Friday, October 31, 2014
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China’s Dream Team

NEW HAVEN – China’s recent leadership transition was widely depicted as a triumph for conservative hard-liners and a setback for the cause of reform – a characterization that has deepened the gloominess that pervades Western perceptions of China. In fact, nothing could be further from the truth.

Xi Jinping and Li Keqiang – the top two officials in China’s new governing council (the Standing Committee of the Politburo) – are both well educated, well traveled, and sophisticated thinkers who bring a wealth of experience to the many challenges that China faces. As so-called Fifth Generation leaders, they continue the steady progress in competence that has marked each of China’s leadership transitions since the emergence of Deng Xiaoping in the late 1970’s.

While it is entirely premature to judge the style and direction that China’s new leaders will take, three early hints are worth noting. First, Xi’s assumption of power is more complete than was the case in earlier transitions. By immediately taking the reins of both the Chinese Communist Party (CCP) and the Central Military Commission, he has a greater opportunity to put his personal stamp on policy than his predecessors had at the start of their administrations.

Yes, China governs by a consensus of the Standing Committee. But Xi is well positioned to drive the thinking of a now-leaner decision-making body (downsized from nine members to seven). Moreover, he has long favored a market-friendly, scientific approach to economic development, which will be vital to China’s future.

Second, Li Keqiang – the presumptive incoming premier – could be the big surprise in the new leadership team. Unlike the current premier, Wen Jiabao, who was third in the chain of command for the past ten years, Li has been elevated to number two, which suggests a greater potential for power-sharing between the CCP and the government at the top of China’s new team.

With a Ph.D. in economics, Li, who, as Executive Vice Premier, headed the all-important “Central Committee Finance and Economy Leading Small Group,” is especially well equipped to deal with the long-awaited structural transformation of China’s economy. Indeed, having overseen China 2030 – an extraordinary joint report recently produced by the World Bank and China’s own high-level think tank, the Development Research Center – he has a deep understanding of the roadmap that China must embrace. His promotion could be a major step up from Wen, who emphasized rhetoric and strategy more than implementation.

Third, and contrary to prevailing wisdom in the West, Wang Qishan, one of China’s savviest and most experienced senior officials, has not been relegated to obscurity in his new position overseeing “discipline” on the Standing Committee. Yes, Wang has invaluable experience in the financial sector, and it would have been logical for him to assume similar responsibilities on the new leadership team. But, as one of the top seven in the CCP hierarchy, he will still be able to weigh in on all important economic and financial matters, while assuming responsibility for tackling one of China’s toughest problems – corruption. Having known Wang for more than 15 years, my sense is that he is very well suited to this vital task.

The other members of the new Standing Committee bring a broad array of experience and skills. That is especially true of Yu Zhengsheng and the two Zhangs, Dejiang and Gaoli, who come from senior roles in three of China’s most powerful and dynamic urban centers – Shanghai, Chongqing, and Tianjin. Their deep knowledge of the key role played by urbanization in driving economic development will be critical to broadening the structural transformation that China now faces.

The West is not only overlooking the new Chinese leaders’ enhanced skill set, but is also misjudging the current state of the country’s economy, which, while far from perfect, is not crisis-torn and in desperate need of a quick fix. In fact, China is emerging in reasonably good shape from yet another global slump. This gives its new leaders leeway between now and the National People’s Congress in March 2013 to focus on the development of implementation tactics for their strategic agenda.

None of this is to minimize China’s enormous challenges. But strategy is not the problem; the pro-consumption 12th Five-Year Plan lays that out with great clarity. The new leadership must now shift the focus to commitment and implementation of that strategy – namely, through enactment of a new set of bold reforms, especially those related to the services sector, the social safety net, and state-owned enterprises. Xi’s emphasis on the “top-level design” of reforms lends itself particularly well to this agenda, as does Li’s intimate familiarity with the detailed blueprint provided by China 2030.

