“Are we obsessing about (China’s) rise when we should be worried about
its fall?”, asks Minxin Pei, professor of government at Claremont McKenna
College and senior fellow at the German Marshall Fund of the United States, in
his article “Everything You Think You Know About China Is Wrong” dated 29
August 2012 in Foreign Policy. Click here

Professor Pei thinks that rather than worrying about how to contain a
stronger China, it would be at least equally sensible to think about China’s
possible collapse or self-inflicted regime change in the light of the country’s
recent economic slowdown, bursting property bubbles, power struggles and
political scandals.

This seems to echo the perennial theme of China’s doubters. Amongst them
a leading light is Gordon Chang who has been serially predicting “China’s
Coming Collapse” since 2001. His latest version here dated 29 December 2011 asks
people to bet on the country’s collapse or beginning of a multi-decade decline
from 2012.

Chang’s arguments are that China seems to turn xenophobic, pushing
foreign investments away by insisting on “indigenous innovation”. China is
heavily dependent on trade but there are now more exporting competitors amongst
the emerging economies. China’s economy is contracting as her demographics are
getting older. Moreover, the leadership is failing to respond to a rising tide
of social change signified by increasing popular protests against official
corruption and inequalities, the likes of which are sweeping across other parts
of the world.

The problems highlighted are by no means exaggerated. Indeed, at the
opening session of the latest 18th Party Congress, President Hu Jintao
announced that reform, particularly fighting corruption, is a matter of life or
death for the Party and the nation.

But China’s problems must be put in context. Consider the following –

(a)    The
latest OECD report here “Looking to 2060: Long-Term Global Growth Prospects” dated
November 2012 suggests that “China will overtake the eurozone in 2012 and the US within the next
four years to become the largest economy in the world.  By 2060 …… the combined GDP of China (27.8%)
and India (18.2%) will be larger than that of the OECD – and the total output
of China, India and the rest of the developing world (57.7%) will be greater
than that of developed OECD and non-OECD countries (42.3%)”.

(b)    According to The
Economist front cover article of 27 October 2012, notwithstanding rising levels
of social discontent, “In the past ten years under the current leader, Hu
Jintao, the economy has quadrupled in size in dollar terms. A new (though
rudimentary) social safety net provides 95% of all Chinese with some kind of
health coverage, up from just 15% in 2000. Across the world, China is seen as
second in status and influence only to America”.

(c)     Successive PEW public attitude surveys show that a vast majority of the population
(exceeding 80%) remains broadly supportive of where the country is heading, in
stark contrast to the surveys’ findings on many Western nations. Of course, the
flip side of the coin is that 20% dissatisfied means a lot of people amongst
China’s 1.3-billion-strong population. Nevertheless, there is no support for
regime change and the rising cynicism and disgruntlement are against corruption
and power abuse, albeit widespread, by individuals.

(d)      Pei and Chang seem to
disregard the fact that China’s leadership has long realized that the country
has to reform and change to stay relevant with the times. Hence the dramatic
change in direction in the current Five Year Plan (2011-15) towards slower and
more balanced, more equitable and more sustainable growth.

(e)      Notwithstanding
competition and rivalry, which are common to all political systems, the
different factions, power-centres, and vested interests of the Party polity all
embrace and continue to benefit from China’s continuing reform and progress.
The question is not whether to reform but where, how much, and how fast, and of
course, how to apportion their respective power and influence.

(f)      A large body of relatively
moderate but yet significant reform measures have already been proposed in a 468-page
World Bank report jointly undertaken with the Development Research Centre of
the State Council (a rare occurrence). These include reforming the state-owned
enterprises to allow more room for private enterprises, liberalizing the
financial sector, defining the powers and obligations of local authorities to
minimize the chances of improper “”land grabs”, changing the “hukou” system
which marginalizes migrant workers, growing a green economy, and promoting the
role of civil society. It is said that Li Keqiang, China’s likely
Premier-in-waiting is the report’s staunch supporter. Click here

(g)      It must be remembered
that even Democracy is not a dirty word in China’s politics. In fact the D-word was
mentioned 61 times by President Hu at the last Party Congress in 2007 and has
been voiced many times since also by Premier Wen Jiabao. The difference is that
China, including most of the population, remains unconvinced that copying the
West’s increasingly dysfunctional model of confrontational multi-party politics
is the best answer. China will therefore continue to find her own path towards
effective, meritocratic, representative government of the people, for the people, though not directly by the
people, at least not at this stage.

