CHINAwatch

The curious case of Bo Xilai (Part I)

Bo Xilai, a top Chinese "princeling" and Party-Secretary of Chongqing, China's fastest-growing and largest provincial-level municipality of over 30 million inhabitants, has abruptly fallen from grace, after a Hollywood-style quick-action drama featuring his top aide fleeing for asylum in an American consulate in the capital city of Chengdu 170 miles away. The curious case of Bo Xilai has attracted a great deal of Western commentaries, including that in the New York Times. Click here

Some Western observers tend to analyze this extraordinary saga as a power struggle between the so-called conservatives and reformists, and/or between the power camps of the so-called princelings and the Communist Youth League (which is the powerbase of China's current President Hu Jintao).

The first problem of such analysis is that Xi Jinping, the next President-in-waiting, is by definition a princeling.

So if the princeling group sticks together and there is such a power struggle within the Party, how could Bo Xilai, a princeling with such an impressive track record, be sacked?

In spite of Bo's alleged faults, he did a wonderful job during his time in Dalian turning it into the dynamic and green city of today. His anti-crime campaign in Chongqing was legendary and won the hearts and minds of many ordinary citizens. Under his watch, the so-called "Chongqing Model" is beginning to be the talk of the town, as an example of fast growth combined with an exotic mixture of "Singing red praises" of Communist revolutionary fervour and "Striking at the black (criminal) elements".

Is it simply because Bo was too brilliantly meritorious such that he was a victim of his own success? Hardly, otherwise by discouraging excellence, the Party would be increasingly staffed by mediocrity and risk eventual death by atrophy. Indeed, China's remarkable economic success during the past three decades would not have come about with this mindset.

Some observers labour over the wealth distribution agenda and associate it with Bo Xilai. This is simply untrue. The latest Five Year Plan (2011-15) sets the direction of the collective leadership, including princelings (like Xi) and the Communist Youth League. The direction is to create a more equitable, more balanced and sustainable society. Wealth re-distribution is at the very heart of this Five Year Plan. It is by no means the product of any single leader, let alone Bo Xilai, who has not made it into the Politburo Standing Committee, China's state cabinet.

Some say that Bo harbours ambitions far beyond mere elevation to the Politburo Standing Committee. Perhaps it is his suspected scheming behind the scene that eventually got him into trouble. Others highlighted the allegations of his own corruption through a "front" of his wife's well-camouflaged law firm located in Beijing, which has been under quiet official investigation. Also coming into the open are unsettling concerns of the way the so-called "Chongqing Model" went about the "Strike Black" campaign, flouting the rule of law and resorting to all sorts of strong-armed tactics remininicent of the Cultural Revolution. The "Strike Black" campaign was also accused of being used as an intrument to topple Bo's political opponents and to extort the transfer of wealth to feather his own nest. The "Chongqing Model" of reckless pursuit of economic growth at all costs has also been criticized.

These latest criticisms are coming to the surface including a piece by Wu Jinglian, one of China's best-known and well-connected liberal economists, which is reported in the South China Morning Post on 26 March. Click here

It is noteworthy that writing in China Reform, an influential magazine in China, Wu warned of two sets of competing forces: one between the development of rule of law and crony capitalism; the other between reform and revolution. He also praised the Wukang Village experiment in democracy through open and fair elections, which was driven by Wang Yang, Party Secretary of Guangdong Province who is a rising star tipped to vie with Bo for a seat in the 9-person Politburo Standing Committee.

One day before Bo was sacked, when meeting the international press for three solid hours after the annual NPC/CPPCC sessions, Premier Wen gave a very good hint why Bo had to be removed.

The Premier stared into the camera and said he was deeply worried that if reform was not steered properly, the spectre of the Cultural Revolution could well return to haunt the Chinese people. With these remarks, Premier Wen is the first Chinese leader who openly refers to the political convulsions of the Cultural Revolution.

So it is clear which side of Bo's doubt-act the Premier is particularly worried about - "Singing the Red" or "Striking at the Black".

It is also clear that Bo's abrupt removal could not have happened without the support of Xi Jinping as the next President-in-waiting.

