Platt Perspective on Business and Technology

Thoughts of China for after its 2012 power transitions 5: setting the stage for 2013 – 4

Posted in macroeconomics by Timothy Platt on November 5, 2012

This is my fifth installment in a series, in which I seek to outline and discuss some of the challenges that China’s new leadership will face as it assumes power coming out of the 18th Party Congress, with that transition formally beginning in the autumn of 2012 (see Macroeconomics and Business postings 122 and loosely following for Parts 1-4.)

And I want to start this posting by opening acknowledging what should be the obvious: I may have something of an idea as to the identity and nature of at least some of China’s challenges but I have to guess like anyone else as to what China’s leadership will do next, and both in response to internal Party pressures, and in response to the more external crises and challenges they face. So when I wrote my third installment in this series, I predicted that Bo Xilai would be tried, convicted and sentenced and before the opening of the 18th National Congress of the Communist Party of China. Quite simply, my reading of this news story has been that this represents a scandal that China’s leadership needs to move past and definitively and as quickly as possible. Then a few days later, Bo – still kept sequestered and out of sight, was publically vilified in China’s official news platform: Xinhua and he was publically stripped of his Party membership, amidst accusations that he has in fact been a hardened criminal for many years now.

The public vilification and official distancing began, and Xinhua’s coverage presented a lengthy laundry list of crime and malfeasance and of possible criminal charges that Bo is likely to face. If the Party and its leadership can separate themselves from Bo and cast him as a rogue outsider and as not being representative of the Party or its principles, that would go a long way towards neutralizing this scandal for them going into their National Party Congress. And with that, and to keep this story from bubbling out again and immediately before the Party Congress, my guess was then, that any trial itself would be postponed until later and probably until early next year. Public vilification and both through Xinhua and other channels would continue, further widening the gulf between Bo and his cronies, and the Party and government of China and their leadership.

I am writing this on October 2. This posting is set to go live on November 5, just a few brief days before the opening of the 18th National Party Congress. Right now I do not know if Bo Xilai will face his show trial before or after the Party Congress and my guess is that even China’s leadership is at odds over that and undecided – at least as of today in early October.

Right now, China has at least two major factions that are vying for supreme Party influence and leadership: one led by China’s current and soon to step down president, Hu Jintao and the other by his immediate predecessor in that role, Jiang Zemin. And as a third force here that has to be taken into account, I also include the senior general officers and military leadership of China’s People’s Liberation Army.

• Hu has been weakened by a number of recent events, China’s current and worsening economic slowdown only constituting a part of that (e.g. his recent loss of Ling Jihua as a right-hand man through scandal: see Part 2 of this series.)
• Jiang is still influential, and in fact the man most likely to succeed Hu in supreme leadership, Xi Jinping can be considered one of his protégés more than one of Hu.
• And the People’s Liberation Army has been quietly but forcefully vying for increased voice and power for some time now, and if for no other reason, in response to the apparent weakening of Hu and the potential for creation of a power vacuum that this could lead to.

So the problems are fairly clear-cut, or at least some of them are, as viewed from the outside. Responses and immediate responses during this period of challenge are a lot less so. And with that as background analysis, I turn to the topic of this posting: the flip side of the challenge that China faces from its preferentially advantaged princes: the very public challenges faced by China’s peasant masses in contrast.

In a fundamental sense I began writing about this side to this story in my earliest postings to this blog about China, with my series: The China Conundrum and its Implications for International Cyber-Security (see my Ubiquitous Computing and Communications – everywhere all the time, postings 69 and loosely following.) I began that examining how China seeks to limit and control the online conversation and its citizen’s access to information, and I found myself essentially immediately delving at least as much if not more so into why they would try to do this. And a widening maze of reasons began to come into focus and one of the most pressing of them as sources of impetus for silence, was the potential that members of China’s populations might begin to openly and publically share of their own stories (see for example, Part 1 of that series. One of the incidents that I briefly touched upon there was an incident in which numerous public buildings, including public schools collapsed during an earthquake and many, many children died as a result. Privately constructed buildings did not experience such widespread and catastrophic failure – and it turned out that these schools and other public structures were assembled using knowingly inferior and sub-standard materials and with corner-cutting in the actual construction. And the rich and powerful who had landed those construction contracts for the most part walked away.

China’s peasants have faced the consequences of environmental disasters from reckless strip mining and open pit mining, and from resulting contamination of their air and water supplies. They have faced injustice from corrupt local and provincial officials as they make special deals with their cronies, and as members of the general public are denied anything like real legal recourse. And that ongoing story and the prospect that more of China’s citizens realize they are not alone in this, has been one of the driving forces behind their Golden Shield Project, and system of online censorship from the beginning. But with China’s hundreds of millions of cell phones and with the gaps and leaks that all but functionally define their Golden Shield: their Great Firewall, stories do get out and spread. And with China’s current and still growing economic slowdown, that includes word of labor strikes and of the conditions that lead up to them.

Right now, during the lead-up to China’s 18th National Party Congress, that includes by way of example some very disturbing strikes at factories owned by Foxconn, in the People’s Republic of China. Foxconn, it should be noted is a multinational electronics manufacturing company, headquartered in Tucheng, New Taipei, Taiwan – a Taiwanese company. Mainland Chinese workers who staff Foxconn facilities in cities such as Shanghai rose up in protest after some very publically visible suicides from workers who took their lives because of the conditions under which they were living and working.

Publically visible labor strikes in which workers take action, and both against their employers and against police forces, have not been limited to this one set of strikes, or to labor unrest in general. And China’s current economic slowdown has only exacerbated this as more and more members of China’s public begin to see the disparities between have and have-not in a new light and as more widely played out across their country. That shared vision is a driving force behind China’s responses to its princeling scandals. And all of this is taking place as they approach their once-in-ten-years power transition.

All of this, and both in this series and in the postings and series that have preceded it (see Part 1 for references), and the forces and factors that led me to white all of that come to a head now for China’s leadership and for their in-practice systems of governance. What path will China’s new leaders take in addressing all of this? China’s Politburo Standing Committee currently has nine members, but with power consolidation that might be reduced to seven coming out of their Party Congress. Certain Party members seem fairly certain to gain positions in that body, but with all of the challenges and uncertainties that China’s leadership currently faces and with the political jockeying for power taking place within China’s leadership, there is still a great deal of uncertainty in that – and I would guess at least some for China’s leaders even if much more so for any outside observers.

There is an old and reportedly Chinese curse that is often phrased in English as “may you live in interesting times.” We are living in interesting times, and I expect to be writing a lot more about all of this, and certainly as China completes its Party Congress, and moves on from decisions publically made and stated there. Meanwhile, you can find this posting and related at Macroeconomics and Business.

2 Responses

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  1. Amedar Consulting said, on November 6, 2012 at 1:00 am

    I do believe all of the concepts you have offered in your post. They are very convincing and will definitely work. Still, the posts are too short for beginners. Could you please lengthen them a bit from subsequent time? Thank you for the post.

  2. dieta said, on November 6, 2012 at 1:51 pm

    were elected as delegates to the Congress through a series of staggered elections in which one level of the party elects delegates to the next higher party congress. An additional 57 veteran (mostly retired) communist leaders were appointed directly as delegates. This system has the effect that the party leadership through the Organization Department of the Communist Party of China can control elections and block the election of anyone it finds unacceptable.

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