(h)       Yes, China’s
international environment is becoming more hostile. Notwithstanding China’s
efforts in managing her “peaceful” rise or development, China’s neighbours are
growing more restless with an 800-pound panda. But most of these worries
translate into hedging their bets. There is no mileage towards an anti-China
block as China remains their largest trading partner at the centre of a
regional and global supply and production chain.

So, looking at the near-final list of contenders for China’s top
leadership, the Standing Committee of the Politburo, why does it seem to be
populated largely by “Old Brooms” (The Economist, 10-16 November, 2012) here who are
not known for their reformist credentials?

The reasons are a little hidden beneath the surface –

• Quite near the eleven hour, the
  Bo Xilai affair unexpectedly derailed the leadership transition process, which
  was fiercely competitive in the first place. The political crisis and what it
  meant for the future stability of the Party required a re-think of the role and
  status of politically-powerful portfolios in the Standing Committee i.e. public
  security and propaganda. These were nearly high-jacked by politically-ambitious
  individuals like Bo and must not be allowed to happen again at the centre of
  China’s power.  So a smaller Standing Committee
  of seven instead of nine members was mooted, throwing open an even more
  fractious battle amongst various factions, vested interests  and power-brokers to get their preferred
  choices into the even narrower door.

•  A number of very senior,
  well-tried and well-connected Politburo members are getting near the retiring
  age limit of over 67 for entry into the Standing Committee. This is their very
  last chance to make it. These include Yu Zhengsheng (67), Zhang Dejian (66),
  Zhang Gaoli (66), Liu Yunshan (65), and Wang Qishan (64). Their claims to a
  seat in the Standing Committee perhaps for just one term are difficult to brush
  aside, particularly when some are backed by influential power-brokers like
  ex-President Jiang Zemin. The younger and perhaps more dynamic hopefuls, e.g.
  Li Yuanchao (62) and Wang Yang (57) may have to bide their time for the shoes
  of retirees at the next 19th Party Congress in 2017, which is still expected to
  be under the leadership of Xi Jinping (59) as President and Li Keqiang (57) as
  Premier, if all goes well.

• Bearing in mind the need to
  root out any remnants of the “Bo Xilai gang”, stability of the Party remains
  paramount at this stage. So, while domestic and external pressures remain
  broadly manageable, the Party may have reached a compromise to allow more old
  guards in the Standing Committee just for one term before younger, more dynamic
  substitutes waiting in the wings take centre stage in the next term.   

There is broad-based consensus that not tackling problems like
corruption and a host of other reforms highlighted in the World Bank report
could undermine the stability of the Party. This is borne out by the strong
words of out-going President Hu in his opening address at the Congress and the
imprimatur of an official organ of the State Council on the World Bank report.
At a Washington think-tank seminar on China’s leadership transition, Henry
Kissinger expected to see transformations in the Chinese economy and society as
well as foreign policy in the coming decade. Click here

In any case, regardless of the final choice for the Standing Committee
at the 18th Party Congress, President Hu has emphasized that the Party’s objective
is to achieve a Middle-Income Society by 2020, doubling the 2010 per capita
income in the process. By that time, China is expected to achieve a per capita
income of $10,000, up from $5,530 in 2011. Click here

This is set to be followed during 2021-25 by further jumps over the
so-called Middle-Income Trap on the road to attain a higher-income society in
the future. Click here

As the Standing Committee of the Politburo is tasked to carry out
China’s collective decisions, including the current Five Year Plan (2011-15)
and the goal of attaining a Middle Income Society by 2020, the new line-up of
well-tried old timers does not mean that China is stalling for reform. In fact
they are well-qualified for these tasks, which should concentrate their minds
and keep their hands very full indeed during their tenure.