Western observers, focusing on recent public statements by Xi and Li, highlight a dearth of comments in favor of economic or political reforms. But the same could have been said of the early utterances of Deng, modern China’s greatest reformer. As Ezra Vogel notes in Deng Xiaoping and the Transformation of China, Deng’s first public statement after his political rehabilitation in 1976 was, “Marxism-Leninism and Mao Zedong Thought constitute the guiding ideology of the party.”

Those were not exactly enlightened words – especially in view of what was shortly to come. Yet Deng seized the moment at a critical juncture that is strikingly reminiscent of the one now faced by Xi and Li.

As is the case in any country’s leadership transition, no one knows for certain whether China’s incoming administration is up to the multiplicity of challenges that they face. Since the days of Deng, China has had an uncanny ability to rise to the occasion and meet its challenges head on. The new generation of leaders has the right skills and experience for the task. Western biases notwithstanding, we will know soon enough if they can translate strategy into action.

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  1. CommentedJohn Brian Shannon

    Hi Stephen,

    I fully agree with your comments and would like to also take the opportunity to compliment the team of former President Hu Jintao and former Premier Wen Jaiboa for their many successes, including the massively successful XXlX Olympiad held in Beijing.

    Both men attended Harvard in younger years, both had plenty of exposure to Western ideas and neither seemed to 'have it in' for the West, or the U.S..

    Historically speaking, communist leaders have often displayed hostility, or skepticism to the West and have been deeply critical of Western thought and actions, even when some Western policies were of little concern to communist nations.

    During their tenure, China advanced in all areas and remained a peaceful partner of the West. In particular, both leaders ushered in powerful policies and regulations to improve the environmental catastrophe which has resulted from such rapid industrialization there.

    China burns more than 3 billion tons of coal each year resulting in the production of 7.2 billion tons of CO2, plus other gaseous pollutants and particulates. These numbers are all expected to double by 2020, based on already planned and funded (but not yet built) coal power plants.

    The successful Chinese program directed by these two great men, to dramatically limit nitrous oxides at coal-fired power plants comes to mind. This is important because, according to Wikipedia; "... It is also a major greenhouse gas and air pollutant. Considered over a 100-year period, it has 298 times more impact 'per unit weight' (Global warming potential) than carbon dioxide.[2]"

    http://en.wikipedia.org/wiki/Nitrous_oxide

    Over 400 billion dollars worth of conservation and sustainable energy projects have been announced in the past 12 months.

    http://energyboom.com/finance/china-spend-382-billion-reducing-energy-consumption-and-pollution

    For an overview of the Chinese environmental position, please see my UNDP article here:

    http://jbsnews.com/2012/09/28/cited-in-a-united-nations-development-programme-report/

    To go directly to the downloadable PDF please see here: http://www.undp.org/content/dam/aplaws/publication/en/publications/environment-energy/www-ee-library/mainstreaming/Green%20Economy%20in%20Action/Green%20Economy%20Compilation%20Report.pdf

    By 2020, when China is planning to pump 15 billion tons of CO2 into the air, just from its coal plants, any positive conservation and mitigation efforts made now, will have enormous consequences then.

    Let us hope that this leadership team is as enlightened about the environment as the previous team. Let's hope the calm and reasonable approach to international affairs and the wise economic choices of former President Hu Jintao and former Premier Wen Jaibao will continue.

    Above all, let's not spoil the atmosphere with fearful or angry rhetoric. Minor irritants must remain minor! China needs us, we need them.

    Only second in importance to ending the Cold War, is the need for China and the West to find ways to work together, everyday for the betterment of the largest number of citizens in the West and in China.

    Best regards, JBS
    http://johnbrianshannon.com



  2. CommentedBinh Ly

    Before taking the top spot in China leadership, Xi Jinping visited America in February 2012. Xi actually went to Iowa to meet a few private citizens, farmers, whom he met many years ago. In his closing statement at the conclusion of power transfer ceremony, he deliberately said that China has much to learn from the world as he welcomed the world to get to know China.

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