Call to inaction

From outside the country, China’s leaders often appear to be interchangeable. Few foreigners can recognize more than a handful of figures, and what distinct views those leaders have are not often articulated.

But Chinese politics are far from a static environment. With a crisis gripping Western countries and a leadership transition approaching in Beijing next year, China is now experiencing “an explosion of intellectual ferment,” as Kenneth Lieberthal, the director of the John L. Thornton China Center at the Brookings Institution, has put it.

It is a political situation without recent precedent. The People’s Republic of China certainly experienced factional splits in its earlier decades, but there has been a remarkable degree of unanimity among China’s leadership group – at least superficially – in the years since 1989.

However, since the “fourth generation” of leaders (led by Hu Jintao) came to power in 2003, political influence has become more diffuse, and the signs of differing approaches and opinions more evident. The last decade also saw a rise in the influence of think tanks, lawyers, NGOs and interest groups. Chinese media organizations have developed rapidly, and microblogging has enabled average Chinese people to send and receive exponentially more information.

Out of this plurality of voices, the outlines of at least two factions have become apparent, and the possibility of several others presumed. One group is “the princelings,” scions of China’s revolutionary elite. This faction includes the party chief of Chongqing, Bo Xilai, and the next party chief of China, Xi Jinping, both sons of prominent Communist leaders. The other faction is composed of leaders who have risen to power through the Communist Youth League, Hu Jintao’s power base. Guangdong Party Secretary Wang Yang, a proponent of financial reforms that would benefit the middle class, is a prominent member of this group.

Bo and Wang are far from being the most influential players in the field; it is not yet certain whether one or both of these men will earn a seat on the Standing Committee that will be announced at the 18th National People’s Congress at the end of this year. But they are often seen as representing the interests of distinct social classes, and there is a sense that either of them could rally various interest groups.

The risk that a plurality of voices presents to a one-party system is clear. But thus far, the factions have negotiated a careful balance. Many speculate that one product of this negotiation is the choice of Xi Jinping, a princeling, and Li Keqiang, a former leader of the Communist Youth League, as the probable “dual heirs apparent.” The coming year is likely to bring more examples of this kind of careful political calculation.

Deep freeze

Politics is being played out more visibly in Beijing these days, as it would in any country undergoing a leadership transition. The outcome of this situation is that Beijing will be less likely to introduce any significant economic reforms in the next year – even if the economic situation necessitates them. Politicians are still jockeying to solidify their positions ahead of the congress, making them less likely to adopt controversial positions that could weaken their base of support.

The US, too, will no doubt see its legislative abilities slow to a crawl during its own election year. But the difference is that the Beijing consensus must be hammered out through careful negotiations.

Policies will be enacted over the next year, but gradualism is likely to remain the order of the day. For example, take municipal bonds, a trial program rolled out in late 2011. The program simply enlarged the existing financial system rather than changing fundamentally the way the country distributes cash and builds up debt.

Other potential changes seem similarly unlikely to challenge any of the economy’s vested interests. Rather, they will aim to maintain stability and the status quo. One safe topic is welfare politics, such as the affordable housing program. Not surprisingly, almost all Chinese politicians express fervent support for enhancing social programs for the poor.

But these programs, while undoubtedly helpful to some, will not necessarily help the government in its much-publicized goal of achieving “inclusive growth.” This catch phrase refers to the initiative, part of the current Five-Year Plan, to shift China’s economy from its reliance on fixed-asset investment and exports towards domestic consumption.

Wen Jiabao emphasized the need for these reforms when he called China’s economy “unstable, unbalanced, uncoordinated, unsustainable” nearly five years ago. With the global economy so fragile, those reforms seem even more urgent today, but concrete progress towards rebalancing has thus far been minimal.

And it may remain so. Wen captured the situation in a lesser-known quote on the subject. China’s socio-economic development is like a person with one long and one short leg, he said – the long leg is economic reform, the short leg, social reform. The outcome is that development proceeds slowly and unsteadily. That may turn out to be the case.