New Leader, Old Blood

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Kristin Xueqin Wu's picture

New Leader, Old Blood

When Xi Jinping took over the post as the governor of the world’s second largest economy, he had few reasons to be optimistic. It is evident that a thorough governance reform is needed to solve the party’s crisis: rampant corruption, widening inequalities, and a collapse of faith in the party’s communist ideology.[i]As China’s economy struggles to avoid a hard-landing, coupled with an ever intense internet censorship reflecting the anxiety and fear of the new leadership, foreign national capitals tend to perceive Beijing’s challenges as safeguarding political stability as well as balancing voice and accountability. However, Mr Xi knows that his biggest challenges are not the slowing economy, neither are those inflammatory microblogs; it is the rampant corruption at all levels of the society, coupled by the weak rule of law, that has increasingly become a life-and-death matter for the party and the state.

The term governance challenge, loosely speaking, encompasses all obstacles which prevent a state from being effectively governed; in other words, these obstacles prevent a state from adapting its socio-economic institutions to suit the need of its development. The World Bank has developed the Worldwide Governance Indicators which equate the term governance to six tangible, empirical counterparts: voice and accountability, political stability and lack of violence, government effectiveness, regulatory quality, rule of law, and control of corruption. Mr Xi’s enemies, corruption and a weak rule of law are twin evils. On the one hand, corruption involves the abuse of public authority for private benefit, distorting policy decisions and their implementation; on the other hand, a weak rule of law allows corruption to go unchecked. Thus, the promotion of rule of law helps combat corruption, which President Hu Jintao tried but failed;[ii] combating corruption helps to strengthen the rule of law, which is what Mr Xi struggles to achieve.

On the first glance, Mr Xi’s challenges indeed have distinct Chinese characteristics. There was virtually no corruption during the Mao’s era. Corruption in contemporary China started with the former paramount leader Deng Xiaoping’s ‘reform and open-up’ policy. Although economic reform and corruption doesn’t have to go hand-in-hand – in most countries they don’t – Deng and his closest associates deliberately chose to put their families in charge of the opening-up of the economy, especially at the strategic industrial sectors such as real estate, coal, steel, finance and telecommunications.  Deng was not corrupt; he was mainly motivated by the need to safeguard the primacy of the Communist Party. However, these ‘red’ families, who were chosen to run the newly restructured state conglomerates, quickly build up the most toxic type of crony capitalism. Today, these princelings control virtually all the key sectors of the Chinese economy; in the heavily-state-driven Chinese market, these princelings translated their families’ political influence into personal fortune, and again translated these fortune into political power. The cycle continues, until these princelings are too corrupt to fail.

Mr Xi is no exception. As a princeling descended from a revolutionary fighter and vice premier, Xi’s family has amassed hundreds of millions of dollars in assets.[iii] In fact, Mr Xi was chosen as the Party leader precisely for the purpose of safeguarding the princelings’ vested interests. His former contestant, Bo Xilai, is also the son of a revolutionary hero. If Mr Xi is so determined to ‘clean up’ the Communist Party – not just touching the periphery – he is bound to stand up against the senior leadership. However, in the senior leadership, there is no family that isn’t corrupt, according to a former government colleague of Premier Wen Jiabao. [iv] Not just Mr Xi himself relies on the princelings for political support in the Party, challenging the economic might of the princelings may bring catastrophic consequences to China’s economy; subjecting them to the rule of law will cause another political earthquake – just think the fall of Bo Xilai – and exacerbate social unrest. Mr Xi surely doesn’t want to be the second Gorbachev.

Fortunately or unfortunately, China is not alone in its fight against corruption. Mr Xi may already find solace by comparing China with India. India serves as a good contemporary counterpart not only because both countries are at similar stage of development, but also because both countries share similar geopolitical factors: strongmen in Asia, huge and populous, gained independence in the mid-20th century and opened up in the late 20th. Both countries the world’s most unequal societies. Both countries have state-driven economy filled with protected industries. It is a shared business culture in both countries to curry favor with the officials and politicians. Like China, India is obsessed with corruption. More ironically, just like China, it remains a deep public belief that all of India’s governors are corrupt, despite waves and waves of anti-corruption movements; just like China, the rule of law has given its place to movements and campaigns.