The point is that in any other political system, there are always vested interests and affiliations. In China no affiliation wants to pursue its own agenda at the risk of rocking the entire boat capsizing everybody. A perceived ideological movement with gimmicks harking back to the most destructive period of the Chinese Communist Party is seen by all the powers-that-be as precisely such a risk, especially coming from someone suspected of organized corruption and hidden ambitions.

Also not in the public eye was what actually happened for 24 hours inside the American consulate in Chengdu where Bo's right-hand man Wang Lijun sought refuge. Some rumours had it that a secret CD disc was handed over. The subsequent investigation was put entirely in the hands of Beijing's National Security Bureau. Both Beijing and Washington have since kept mum about the details. In any event, Beijing is unlikely to be comfortable with someone like Bo remaining in the heart of the Party leadership whose personal and other Party secrets may well have passed into the hands of China's perceived mightiest adversary.

So explaining the Bo Xilai affair simply as a triumph of reformists over leftists is perhaps as over-simplifying as a struggle between the Communist Youth League and the princelings.

China's leadership now rests on collective ownership, based on competitive meritocracy rather than ideology. Like any other political system, there is of course a measure of sharing of vested interests but the common aim to keep the Party-boat afloat trumps any internal divisions.

Pivot to Asia or tilting at Chinese windmills?

In a two-part series, authors in YaleGlobal outline the new US strategic shift, labelled ''Pivot to Asia", in recognition of a declining capacity for spreading resources too thinly across the globe. Europe (along with NATO) is urged  to take a more proactive role in sharing costs and responsibilities for regional security. Though secuirty threats from failed states, climate change, cyber and other forms of terrorism are also mentioned, it is clear that the US priority is to gear its own resources to dealing with a rising China.

For Global Power Shift - Part I dated 21 March by Alistair Burnett, Click here  For Global Power Shift - Part II dated 23 March by Richard Weitz, click here.

This two-part series reflects a China-centric fixation. While no more than responding to perceived realities in the 21st century, this mindset, however, begs the following questions -

(a) Would the expectation for Europe and NATO to shoulder greater financial and operational responsibility for NATO be realistic in the light of a financially-weakened and more China-friendly Europe much less willing to do America’s bidding?

(b) By focussing on China and the Pivot to Asia, would American strategy be led to concede the vast theatres of continental Europe, Central Asia and even the Middle East to a resurgent Russia (and China)?

(c) With worsening demographics, China is set to grow old before getting rich. Moreover, a host of domestic and international challenges hardly empowers the country to harbour hegemonic ambitions. In terms of military technology and global outreach, China is many miles behind. What is more, China has yet to develop a set of global values which can rival those of the West. All told, is China well placed to supplant American leadership?

(d) Would a China shifting towards a slower, more equitable, balanced, and sustainable development model be such a global threat?

(e) In the light of a multi-polar world recognized by these articles, would the Pivot to Asia be a vain-glorious attempt to cling to perpetual American dominance by tilting at Chinese windmills?

Best regards,

Andrew

Galaxy to Target China's Middle Class

Live interview on Galaxy and Macao's casion business with CNBC on 14 March 2012 Click here

Will the revisions to China's criminal code be implemented and do they represent real change?

TV interview on 14 March 2012 on Inside Story with Aljazeera English based in Doha in "Debating China's security apparatus". 

The other interview guests are -

- Francois Godement, a Political science professor at Sciences Po in Paris, Director for strategy of Asia Centre, Paris, Senior policy fellow of the European Council on Foreign relations, non-resident Senior associate of the Carnegie Endowment for International Peace, and an outside consultant to the Policy Planning Directorate of the French Ministry of Foreign Affairs; and

- Phelim Kine, a Senior researcher for Asia with the New York-based Human Rights Watch.

Click here

"China 2030: Building a Modern, Harmonious, and Creative High-Income Society"

A raft of reform measures is needed if China is to become a "Modern, Harmonious, and Creative High-Income Society", according to a 468-page study report jointly compiled by the World Bank and the Development Research Centre (DRC) of the State Council, China's highest national policy organ. Click here and here  For a conference edition of the full report Click here

The report was released on 27 February shortly before the opening of the 2012 sessions of the National People's Congress (NPC) and the Chinese People's Political Consultative Conference (CPPCC), which set out to review the implementation of China's 12th Five Year Plan (2011-15).

