Platt Perspective on Business and Technology

China and its transition imperatives 6: Xi Jinping’s challenge 1

Posted in macroeconomics by Timothy Platt on April 4, 2014

This is my sixth installment to a new series on China and its recent Party and government leadership transition, looking back over the past year since that formally and officially took place and to now and China’s current situation, and forward (see Macroeconomics and Business, postings 154 and loosely following for Parts 1-5.)

I began a discussion of the Who that stands behind and maintains China’s one Party rule and its system of centralized power and authority in Part 5 and with the still-central figure in any power distribution in China: with Mao Zedong and his all but deified legacy. And I begin this posting, expanding discussion of China’s all powerful Who from there outward with consideration of China’s politically connected elite: its new aristocracy as it has come into being in this one Party system and state. And I refer there to China’s Crown Prince Party: its Princelings. They are all direct descendants of Mao’s closest allies from the days of his taking power. Those allies were themselves afforded special primacy of place and authority, and of voice and power for their contributions toward making Mao’s China a reality and for their direct, personal loyalty to him. And their special privileges and access to power and wealth have been handed down to their children and then on to theirs as an inherited legacy.

And under these Party aristocrats in authority is a foundation base of Party and Party member/government official functionaries, and from officials in charge of local community Party and government offices on up through provincial and national levels. And each of these officials has their own particular personal measure of power and authority from their affiliation with and support of the State and of the Party that defines and controls it, and their own vested interest in maintaining this system as this is where their own personal authority, however local and locally circumscribed, comes from.

And this shapes everything in China, and determines what is allowed and what is possible and for every business or organization in China and for every individual and family there too. To focus here at least briefly on a personal and family level, I cite their now recently formally ended one child policy. This policy, among other things, was used to control dissent (e.g. affiliation with or even just overt and publically known leanings toward unapproved religious organizations) with harsh penalties imposed on any who would seek to have a second child and with that determination wielded locally in accordance with political considerations.

In a business and economic context this system of power and authority, and of government of men rather than of law has meant intervention in and control over businesses and over the overall economies of China: their overtly acknowledged official white market economy, their nominally disallowed but often actively supported black market and its economy and the vast gray market and its economy that floats between them. I have written in some detail of these systems in other series and in this regard re-cite my series: The China Conundrum and its Implications for International Cyber-Security (see Ubiquitous Computing and Communications – everywhere all the time, postings 69 and loosely following for its Parts 1-23.) For purposes of this discussion I would not focus on specific instances of how this all works, with for example black market mining of rare earth elements surpassing in scale the mining and production of these resources through officially approved white market enterprise channels. My focus here is on how everything in all of this: white, black or gray market succeeds or fails at the whim of individuals who, buttressed in their authority by the party and their ties to it, make the real binding day to day decisions in China. And any change that is attempted is going to have to gain the acceptance and support of this rigidly inertia-bound system if it is to succeed.

I briefly noted Deng Xiaoping in Part 5 of this series. He succeeded in effecting real change in China by challenging select edge pieces of Mao’s dead hand legacy that had proven problematical and even overtly detrimental to the legions of Party backed and Party supporting bureaucrats who collectively comprise the tiller that Mao’s hand still steers China’s ship of state with as their Great Helmsman. But he never, ever even tried to touch the third rail of their One Party system or anything else fundamental to their overall system.

And this brings me very specifically and directly to Xi Jinping’s challenge. He has at least seemingly ended China’s enormously unpopular and disruptively damaging one child policy and he has continued a process of challenging very select Party powerful for moral and legal transgressions, that began in the months leading up to the 2012 18th National Congress of the Communist Party of China. But at the same time that he has begun challenging Mao’s legacy and its ongoing implementation around the edges, he has publically proclaimed his ideological purity and his fervent ongoing support of China’s Communist Party as the one and only legitimate source and voice of power and authority in his country.

I am going to end this posting at this point, simply noting in anticipation of the next installment to this series, that ultimately Deng Xiaoping was a failure, even as he is revered in China and primarily for the change he did bring into being. He was a failure because all of his changes were cosmetic, leaving a rot at the core of the one Party system that he could not even touch with challenge or change. And Xi Jinping risks marginalizing himself in this same way unless he can somehow find a way to challenge the core, fundamental of Mao’s legacy as embodied in his sacrosanct One Party system. And this means wresting power from the legions who collectively make any such challenge, any such change so fraught with peril, or at least convincing some threshold percentage of them to accept more fundamental change. But I leave that discussion to a next installment. Note that I did not mention China’s military in this posting’s discussion, or its vast business and industrial holdings. I will bring them into this in my next series installment too. Meanwhile, you can find this and related postings at Macroeconomics and Business.

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