director, also, of the National Committee on U.S.-China relations. He grew up in Shanghai during the Cultural Revolution before coming here to the United States. Welcome to the program.

Cheng Li (CL): Thank you for having me.

CA: So, you heard that very unusual dire warning from Hu Jintao. How surprised were you by what he focused on today? .

CL: Well I’m not surprised, but encouraged by this statement. The people in China talk about revolution, talk about corruption, talk about [how] the Communist Party lost its legitimacy in the wake of [the] Bo Xilai case and widely-spread corruption. But this is [the] first time from the top leadership [to] make a commitment, make a very clear statement that, unless the Party reforms itself, otherwise it will be kicked out of history.

Watch the full interview on CNN.com »

Authors

Cheng Li

Publication: CNN International

Image Source: © Jason Lee / Reuters

Li vs. Pei: China’s Prospects for Political Reform, Round Two

Cheng Li and Minxin Pei — Fri, 09 Nov 2012 00:00:00 -0500

Editor's Note: In the midst of China's once-a-decade top leadership transition, The Wall Street Journal invited Cheng Li and Minxin Pei of Claremont McKenna College to debate the chances for political reform. In Part 2 of the debate Li and Pei address whether or not the Communist Party system itself will allow for reform. Read an excerpt below. (Read also Part 1 and Part 3.)

China Real Time: What about the decision-making process among China’s political elites? Do you think the current system allows them to move in the right direction?

Cheng Li: China is a one-party state in which the Chinese Communist Party monopolizes power. The party leadership, however, is not a monolithic group. Its members do not all share the same ideology, political association, socio-economic background or policy preferences. In fact, I would argue the two main political factions or coalitions within the Chinese Communist Party leadership are currently competing for power, influence and the control over policy initiatives.

This bifurcation has created within China’s one-party polity something approximating a mechanism of checks and balances in the decision-making process. This mechanism, of course, is not the same as the system of checks and balances that operates between the executive, legislative and judiciary branches in a democratic system. But this new structure — sometimes I refer to it as “One Party,Two Coalitions,” following Deng Xiaoping’s famous line “One Country, Two Systems,” — represents a major departure from the all-powerful strongman model that was characteristic of the Mao and the Deng era.

Now, I don’t want to go into details with these two coalitions. I think people are quite familiar with the concept of the princelings, who largely make up Jiang Zemin’s camp, versus the Tuanpai, referring to Hu Jintao’s Communist Youth League officials. So you have the Jiang camp and the Hu Jintao camp, and they’re competing against each other. This is the Chinese style of checks and balances.

Read the full debate »

In Part 3, our experts discuss whether China can tackle the vested interests blocking reform and wrap things up with closing arguments. In Part 1, they explained what sort of reform they thought China needed and argued over whether China’s incoming leaders should be considered reformers.

Authors

Cheng Li
Minxin Pei

Publication: Wall Street Journal

Li vs. Pei on China’s Prospects for Political Reform

Cheng Li and Minxin Pei — Thu, 08 Nov 2012 00:00:00 -0500

Editor's Note: In the midst of China's once-a-decade top leadership transition, The Wall Street Journal invited Brookings's Cheng Li and Minxin Pei of Claremont McKenna College to debate the chances for political reform. In the first round Li, more optimistic on the outlook, argues the case that reform is possible. Mr. Pei, more skeptical, argues that it is unlikely. Read an excerpt below. (Read also Part 2 and Part 3.)

China Real Time: What does political reform mean in China, and why is it so important right now?

Cheng Li: Political reform means that China’s leadership will open the political system for competition, supervision and for rule of law. To a certain extent it’s a democratic change, although they may be hesitant to use that phrase. They will emphasize intra-party democracy or intra-party elections.

I think there’s a very good chance that the new leadership, the fifth-generation leadership, will push for serious or even fundamental political reform now, for several reasons.

First, this is actually not a choice, in my view; it’s a necessity.

The Bo Xilai crisis revealed the fundamental flaws of China’s political system. Corruption is completely out of control. It’s unprecedented in terms of scale and scope — one may even argue unparalleled in today’s world. We’re talking about, you know, a couple of billion U.S. dollars for many cases, including the railroad minister.

