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Nov 16, 2012 | 11:31 GMT

China's Leadership Transition: Continuity at All Costs

China's Leadership Transition
Stratfor
Summary

Editor's Note: This is the final installment of a series on China's political future. Click to read part onepart two and part three.

There were few, if any, surprises in the selection of China's new Politburo Standing Committee, the country's highest governing body. At the first plenary session of the final day of the 18th Party Congress, the 25-member Politburo formally elected the seven men who will lead China for the next five years. The members of the new Standing Committee have been known to the world for more than two years thanks to Beijing's efforts to reinforce a sense of continuity and stability as one generation of Chinese leaders hands over power to another. 

The ability to look at the country's many challenges and still project continuity could be the Party's greatest strength. However, its determined, even structural, aversion to change could prevent the Party from responding effectively to those challenges, setting it on a downward course. 

The members of the new Standing Committee are Xi Jinping, Li Keqiang, Zhang Dejiang, Yu Zhengsheng, Liu Yunshan, Wang Qishan and Zhang Gaoli. Due to Beijing's decision to downsize the committee from nine to seven members, Guangdong Party chief Wang Yang and head of the Organization Department Li Yuanchao have been left off. Likewise, Bo Xilai and Ling Jihua — both of whom were widely considered strong candidates for the committee until they were felled by political scandals earlier this year — are, not surprisingly, absent.

The composition of the Standing Committee fit with Stratfor's — and most analysts' — expectations. As stated, the Standing Committee has been visible publicly for more than two years, meaning it has probably been set internally even longer. Likewise, the future positions of Xi and Li, the incoming president and premier, have been known publicly since 2007, when they joined the 17th Politburo Standing Committee.

Strengths and Weaknesses

The formal election of the committee Nov. 15 testifies to the resilience of a political machine that in the past two years has endured multiple political and public relations crises (from those of Bo Xilai and Ling Jihua to last year's ouster of Liu Zhijun, the former minister of railways, on corruption charges). Moreover, the government now finds itself beset by growing domestic and international pressures as China's economy slows. In no other political system, and certainly not among the world's major economies, is the generational succession of leaders so clear, transparent and predictable — even if the behind-the-scenes decision-making process remains opaque.

The Communist Party's ability to project continuity in the face of new challenges may be its greatest strength. It also could be the Party's greatest weakness. On the one hand, the process of identifying and grooming each new generation of leaders long before they take control of the government is a powerful tool for reassuring international audiences of the system's sound foundations. More important, it reinforces to domestic audiences — and other organs of government, from state-owned banks and enterprises to the military — that the Party maintains a strong central vision for the future. For Beijing, projecting security is critical to being secure.

But as the leadership transition shows, the Party is steadfastly, even structurally, set against dramatic change. Despite suggestions in Western and Chinese media over the past several months that the Fifth Generation of leaders may push more strongly for reform, the 18th Party Congress has given little indication that real change is on the agenda. Instead, it has upheld Maoist thought as the Party's foundation and officially enshrined Hu Jintao — whose own ideological program, "Scientific Development," calls for strong state control of the economy — within the pantheon of Chinese Marxist theoreticians.

This aversion to change and unpredictability suited China well between 1992 and the 2008 global financial crisis, during which time the Party's core mandate was to maintain enough political and social stability so as not to hamper economic growth. But by putting a premium on stability at the expense of reform, the Party neglected to address, and even exacerbated, the core challenges Hu and Wen Jiabao inherited in 2002. Today, those problems — regional inequality, widespread bureaucratic consumption, waste, inefficiency and a ballooning energy burden — are of an exponentially larger scale and are growing. The Fifth Generation leaders' inability to respond effectively and quickly to those problems — because of the nature of the system — could set the Party on a path of systemic decline.

The Difficult Road Ahead

The Party is aware of the challenges it faces going forward, both new and inherited. Already, wages and input costs are pushing low-end manufacturing out of coastal China, redrawing labor migration patterns and testing the limits of China's inland energy and goods transport systems, power distribution networks and social services programs. Over the next decade, China's workforce will only shrink as the population ages, further driving up labor costs and adding new social pressures — not least of which is the stark imbalance between young male and female populations today, in part because of the One Child Policy. Meanwhile, China's growing reliance on foreign energy resources will force Beijing to play a more proactive role internationally, both diplomatically and militarily. Developing the military capacity to effectively defend its interest overseas will, in turn, put Beijing at odds with regional neighbors and perhaps the United States. On top of all this, the Party must grapple with a deepening sense among ordinary Chinese that the regime is more concerned with preserving itself than improving the country — and their lives.

The leadership transition process has been both clear and deeply opaque. On the one hand, the names and profiles of China's new leaders have been known for years. At the same time, little is known about the process by which they were selected, and there is little consensus among international or Chinese observers as to what kind of leaders they will be. Opacity may benefit Beijing in the near term, giving the Fifth Generation enough breathing room to consolidate its own control over the Party and military. Likewise, the ability to project solidarity in the face of internal division will help the Party navigate rising social tensions and the effects of economic transformation and labor dislocation, as well as its evolving relationship with the People's Liberation Army.

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