It also fortuitously coincided with a high-profile election on 3 March in Wukan Village of Donghai Township in Lufeng City, south China's Guangdong Province. This came about after Wang Yang, the Provincial Party Secretary and a rising aspirant for the Politburo Standing Committee, saw fit io intervene personally in resolving a prolonged villagers' stand-off against the land grabs of the local village authorities. With the support of the Party Secretary, all of the village protestors' demands were met. A subsequent open and fair election saw the leader of the village protest elected as village chief. The Party Secretary hastened to explain that the democratic election in Wukan was in accordance with the nation's Organic Law of Villagers Committees. "What made the Wukan election special was that the organic law and election rules were fully observed and implemented in detail this time, unlike previous pro forma elections." He is reported to have insinuated that the Wukan model of elections is to be rolled out throughout his Province.

The Wukan affair is only the tip of an iceberg of rising social unrests. Some analysts citing leaked official figures put such incidents at 127,000 in 2008. Click here These unrests in themselves are a manifestation of strains of a system falling behind the times whose socio-economic and political fabrics seems to have outlived their usefulness.

Contrary to The Economist's skepticism click here , the prescrptions in the World Bank/DRC Report may not end up as wishlist of the so-called "reformers" in the Party. The DRC cannot operate as the exclusive preserve of the so-called "reformers" and could only play to the collective wisdom of the State Council. Above all, reform is imperative if China is to escape the so-called "Middle Income Trap" which see many developing countries stagnate at around $8,000 per capita income. Indeed, as premier Wen openly stressed recently, "Not reforming is not an option. It could only lead to death."

In line with the directions of the latest Five Year Plan, the World Bank report focuses on the efficiency, equity, and sustainability of the existing system of allocation of resources. Its prescriptions include -

(a) redefining sources of revenue and scope of responsibilities between the central and local authorities to avoid forcing the latter to resort to land appropriation as their main source of revenue;

(b) unlocking the inefficient capital accumulated by large state-owned enterprises and promoting the competition and innovation of the private sector;

(c) implementing the State Council decision in 2011 of guaranteeing a decent standard of living of the people with access to public services including heathcare, education and housing by 2020;

(d) unblocking the "hukou" (household registration) system which deprives migrant workers of access to local social provisions and acts as a hindrance to greater national social mobility;

(e) using the rising middle class as a catalyst for improved governance, standards of services, and the empowerment of civil society;

(f) liberalizing the financial system to achieve higher total factor productivity;

(g) pushing ahead with the internationalization and eventual capital-account convertibility of the RMB with a view to its use as an international reserve currency;

(h) delivering a comprehensive economic, social and environmental agenda to achieve a green economy and society by 2030 (e.g. by capitalizing on a voluntary "cap-and-trade" scheme and introducing green standards in the massive government procurement program); and

(i) playing a more proactive role as a responsible stakeholder in helping to shape the global order commensurate with the growing size and influence of China's economy.

The Report takes cognizance of a number of eye-catching realities. China has over a million millionaires while some 170 million people still live under the poverty line of $1.25 a day. The body of university graduates is expected to swell by 200 million over the next two decades, bigger than the entire workforce of the United States. By 2030, China will become two-thirds urbanized, compared with 50% at present. Owing to demographics, China is likely to "grow old before it gets rich".

Against all these challenges and contradictions, doing more of the same is no option. If anything, the Report seems to err on the side of over-caution. There is, for example, no mention of establishing a more independent judiciary system to safeguard the rule of law (as distinct from rule by law). For example, instead of being appointed by local authorities, judges of such a judiciary could be appointed for a fixed term by a commission with elected members answerable to the State Council. The Report also shies away from a suggestion to scrap the culprit of China's eschewed demographics - the One Child Policy - which seems to have past its sell-by date.

Judging from the moderate content and tone of the World Bank Report, it is apparent that the DRC has already walked through it to ensure that everyhting is doable. It is also widely known that Li Keqiang, China's next Premier-in-waitng, is the Report's strongest backer. So, contrary to the heavy pinch of salt in some Western quarters, I would not be surprised if this Report will  be used as a blueprint for China to build a "Modern, Harmonious, and Creative High-Income Society" by 2030. 