So the Communist Party has largely lost the moral high ground with these kinds of cases. There’s no moral bottom line. That’s clear in the case of assassination with Bo Xilai’s wife; and also terrible abuse of power elsewhere.

Read the full debate »

Continue reading Part 2 (on whether CCP system allows for reform) and Part 3 (on vested interests).

Authors

Cheng Li
Minxin Pei

Publication: Wall Street Journal

The Powerful Factions Among China's Rulers

Cheng Li — Mon, 05 Nov 2012 00:00:00 -0500

Editor's Note: This article, with an introduction from BBC News, was first published on the BBC News website.

China's political elite is dominated by two factions. But once the new leaders are unveiled, who will have the upper hand, and how will competing factions balance power? As part of a series on challenges for China's new leaders, political analyst Cheng Li says the country's future could be decided by a tussle at the top.

Of all the concerns about the forthcoming political succession in China, none may ultimately prove as important as whether or not the factional balance of power will be maintained.

China is now confronting widespread social unrest, slowing economic growth, increasing divisions within domestic public opinion on the issue of the country's political trajectory and rampant official corruption as revealed by the Bo Xilai scandal.

Any further signs of elite disunity or upsets in the factional balance of power within the top leadership could be overwhelmingly detrimental in terms of the continued rule of the Communist Party.

That is why the composition of the new Politburo Standing Committee (PSC), the supreme decision-making body in China, is critically important.

What will be the status of the competing factions in that committee? Will the existing system of collective leadership in China continue - or is it headed towards failure?

Populists vs Princelings

China is a one-party state in which the Chinese Communist Party (CCP) monopolises power. The party leadership, however, is not a monolithic group. Its members do not all share the same ideology, political association, socio-economic background, or policy preferences.

In fact, two main political factions or coalitions within the CCP leadership are currently competing for power, influence and control over policy initiatives. This bifurcation has created within China's one-party polity something approximating a mechanism of checks and balances in the decision-making process.

This mechanism, of course, is not the kind of institutionalised system of checks and balances that operates between the executive, legislative and judicial branches in a democratic system.

But this new structure - sometimes referred to in China as "one party, two coalitions" - does represent a major departure from the "all-powerful strongman" model that was characteristic of politics in the Mao and Deng eras.

One of the two intra-party groups in China is the "populist coalition", which is led by President Hu Jintao and Premier Wen Jiabao. The other is the "elitist coalition", which emerged in the Jiang Zemin era and used to be headed by Jiang but is currently led by both Wu Bangguo, chairman of the national legislature, and Jia Qinglin, head of a national political advisory body.

These four individuals - Mr Hu, Mr Wu, Mr Wen and Mr Jia - are currently China's top leaders. These two political camps share the seats in the top leadership organisations in a way as to reach a near-perfect balance.

The nine-member PSC, for example, has - at least prior to this 2012 Party Congress - maintained a four-to-five split, with four seats for the populist coalition and five going to the elitist coalition.

Xi Jinping and Li Keqiang, who will likely take over the top two posts at the 2012 Party Congress, each represent one of these two coalitions.

The two coalitions represent different socio-economic and geographical constituencies. Most of the top leaders in the elitist coalition, for instance, are "princelings", leaders who come from families of veteran revolutionaries or of high-ranking officials. These princelings often began their careers in the economically well-developed coastal cities. The elitist coalition usually represents the interests of China's entrepreneurs.

Most leading figures in the populist coalition, by contrast, come from less-privileged families. They also tend to have accumulated much of their leadership experience in the less-developed inland provinces.

Many advanced in politics by way of the Chinese Communist Youth League and have therefore garnered the label tuanpai, literally meaning "league faction". These populists often voice the concerns of vulnerable social groups, such as farmers, migrant workers and the urban poor.

Leaders of these two competing factions differ in expertise, credentials and experience. Yet they understand the need to compromise, the necessity of cutting deals, in order to co-exist - especially in times of crisis.

