Platt Perspective on Business and Technology

China and its transition imperatives 12: facing and confronting the core, most fundamental challenge 3

Posted in macroeconomics by Timothy Platt on August 7, 2014

This is my 12th 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 1-11.)

I offered a four point list of issues that I would address in this series, towards the top of Part 11, and ended that series installment at the fourth of those bullet points, simply acknowledging it as being important to address. This point stated that I would:

• “At least take note of some recent events that have if anything exacerbated these challenges and both for China and her peoples, and for their new leadership.” (Here, “these challenges” refers to issues raised in the first three bullet points.)

And I then went on to end that installment with a follow-up note that I appended to it, concerning the legal response that the United States government has entered into in 2014 in direct response to the cyber-surveillance and other activities of a unit of the Chinese military, against both civilian businesses and government computer systems in the US.

To keep all of this in focus, my primary ongoing goal for this series has been to at least briefly explore and discuss some of the issues that China’s new supreme leadership faces if it is to effectively address any of their country’s serious long-standing structural problems, as I have been discussing through a succession of postings and series in this blog.

I have in the course of this series, discussed how:

• Many if not most of the basic structural challenges that China faces, stem from its unquestioned and unquestionably sacrosanct one Party system,
• And from its top-down command and control systems that radiate out of that and at all political levels in their system from local Party and government on up, and from their national Politburo Standing Committee on down.

And particularly in its Part 10 and Part 11 I have focused on two sources of potential threat to China’s current centralized one Party control that could be used as significant sources of leverage for effecting real structural change and even an opening up of China’s society to include and allow a wider diversity of voices and opinions. Those two potential sources of change-driving strength are:

• The increasingly online and call phone connected citizenry of China, where it is becoming increasingly impossible for any central authority to control all conversations and all information distribution and access, and
• China’s new and growing private sector businesses, where much of their country’s future prosperity and position in the global community will depend on their thriving and where that will require a loosening of centralized, governmental and Party control.

I have, at least in passing more or less continuously throughout this series been referring to the stultifying voice and authority of the Communist Party of China’s bureaucracy and at all levels from local on up, as a countervailing factor that would seek to sustain the current status quo, as that is where their power and authority come from. And that is where their own personal wealth comes from too, and particularly where Party officials can and do extract personal benefit as a requirement for the communities they control to function.

I am almost certainly going to come back to the complex of issues that local and provincial Party leadership raise in future postings, but for now I will set that aide and turn to a second, and in many respects far more dangerous source of challenge to any real, fundamental change: the People’s Liberation Army (PLA) of China. And I begin that by repeating some points that I have raised many times in this blog and in my China-oriented postings here:

• Under the terms of China’s governing law, the PLA has both a right and a responsibility to directly participate in and even effectively control and manage, any industry or business sector that produces or otherwise provides critical needs material, that would be needed for it to fulfill its national defense mission.
• And in practice, the PLA has pursued that opportunity to enter into essentially every business and industrial sector in China, and often as a directly controlling participant.
• As a result the PLA, acting under the authority of government and law, and of Party is by far the largest and most powerful force in all of China’s production and manufacturing, and business sectors.

The PLA is tremendously powerful militarily with on the order of 2.3 million men and women in uniform, making it the largest military force in the world. It is also tremendously powerful financially. And its leadership sees any change from the status quo of current one Party control as a direct threat to themselves and to their system of authority.

I begin discussing that with a brief and I admit very selective, if telling story as to the political orthodoxy of China’s military leadership. And this is a story of a crown prince among princes, of what has become known in China as their well-connected and all but all-powerful Crown Prince Party. I begin with Mao Zedong’s one officially recognized grandson: Mao Xinyu. I have already at least briefly outlined who he is, and how he was catapulted into power in a series that I wrote and posted in anticipation of the 18th National Congress of the Communist Party of China in which their current leadership was formally brought to power: my 2012 series China in Transition (and see in particular its Part 2 and Part 3 in this context.)

• Basically, Mao Xinyu graduated from college with a PhD in his grandfather’s thoughts and teachings, and he was brought into the military on a fast track to becoming a four star general officer – making him the most rapidly promoted officer in the entire history of the PLA.
• And he serves as a spokesperson for their military in support of the as-is Party controlling status quo.

China’s military has seen the recent and still consolidating national Party and government power transition as an opportunity that is not to be lost out upon, for both consolidating and expanding their role and their authority in China. And they have been preparing for this for years now; bringing in Mao’s grandson as a figurehead and symbol of Party purity and focus is only one small part of this larger campaign.

As a second, and perhaps at first seemingly minor part of this larger puzzle I would cite how China acquired an old Admiral Kuznetsov class aircraft carrier hull which it rebuilt and renamed the Liaoning. And they immediately began work on a second aircraft carrier and on building a fleet of support ships for them. And of course, they have been actively developing and building new aircraft and both for land-based and carrier-based use. In this regard I would specifically cite their new variant models of their admittedly old design Shenyang J-11 air superiority fighter. And I cite how they are actively working to design and build next generation replacements to them. Basically and as a bottom line conclusion here, China and their PLA are actively seeking to develop open ocean military capabilities where their navy has, up to now been primarily a modest shore defense force. And they are taking this power transition as their opportunity to flex their muscles.

This becomes important here when you consider how China, through its military is increasingly claiming national ownership of vast tracts of the South China Sea, and of all natural resources found in and under those waters.

• Any successful effort to effect change in China, and change that goes beyond the cosmetic and show-only, is going to have to balance the needs and priorities of conflicting forces, and potential forces.
• The potential threats of instability and its possible outcomes as arising in China’s citizenry are viewed more as a longer-term source of concern – even if longer-term might come due earlier than China’s current leadership now sees as possible.
• The same can be said for possible problems arising from Party created friction and challenge to success, in their still early-stage private sector businesses and industries.
• Potential threats from their own system of bureaucrats and from an organized force such as their military with its many sources of strength and authority are here-and-now and cannot be denied – ever. And in that regard, their military’s show of force in the South China Sea, and I add in the realm of cyber-conflict comprise messages that are directed inward and to their government’s leadership at least as much as they represent messages directed outwards to other nations, and in their immediate region and globally.

And this brings me to the central conundrum that Xi Jinping and his Politburo Standing Committee face and even when he personally holds key military oversight titles too.

With this, I have at least briefly sketched out some of the key factors that have to be taken into account in navigating stability and change and in trying to achieve and maintain both. Any real change in China’s basic Party and government systems will require a significant rethinking and rebalancing of goals and priorities, and of potential opportunities and challenges faced. And this will require moving beyond the sometimes entirely brute force approaches to compliance that China’s leadership has resorted to, and certainly from Mao Zedong’s time on as China’s modern context.

I have been mentally debating adding a next series at this time, to this series. I may very well add a 13th installment to it but at least for now I am going to end this series here at this point, simply adding that any real resolution to any of the issues that I have been discussing here, will have to come from China and from its people and its leadership, and they will have to be framed and presented in ways that can win over potentially strongly competing factions. Meanwhile, you can find this and related postings at Macroeconomics and Business.

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