Another apt comparison would be to compare Mr Xi’s China with Yuri Andropov’s Soviet Union. Today, China’s GDP per capita (PPP adjusted) is estimated at approximately US$ 8500,[v] similar to that of the Soviet Union in the 1980s. Apart from the similar level of economic development, contemporary China and the former Soviet Union share strikingly similar socio-economic features: one-party rule, crackdown on dissidents, top leadership appointed by predecessors, and an economy guided by a series of Five-Year Plans. When Andropov became the Soviet President, the Soviet Communist Party, like that of China, has increasingly distanced its operation from the daily life of the populace. Like the Chinese people, the Soviet people pretended to support their leaders, thanks to Andropov’s mission to ‘destruct dissent in all its forms’; like the Chinese leaders, the Soviet leaders pretended to believe in Marx, thanks to the party’s egalitarian protestations. When facing rampant corruption, just as Mr Xi has come down hard on corrupt officials, Andropov did exactly the same. Furthermore, just like Mr Xi, Andropov recognized that once the ruling elites place themselves above the law and the people, they will end up knowing nothing about the society they lead. Just like China, Soviet’s danger was not from imperialist, but from the suffering and grievances of the oppressed people.

Hence, the governance challenges facing China’s new leadership are not that different from other countries, be it the contemporary India or the former Soviet Union. After all, China’s new leadership is not that new. Not only will Mr Xi find his power constrained by the powerful princelings, such as those of the large state-owned conglomerates, Mr Xi will also find his economic policies pre-destined by his predecessor in the 12th Five-Year Plan, which will last till 2015. Furthermore, it has been a tradition for incoming Chinese leaders to stress smooth transition rather than radical reform. On top of that, Mr Xi needs to especially stress stability and continuity, in an effort to heal the party’s own divide over the dramatic plunge of Bo Xilai. Mr Bo is not the first Chinese official charged with corruption, but he remains tremendously popular even after his fall, especially among the die-hard Maoists. Half a decade after the departure of the country’ founder, Mao still casts a long shadow on Mr Xi’s leadership.

To conclude, although the governance challenges facing China’s new leadership do bear some unique Chinese characteristics, they are not that different from other countries. Like its democratic neighbor India, China needs to combat rampant corruption bred by its crony capitalist economy. Like its ideological forefather Soviet Union, China needs to subject its ruling elites to the rule of law in order to regain the faith of the people. These challenges facing China’s new leadership are not at all new. Deng Xiaoping already pointed out in 1980: “as far as the leadership and cadre systems of our party and state are concerned, the major problems are bureaucracy, overconcentration of power, patriarchal methods, life tenure in leading posts and privileges of various kinds.” [vi] 30 years later, in Mr Xi’s words, these challenges will spell “the end of the party and the end of the state” if left unsolved. Although China’s new leadership is not that new, hopefully the growing frustration in China will serve as a push. Even if Mr Xi does not have the political power to alienate corruption, hopefully he can remain focus on reducing inequality, and improve the life of China’s poorest.

 

[i] Princelings and the goon state, The Economist, 14 April 2011, available at <http://www.economist.com.hk/node/18561005>, last visited on 10 February 2013.

[ii] John Simpson, Successes and failures: Hu Jintao's legacy, available at <http://www.bbc.co.uk/news/world-asia-china-18897490>, last visited on 10 February 2013.

[iii] Billions in Hidden Riches for Family of Chinese Leader, The New York Times, 25 October 2012, available at < http://www.nytimes.com/2012/10/26/business/global/family-of-wen-jiabao-h... >, last visited on 10 February 2013.

[iv] Ibid

[v] World Economic Outlook Database-October 2012, International Monetary Fund, available at < http://www.imf.org/external/pubs/ft/weo/2012/02/weodata/index.aspx>, last visited on 10 February 2013.

[vi] China’s Princelings Build the Wrong Kind of Capitalism, Bloomberg, 28 Dec 2012, available at <http://www.bloomberg.com/news/2012-12-28/china-s-princelings-build-the-w..., last visited on 10 February 2013.

References: 

Bloomberg, China’s Princelings Build the Wrong Kind of Capitalism, 28 December 2012, <http://www.bloomberg.com/news/2012-12-28/china-s-princelings-build-the-w...

John Simpson, Successes and failures: Hu Jintao's legacy

<http://www.bbc.co.uk/news/world-asia-china-18897490>

The Economist, Princelings and the goon state, 14 April 2011 <http://www.economist.com.hk/node/18561005>

The New York Times,  Billions in Hidden Riches for Family of Chinese Leader, 25 October 2012, < http://www.nytimes.com/2012/10/26/business/global/family-of-wen-jiabao-h... >

World Economic Outlook Database-October 2012, International Monetary Fund,  < http://www.imf.org/external/pubs/ft/weo/2012/02/weodata/index.aspx>