And there is a crisis going on now - one brought on by scandals among the factional leaders.

Threats to Stability

The most serious one has centred on Bo Xilai, a prominent princeling. Another case is Ling Jihua, Hu Jintao's former chief of staff and up until recently a rising star in the tuanpai faction. Having become embroiled in a scandal of his own, Ling was appointed to a less important position on the eve of the Party Congress.

These scandals among factional leaders, however, can and should be easily dismissed. Factions themselves are too strong to be dismantled.

Factional tensions and dynamics now constitute the defining feature of Chinese elite politics. Outside analysts must develop a sophisticated understanding of Chinese factional politics, one that understands that Chinese leaders are not always mired in factional infighting.

In fact on most occasions and on many issues, they tend to co-operate. There is, at least for now, tremendous incentive among all senior leaders regardless of faction to unite under new party chief Xi Jinping to show elite cohesion and political solidarity.

Paradoxically, it is also in the interest of both factions to have the existing balance of power remain intact (a three-to-four split assuming the new committee will consist of seven members). The overall balance of power should also take into consideration the composition of the full Politburo and the Central Military Commission, including whether or not Hu Jintao steps down as the chairman of the powerful military commission at the Party Congress.

But recent rumours hold that the factional split in the new standing committee will shift to two-to-five (two tuanpai versus five princelings or protégés of Jiang). If true, this could be highly problematic. If the factional balance is not maintained, the defeated faction would likely use its political resources and socio-economic constituencies to undermine the legitimacy of the political system, which in turn would threaten the stability of the country at large.

Even if the current balance of power remains, China's emerging "bipartisanship" is still at risk of failure. Deal-cutting, power-sharing and political compromise is not always easy. The fact that there are more ambitious candidates than available seats may naturally create a sense of winners and losers.

Controversy concerning personnel appointments, especially when it comes to membership in the Politburo and PSC, could become viciously contentious, leading factional infighting to spiral out of control.

In addition, conflicts of interests and disputes over policies - including distribution of resources, financial reforms, rural land reforms, public health and social welfare reform, affordable urban housing initiatives, anti-corruption mechanisms and other political and judicial reforms - could prove so controversial that the new leadership may find it increasingly difficult to build the kind of consensus necessary to govern effectively.

A frequent criticism of Chinese collective leadership found both in China and abroad is that this new political structure tends to make the decision-making process lengthier and more complicated, often resulting in deadlock.

Top leaders, most noticeably President Hu and Premier Wen, sometimes proved themselves unable to effect initiatives or policy decisions due to resistance from other members of the standing committee. Critics fear that soon-to-be President Xi Jinping and Premier Li Keqiang will face even tougher obstacles due to both the competitiveness of their peers and increasing institutional constraints.

Chinese-Style Democracy?

One may argue, however, that it is neither feasible nor desirable for China to return to the era of strongman politics. Only if China actually went to war or experienced prolonged domestic chaos might a political environment emerge in which a strong leader - possibly an egoistic and ultra-nationalistic demagogue like Bo wished to be - come to the fore.

The choice, of course, should not be just between an ineffective collective leadership on the one hand or an effective but dangerous dictator on the other. China's "one party, two coalitions" experiment, despite its limitations, may gradually overcome the system's deficiencies, thus paving the way for a systemic transition to a Chinese style of democracy.

At this week's Party Congress, the leadership must find a way to guarantee the strong administrative power and political authority for Xi Jinping, the first among equals, and to prevent retired top leaders (namely Jiang and Hu) from interfering in the decision-making process.

The widely speculated downsizing of the PSC from nine seats to seven is significant on two counts. First, this move will likely eliminate two specific positions - the propaganda czar and the police czar - that have constituted the main obstacles to economic liberalisation and political reform. Second, this smaller size will likely enhance the top leader's power.

More importantly, given the deep legitimacy crisis facing communist rule and the growing public resentment of nepotism and patron-client ties in the selection of leaders, the authorities should adopt more mechanisms for intra-party elections.

