New generation of Chinese leaders face a dynamic future

The 18th national congress of the Communist Party of China concluded late this week with the election of a new Central Committee and a new Central Commission for Discipline Inspection.

Departing Chinese President Hu Jintao and Prime Minister Wen Jiabao transferred party control to Xi Jinping, Li Keqiang and eight other members of the arriving Fifth Generation of leaders. It will not be until March, however, that  Xi Jinping will officially assume the presidency.

Chinese leaders are groomed years in advance. This new leadership has experience in provincial government and are more highly educated than their predecessors. Just like their contemporaries in other governments, some in the new succession hold doctorates in economics and engineering.

President Hu Jintao’s successor, Xi Jinping, plans to continue China’s military build-up and press Beijing’s territorial claims. The incoming leader was told in no uncertain terms there will be no big changes and that he must stick to the playbook of uncovering corruption and maintaining the economy.

China’s deep social divisions and potential for instability means drastic reformation is unlikely and the status quo looks likely to remain for the next 10-year cycle. But social pressure will continue to threaten stability for the foreseeable future.

A bumpy road

The transition has been wracked by the scandal involving former Chongqing Party Secretary Bo Xilai and his family. Mr Bo is under investigation for complicity in his wife’s allegedly murderous actions which threatened to derail the power transfer earlier this year.

The party says the scandal will not obstruct consensus and unity within its ranks. Yet it shows how chaos can quickly unfold even in a strictly choreographed leadership transition and threaten the unity Beijing has sought to nurture over the years.

Mr Bo’s rise to eminence through his neo-Maoist policies were sufficient reason to press ahead with an investigation. The political model his faction represented, whether or not Mr Bo completely believed it himself, was not the direction Beijing planned.

It is extremely difficult for the Chinese elite to change course. Giving up even limited control weakens the entire structure. And now, as the world heaves with economic uncertainty, the party cannot afford disruption in political direction at such a vulnerable time.

This is not to say there will be nothing new to expect from the fifth generation’s politics. The new team is comparatively young and Xi Jinping is the first party leader not to be appointed by either Mao Zedong or Deng Xiaoping, effectively marking the end of the Deng dynasty.

Power transitions in China’s one-party state usually excite the world’s foreign relations and humanitarian watchdogs. With new leaders comes the potential for changes in Chinese politics, the economy and society. 

But very little information, outside of carefully crafted state media releases, is known about the incoming leaders. The party is portraying itself as a structure working on significant reform without actually implementing any large changes.

Former US Secretary of State Henry Kissinger is at the forefront of high-profile Western figures expecting the new leaders to bring change. Yet they will probably be more like stewards than sweeping policy giants.

Any deviation will be the result of policies set in motion years ago and will be pressured by China’s rapidly evolving economy and, especially, their social sphere.

Rising social unrest

China’s last 10-year leadership cycle started promisingly for more media freedom. President Hu Jintao and Prime Minister Wen Jiabao ran a relatively open government tackling their tenure’s first major crisis, the outbreak of sever acute respiratory syndrome (SARS).

Since then, even with the advent of the country’s social media website weibo.com, civil rights and free press has been widely repressed and heavily controlled.

Each week, there are dozens of isolated demonstrations nationwide, particularly among the less wealthy rural population inland.

Any nervousness about changes to the central party’s political direction is generally met with strict discipline, as in the Bo Xilai scandal. Demonstrations are treated no differently.

Beijing keeps a tight lid on protests by using a very visible police and state presence, but it is clear social upheaval is simmering just below the surface. More than 40% of the population lives in sub-Saharan poverty and cannot afford to buy the goods Chinese factories produce.

China has always struggled to establish a strong indigenous consumer base and a large proportion of production is exported because the cash-rich Chinese middle-class is still too small to absorb much of it.

Developing the vast interior may alleviate some pressures in the future, but that will require additional infrastructure spending that Beijing may not be able to afford if international demand for its products falters further.

Infrastructure is not cheap, either. China has to import most raw resources, leaving Beijing reliant on expensive overseas resources.

A diminishing ability to sell goods might sometimes not cover the costs of importing the needed raw materials. This could quickly spiral into a social problem as jobs are lost and government spending falls.

Economic model already evolving

The Chinese leadership bases its legitimacy on the success of its economic model. That success is now eroding and no amount of propaganda will keep the citizens from noticing the widening gap between themselves and the party.

This is largely because of the systemic economic issues the country faces.

Beijing’s economic model relies heavily on a strong manufacturing and export base to soak up its billion-person workforce and keep government coffers full.

An on-going economic crisis in Europe has seen plummeting demand for Chinese goods on the continent.

The double-digit growth rates China enjoyed since the early 2000s cannot be maintained indefinitely, especially as the US and Europe look more seriously to cheaper manufacturing options from Mexico, the Philippines and South East Asia.

Also, China is reaching the end of a two-decade economic boom, something that may have continued had the crisis of 2008-09 had not occurred. Transiting to a different model will not be easy.

Beijing and the outgoing leaders understand how its population sees the party. Many demonstrations are against the rampant corruption at all levels, exemplified best by the Bo Xilai scandal.

Announcing a clampdown on corruption and promising reform have been ideal smokescreens so far but it is unclear how long this tactic will last.

In maintaining the status quo, Beijing will look to focus on urbanisation and increase taxes to redistribute income. Of course, wealth redistribution to address the needs of the rural and interior population means taking away from wealthier citizens.

This path is becoming risky because richer Chinese are going to be important for Beijing in the coming decades. Outgoing President Hu Jintao is under no illusion that corruption is alienating the populace from the party, especially the rural poor.

Retaining party unity will be high on the agenda, but closing the ideological gap between the people and Beijing is just as important. Obliquely promising pseudo-reform in some areas will dampen social unrest and just might buy the party time to stabilise China’s economy.

Nathan Smith has studied international relations and conflict at Massey University. He blogs at INTEL and Analysis