Last November, when Xi Jinping was elected to lead China for the next ten years, he promised to move towards a more “harmonious society”, to reduce corruption and ease social tensions. But his promises for change have brought challenges, not least the need to convince the deeply conservative Politburo members that clinging to the status quo risks China’s rising position on the world stage.
On the other side of the globe from the US presidential election, China saw the second main national political event of global significance in 2012. While the change in the leadership in Beijing in November was predominantly a domestic affair, the impact of the People’s Republic on the world is such that the policies followed by the last major state ruled by a Communist Party affects most other nations.
The new Politburo and government are likely to maintain the broad contours of Chinese foreign policy, focusing on access to raw materials and non-interference of other nations in its internal affairs, but they will also have to deal with a more assertive US position in their home region under President Obama’s ‘Asia pivot’.
Clashes with Japan and the Philippines, both US allies, as well as with Vietnam have led to increased tension in a region which is the prime driver of the world economy. The ability of Washington and Beijing to steer their way through this will be a significant test of diplomacy on both sides as the USA shifts policy to acknowledge the changing global balance towards Asia amid forecasts that the Chinese economy will surpass its own in size in the second half of this decade.
The outlook is a good deal more complex than may be suggested by those who see China’s rise as inexorable, and the reasons lie in domestic affairs. Though the achievements since the launch of economic reform at the end of the 1970s are evident, the growth model now faces multiple challenges with major implications for a society that is evolving very fast. Political reform is not on the cards but, in a state where the monopoly Party holds all the reins of control, any change has political overtones.
The impact of those broad challenges on foreign policy is a matter for conjecture given the lack of pointers from the leadership. The result could be a concentration on domestic matters with little attention paid to relations abroad.
That seems unlikely, however, given Beijing’s more assertive stance in recent years and the way it sees a real and present threat from other regional powers backed by the USA, especially over conflicting claims to maritime sovereignty. More likely is a combination of increased nationalism and an effort to overawe smaller East Asian states while confronting the old foe, Japan. The moment of decision will come when such confrontation affects economic relationships that both Asian countries need – and draws in the USA.
However, the first priority for Xi Jinping, the new Party Secretary who ranks first in the Communist Politburo, is domestic. Xi has made his way to the top by working well with the various interest groups that make up the country’s political apparatus, including the big state-owned enterprises, the bureaucracy and the army. In his first remarks after being promoted to the top job at the Party’s five-yearly Congress in mid-November, he acknowledged the desire of the inhabitants of the world’s most populous nation for better lives, following up with the launch of a campaign against corruption. His colleague at the top of the Politburo, Li Keqiang, who will become prime minister at the annual meeting of the legislature in March, has spoken of the need for economic reform and shares the desire of the outgoing leader, Hu Jintao, to move towards a “harmonious society” of reduced wealth disparities and less social tension.
So the leadership knows it has to improve living standards further – 13 percent of Chinese live on less than $1.5 a day – and rebalance the economy away from its dependence on exports and fixed asset investments. The question is whether they can achieve this without chipping away at Communist rule in a regime that remains in a political straitjacket and where the Party’s continued supremacy is the bottom line for the leadership. That means avoiding risks to the system.
There had been speculation that the Politburo’s top body, the Standing Committee, might include two figures committed to economic and social change when it was formed at the five-yearly Party Congress held in November. One of these, Wang Yang, had laid out an agenda for change during his five years in charge of the country’s richest province, Guangdong; the other, Li Yuanchao, had a reformist record when running Jiangsu province in eastern China before moving to Beijing to head the Party’s powerful Organisation Department.
In the event, both men fell by the wayside. Wang was seen as too disruptive by a leadership that wants to stress unity after the dramatic fall from grace of the rising star of Chinese politics, Bo Xilai. Li made enemies through his promotion policies at the Organisation Department. Former leaders, including Jiang Zemin who headed the Party from 1989 to 2002, emerged from supposed retirement to help mould the new seven-man Standing Committee in which five Party stalwarts with experience of running big provinces or cities joined Xi and Li at the summit. The backstairs politicking was intense.
All the signs are that the new Standing Committee will follow cautious, incremental policies at home while drawing on the political dividends of a strong national stance in foreign affairs. Change will come, but on a piecemeal, localised basis. However in a regime as interlocking as that in China, there are inescapable political and social implications in such steps as reducing the power of privileged state companies, strengthening land-ownership rights, liberalising the financial system, increasing the rights of migrant workers, and implementing realistic pricing of water and energy as well as getting to grips with environmental degradation.
With the economy likely to show mild short-term recovery after growth fell in 2011, and given the way that reform would cut growth and boost inflation in the short run, the temptation to stick with the status quo are considerable. Yet that could spell longer-term dangers in a lack of necessary development away from the post-1980s model. China may seem unstoppable and confident in its future but, like other nations, it has major choices to make and a tricky task in adapting to a shifting world crowding in on it.