The full Central Committee can elect seven from the eight candidates on the ballot for the standing committee, which will in fact not change the factional balance of power (as four candidates can be chosen from each camp). Or alternatively, the full Central Committee can elect the 25-member Politburo with more candidates on the ballot. The intra-party election in this highest level of leadership can build a new source of legitimacy and mandate for new leaders.

Success or failure, China's collective leadership and its factional dynamics will have a major impact on how the most populous country in the world will be governed in the years to come.

Authors

Cheng Li

Publication: BBC News

In the Name of Justice : Striving for the Rule of Law in China

Weifang He (Author), John L. Thornton (Foreword) and Cheng Li — Mon, 05 Nov 2012 00:00:00 -0500

Brookings Institution Press 2012 230pp.

* Thornton Center Series on Chinese Thinkers

As one of China’s most influential law professors, He Weifang has been at the forefront of the country’s treacherous path toward justice and judicial independence for over a decade. Among his many remarkable endeavors was a successful petition in 2003 that abolished China’s controversial regulations permitting the internment and deportation of urban "vagrants," bringing to an end two decades of legal discrimination against migrant workers. His bold remarks at the famous New Western Hills Symposium in 2006, including his assertion that "China’s party-state structure violates the PRC Constitution," are considered a watershed moment in the century-long movement for a constitutional China. With In the Name of Justice, He presents his critical assessment of the state of Chinese legal reform.

In addition to a selection of his academic writings, In the Name of Justice also includes many of He Weifang’s public speeches, media interviews, and open letters, providing additional insight into his dual roles as thinker and practitioner in the Chinese legal world. Among the topics covered are judicial independence, judicial review, legal education, capital punishment, and the legal protection of free speech and human rights. The volume also offers a historical review of the evolution of Chinese traditional legal thought, enhanced by cross-country comparisons.

A proponent of reform rather than revolution, He believes only true constitutionalism can guarantee social justice and enduring stability for China.

"He Weifang has argued for two decades that rule of law, however inconvenient at times to some of those who govern, must be embraced because it is ultimately the most reliable protector of the interests of the country, of the average citizen, and, in fact, even of those who govern."—from the Foreword by John L. Thornton, chairman, Brookings Institution Board of Trustees and Professor and Director of Global Leadership at Tsinghua University

"What struck me—and shocked me as a foreign visitor—was not only that the entire discussion was explicitly critical of the Chinese Communist Party for its resistance to any meaningful judicial reform, but also that the atmosphere was calm, reasonable, and marked by a sense of humor and sophistication in the expression of ideas."—from the Introduction by Cheng Li, director of research and senior fellow at the John L. Thornton China Center at Brookings

* The introduction, written by Cheng Li, is free to read in the downloads section.

Praise for the book:

"China stands at a crossroads. Will the Chinese Communist Party continue to remain essentially outside the law, or will China embrace the rule of law in a way that gives its citizens both secure property rights and meaningful human rights? No scholar has formulated this dilemma with greater clarity No one who wishes to understand China today can afford to ignore this book."—Niall Ferguson, Laurence A. Tisch Professor of History, Harvard University

"Since the 1990s, Peking University professor He Weifang has emerged as one of China most influential public intellectuals, passionately advocating for legal reform and political liberalization. The excellent translations in this volume allow English readers to fully grasp his depth (and humor) on topics ranging from judicial independence to the death penalty."—Carl Minzner, Associate Professor of Law, Fordham Law School

"In this truly timely collection, the noted scholar He Weifang displays the erudition, wisdom, and courage that have made him an exemplar of what is best about the legal profession in China and beyond. Kudos to the Thornton China Center for this welldone volume, which will ensure the heroic Professor He they deserve in the western world."—William P. Alford, Henry L. Stimson Professor of Law and Director of East Asian Legal Studies, Harvard Law School

ABOUT THE AUTHORS

Weifang He (Author)

He Weifang, one of China's most influential public intellectuals, is a professor of law at Peking University in Beijing and an expert on constitutional development in China.

John L. Thornton (Foreword)

John L. Thornton is chairman of the board of trustees at the Brookings Institution and professor and director of global leadership at Tsinghua University.

