Constraints on China's New Leadership
Video Transcript:
Video Transcript
The Communist Party of China commenced its annual National People's Congress today. This marks the beginning of the end of a generational leadership transition that will see Xi Jinping formally instated as China's new president. The Congress and transition come at a time of tremendous stress for the Party, both internally and externally, as it struggles to maintain growth and social stability, battle trenchant bureaucratic corruption and better define China's role amid shifting regional geopolitical dynamics.
Over the next two weeks, nearly 3,000 delegates representing a wide variety of constituents, from small towns in rural China to large state-owned enterprises, will converge on the Great Hall of the People in Beijing. During the Congress, delegates will meet for workshops and training sessions and convene for an occasional vote or work report from senior Party officials. But for the most part the Congress is ceremonial. It serves as a rubber stamp on policies and decisions that have already been made in the upper echelons of Party leadership.
This year, the key events of the Congress are outgoing Premier Wen Jiabao's work report on the state of the Chinese economy and Xi Jinping's official promotion as president.
The premier’s annual work report is notable, more than anything, for its predictability. This year, as was widely anticipated, Wen Jiabao announced a 2013 gross domestic product growth target of 7.5 percent and a 3.5 percent inflation target. Also as expected, he stressed the general themes of growth with stability, prudent monetary policy and proactive fiscal policy. In other words, the Party does not plan to radically change course in 2013.
In the short term, this seems like a sound approach given the immense risks large-scale economic reform and restructuring would pose to social stability. But this same caution brings its own problems. China is already deep into an economic crisis that began with the decline after 2008 in global demand for low-cost Chinese exports. So far, Beijing has prevented the economic crisis from snowballing into a social and political one by injecting trillions of yuan in credit into sectors like transport infrastructure and real estate, which don’t depend on external consumer markets.
But in doing so, not only has it held off on implementing critical, if painful, reforms that might put the Chinese economy on track towards greater domestic consumption and higher productivity, it has, in fact, created huge new structural impediments to those reforms. In many ways, Wen Jiabao’s work report is emblematic of the caution (bordering on immobility) that has come to characterize his and Hu Jinatao’s administration.
This deep-seated institutional caution and desire to preserve the status quo may be the single greatest legacy of Hu Jintao and Wen Jiabao’s decade at the head of the Party. It, more than any other single element, will constrain future efforts by Xi Jinping and the Politburo Standing Committee to shift the Chinese economy away from overreliance on exports and investment and towards greater consumption and profitability. There have been many signs that Xi and the Fifth Generation leaders will push -- or rather, be forced to push -- more strongly for reform. But when Xi takes the stage as China’s new president at the end of the National People’s Congress, the first thing on his mind will be not what he can do, but what he cannot do.
