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Xi on the Brink

Elections in a large nation are always a time for musing about the future direction of the nation. This is especially true in China for the simple reason that they don’t have elections. The 19th Communist Party Congress will convene for a week starting on 18 October, determining who will run the largest country on earth for the next five years.

China is a true republic, meaning that the outgoing leadership picks the new leadership – independent of the wishes of the vast majority of population. It’s not exactly a dictatorship in that no one person or faction has complete control, at least not since Mao Zedong died in 1976. That may change as Premier Xi Jinping is poised for a dramatic consolidation of power.

Much has been and will be written about it. Like the Communist Party of China (CPC) itself, the articles are dense and almost impossible to understand without a lot of background material. Here is an attempt at a quick guide.

Xi Jinping. This is about as close to a smile as he ever has.

Like every political party, the CPC is divided among factions. The main difference in this autocratic nation is that the factions are generally divided by personality, with sub-factions based on economic and social interests. The main factions are identified by the leaders past and present who are still alive and continue to exert influence. They are Hu, (for Hu Jintao) Jiang (for Jiang Zemin) and Xi.

There are policy implications which naturally come from these, with Hu representing the most hard-line control and Jiang a more benign stay-the-course group. Xi represents reform, generally, but policy is largely unimportant. This is a game of thrones more than anything.

Xi rose in power because he was able to gain the backing of the Communist Youth and the “Shanghai Group,” largely defined as business interests. These picked the previous leaders in turns and their unity was a great source of strength for Xi at the last CPC Congress in 2012.

The Standing Committee poses for a group photo after the “election” in 2012. This is what passes for openness in China.

Despite that success, however, Xi has only one other clear ally on the seven member Standing Committee which actually runs the nation, and a total of five on the 25 member Politburo which has genuine influence on policy.

This is about to change in the new Congress, although exactly how much is to be determined. It is clear that Xi will be given broad powers which no one has held since 1976 and much more representation on the Politburo. What exactly this means may not be known for some time, but the tea leaves will be set if not actually read by 25 October.

This is a critical time for China for many reasons. Xi is extremely popular in the nation largely because he has ruthlessly rooted out corruption at many levels and removed very powerful people. This includes Zhou Yongkang, the first ever member of the Standing Committee to be removed for corruption, top officials in all 31 provinces,  as well as a complete overhaul of the powerful People’s Liberation Army (PLA).

A top leader from all 31 of China’s provinces has been removed for corruption since 2012. They are serious about this.

This is where opinions of Xi naturally diverge. There are signs that he has a healthy fear of the general population, who were growing restless over the high degree of general corruption that has taken root alongside China’s rapid growth since the 1990s. In that sense, Xi is clearly a reformer. However, cynics will note that in a nation where everyone is dirty an anti-corruption drive is a popular way of rooting out opponents.

Both of these views have merit. It’s a question as to how much.

This is what everyone will be looking for at the CPC Congress. As a genuine reformer, Xi still has a lot of work cut out for him. China still wants it both ways in terms of needed economic reform, favoring a new openness and expansion of free market policies, including governing their currency the Yuan Renminbi (People’s Currency) while attempting to maintain control. There are still corrupt officials everywhere, and the PLA still famously hands out promotions for pay.

Once Xi is handed more power, probably including complete control of the PLA, he will either use the power for more reforms or he will use the power against his enemies first. We will find out.

Is the People’s Liberation Army a capable fighting force or just a source of easy cash?

The problem before the nation, however, is bigger than corruption itself – although that often defines the limits of what can be done. Debt has spiraled out of control since 2008 at all levels of the economy but most notably industry. This would be a good thing if it was an investment in the future, and optimists see it that way. Cynics see it as an attempt to prop up slowing growth and a net drag on the economy that will eventually slow growth.

The difference between the two? Corruption, or pocketing all that money. And, of course, the inefficiencies inherent in a centrally planned economy – which, given there is only the CPC is something which is never talked about. So the focus is on corruption.

Xi has his own main policy initiatives which do point to more general reform and growth, although still very much within the framework of a centrally planned economy.

The Belt and Road Initiative, including the new Silk Road. As a foreign policy initiative it’s daring and ambitious. It’s also expensive.

The “Belt and Road Initiative” of high speed rail is intended to spread the benefits of growth, now concentrated in four to eight large cities, across the nation. Shanghai, for example, doesn’t need more growth as it is already strained but the rural provinces do. A 400 kph (240 mph) universal rail system would spread this around and, in the grander scheme, connect China with the entire world through a new “Silk Road”. This ambitious world leadership has captured a lot of imaginations for good reasons.

The other initiative is to alleviate poverty by generally lifting those left behind by rapid growth through more direct means. This has not been well defined or named yet, and we expect to hear more at the Congress.

This gives us three clear policy goals – fighting corruption, infrastructure investment, and eliminating poverty. If this only makes you more worried about debt you are far from alone. But as a “reformer,” is there any political reform in the works? There is not a sign of it at all, nor is there an identifiable faction backing it. This is where it gets strange.

“Straighten your waist!” (“Get in shape”) The enigmatic rabbit-filled first post of the short-lived Communist Youth League’s twitter account.

For a nation which blocks all speech it wants to, including all of facebook and twitter, an estimated 200 million people (about 1 in 7) have an illegal Virtual Private Network (VPN) which circumvents this “Great Firewall of China”. The Communist Youth League recently opened a twitter account, breaking the law themselves, in what was seen as a tacit admission that the youth they want to reach are indeed on the other side of the firewall. The account was removed and nothing more has been said.

But there are many signs that the population, especially the young, are restless. That’s why what happens with the new power given to Xi is so important. It’s also worth noting that while Xi is indeed a charismatic and capable leader his successor is unlikely to be as skilled. And as of yet no obvious successor is being discussed – another key thing to look for. Without a smooth transition anything Xi accomplishes may not be lasting or important, and he has to know this. But a successor is a potential threat, and the lack of a clear one does point to power for it’s own sake in the hands of Xi.

What is the future of China? On October 25th the last cup of tea will have been downed and we will have the leaves to read. Like all divination, it will be open to interpretation. All we know for sure is that the future of 20% of the population of this planet is about to be determined.

That alone is worth contemplating.

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