Cheng Li

(editor)

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{CD2E3D28-0096-4D03-B2DE-6567EB62AD1E}, 978-0-8157-2290-8, $34.95 Order
{B98DCBB0-3580-4D55-ABD4-AB91E00585E6}, 978-0-8157-2291-5, $34.95 Order

The Trial of Bo Xilai and What it Means for the Rule of Law in China

Cheng Li — Sun, 04 Nov 2012 00:00:00 -0400

It is an outstanding result for the trajectory of political reform in China that the country’s leadership decided to put Bo Xilai through the public legal process rather than handle the matter internally.

The decision to publicly reveal some of the criminal conduct of this charismatic and demagogic Communist Party leader is a testament to unity among the Chinese leadership — not evidence of a split. In fact, this decision is an important step toward gaining public confidence in political reforms and the rule of law.

Even before Bo was dismissed as party chief of Chongqing, Premier Wen Jiabao said that the leadership should use legal processes to deal with the Wang Lijun case. This is a positive development in the Chinese leadership’s attitude to the rule of law. China’s legal profession has become an important interest group in Chinese society in the years since the Tiananmen protests. Two hundred thousand registered lawyers now have a voice and many of them are calling for improved rule of law and constitutionalism. This call has grown louder in the wake of the Bo Xilai crisis.

Read the full article at eastasiaforum.org »

Authors

Cheng Li

Publication: East Asia Forum

The Political Mapping of China’s Tobacco Industry and Anti-Smoking Campaign

Cheng Li — Thu, 25 Oct 2012 08:55:00 -0400

China has gained a reputation as “the smoking dragon” due to its rapidly growing tobacco industry and ongoing smoking-related health crisis. The anti-smoking campaign in China, despite daunting challenges and deep-rooted institutional barriers, has the potential—and the unprecedented opportunity—to change the course of the tobacco epidemic within China and in the world.

In his latest monograph Cheng Li drafts a political map of China’s tobacco industry and its main stakeholders essential for the next phase of the campaign. On October 25, Li will discuss the key findings in his monograph at Brookings.

EXECUTIVE SUMMARY

The high prevalence of tobacco use in China is not only the country’s single most serious public health problem, but also constitutes the ultimate test case for the global tobacco control campaign. While China’s remarkable economic growth over the past three decades has been one of the most amazing miracles of our time, the country has also gained a reputation as “the smoking dragon” due to its rapidly growing tobacco industry and ongoing smoking-related health crisis. The anti-smoking campaign in China, despite daunting challenges and deep-rooted institutional barriers, has the potential—and the unprecedented opportunity—to change the course of the tobacco epidemic within China and in the world. The drafting of a political map of China’s tobacco industry and its main stakeholders is essential for the next phase of the campaign.

Brookings: Experts - Cheng Li

High Expectations for China’s National People’s Congress

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China's New Leaders: Rule of the Princelings

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China's Political Transition: A Balanced Assessment of its Problems and Promises

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China in Revolution and War

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China at the Tipping Point: Top-Level Reform or Bottom-Up Revolution?

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A New Cold War? The Future of U.S.-China Relations

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Rule of Law in China: Prospects and Challenges

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America and China in the Aftermath of Election and Succession: Paths and Pitfalls

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Opportunity Lost? Inside China's Leadership Transition

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Xi Jinping Can Send China in a New Direction

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Challenges for China's New Leadership

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Shadow of Former President Looms Over China's New Leaders

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Li vs. Pei: China’s Prospects for Political Reform, Final Round

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Will There Be More Freedom and Reforms in China's Future?

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Li vs. Pei: China’s Prospects for Political Reform, Round Two

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Li vs. Pei on China’s Prospects for Political Reform

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The Powerful Factions Among China's Rulers

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In the Name of Justice : Striving for the Rule of Law in China

ABOUT THE AUTHORS

Weifang He (Author)

John L. Thornton (Foreword)

Cheng Li

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The Trial of Bo Xilai and What it Means for the Rule of Law in China

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The Political Mapping of China’s Tobacco Industry and Anti-Smoking Campaign

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