Premier Wen at NPC/CPPCC - China's growth forecast lowered

Live radio interview on Newshour with BBC World Service on 5 March, 2012

Download BBC World Service Newshour 5 March 2012

(Drag the blue horizontal bar just past the middle of the circular button to start the section on China.)

 

"The Chinese Dream"

"Successful Chinese Emigrating to West in Droves"", an article by Wieland Wagner in Spiegel Online International (24 February, 2012) shows how "Despite their country's stunning economic growth, many successful Chinese entrepreneurs are emigrating to the West. For them, the Chinese government is too arbitrary and unpredictable, and they view their children's prospects as better in the West." Click here

The heart of the phenomenon is whether more and more sucessful Chinese people are in search of an American Dream or a Chinese Dream, and how are their rising aspirations can be met in a one-Party state.

It is instructive that many Chinese people who have become emigrants in the West seek their business opportunities in China (not just in emigration services) while some of the best and brightest in China seek to acquire Western citizenship.

As the article points out, it is an open secrete that some of the higest-ranking Chinese leaders have children attending top universities in the West. Even China's best universities do not come close in the same league.

It is obvious that a Western citizenship offers a good personal insurance policy. It is also obvious that the West may offer a higher quality of personal and family life, for those Chinese emigrants who can afford it. For some, even after acquiring their foreign citizenship, they may not even want to live abroad most of the time, let alone permanently, at least perhaps until they retire.

While many may well settle in their foreign adopted countries lock, stock and barrell, a larger number would maintain their strong presence in China. Indeed, for many, including some who already have settled in the West for a long time, China is now the Land of Opportunity.

Taking a worldview, some of those who have made it in China realize only too well that they really have to connect to the West if they want the best of both worlds.

On the other hand, what with the Arab Spring and the lessons of the Occupy Movement, the Chinese leadership realizes only too well that China has to address the aspirations of a rapidly rising and increasingly university-educated middle class. This cohort now accounts for less than a quarter of the nation's population, most of whom remain peasants and manual workers, but it is expected to reach 50% (nearly 700 million people) by 2025. The middle class is set to define China in the coming decades, both economically, socially and politically.

Looking at the faultines exposed in the Western model of democracy, it is even more unlikely that China would copy the Western model. China is known to have studied how a single party could retain its legitimacy for so long in countries like Singapore, Japan and Sweden.

While China has become more open and liberal to an almost unimaginable degree compared with merely a decade or so ago, the challenge remains of how to institute the checks and balance of democracy, against the corruption and abuse of an unchecked state, without necessarily adopting an adversarial, if not confrontational multi-party system.

In sum, such checks and balance are the supremacy of a national constitution, the separation of the executive, legislative and judicial powers, and fair and open election of government officials. It is not totally unimaingable that in the fullness of time, even a single Party, call it what you will, may be able to embrace these characteristics.

While from an ecological and sustainable point of view, it is increasingly questionable that the so-called American Dream of middle-class lifestyle can or should be replicated in China, a Chinese Dream of combining the best (and avoidng the worst) of both worlds remains elusive, at least for now. ("The Chinese Dream", by Helen C Wang, Best Seller Press, 2010).

China is at a crossroads of constant change. While unlikely to unveil dramatic about-turns in a cautious, unprecedented developmental trajectory, the upcoming Chinese People's Political Consultative Conference (CPPCC) and the National People's Congress (NPC) sessions, which are due to run from March 3 - 5, may offer a further glimpse of the country's direction against the backdrop of the new Five Year Plan (2011-15).

Meanwhile, the kind of "immigration by investment" agencies flourishing in China is likely to bring welcome funds to the West for at least some of the small-and-medium-sized enterprises and, more importantly, perhaps some of the best and brightest brains.
 
Best regards,

Andrew

Debate: China diverting Brahmaputra?

Live TV debate on Times NOW of India on 1 March, 2012

Click here

China's China Manufacturing Picks Up, but Risks Remain

Live interview on The Call with CNBC on 1 March, 2012

Click here

For a CNBC analysis, Click here