china’s real leadership question

7/31/2019 Chinas Real Leadership Question

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Chinas Real Leadership QuestionEconomic Development and Social Challenges Ultimately Will

Determine Who Runs the Country over the Coming Decades

Melanie Hart August 2012

www.americanprogress.o


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Chinas Real LeadershipQuestionEconomic Development and Social Challenges

Ultimately Will Determine Who Runs the Countryover the Coming Decades

Melanie Hart August 2012


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Contents 1 Introduction and summary

7 Understanding Chinas leadership dynamics

14 Rebalancing the economy to meet the demands

of Chinas rising middle class

20 Satisfying Chinas rising middle class in an era

of economic uncertainty

23 Will the next generation have what it takes?

27 Conclusion

30 About the author and acknowledgements

31 Endnotes


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1 Center or American Progress | Chinas Real Leadership Question

Introduction and summary

op Chinese Communis Pary leaders me his monh in Beidaihe, he beachside

rerea on he Yellow Sea where hey gaher every summer o hash ou criical poliical

and economic decisions in comor and seclusion, ar rom he prying eyes in Beijing.1

Tese summer meeings are always imporan bu his year is paricularly criical. Tis

summer hey mus orge a consensus o setle years o heaed negoiaions over who

will ake he helm when he curren leaders reire laer his all.

Te big quesion seemingly is who will ake he remaining spos on he PoliburoSanding Commitee, he group o seven o nine op leaders who will guide he

pary and he counry or he nex 10 years. Te op wo posiions are already

locked in. Curren Peoples Governmen Vice Presiden and Poliburo Sanding

Commitee member Xi Jinping will become Pary General Secreary and cur-

ren Sae Council Vice Premier and Poliburo Sanding Commitee member Li

Keqiang will become he nex Premier.2 Te remaining posiions are sill being

hashed ou and will mos likely have been he ocus o inense debae in Beidaihe.

Tese inernal personnel negoiaions ge more conenious wih every leadership

ransiion, because each ime marks 10 more years removed rom he Communis

Pary srongman eras o Mao Zedong and Deng Xiaoping. oday here are no

aging revoluionary leaders le o serve as iebreakers when inernal pary acions

but heads. And his 2012 ransiion is he mos conenious ye because none o

he nex generaion o leaders were approved or anoined in any way by he las o

hose srongmen, Deng Xiaoping.3 Ta leaves a relaively open eld or he vari-

ous acions o ll he op seas in he sanding commiteeand pleny o room

or inernal poliical inghing.

Look no urher han he scandal and inrigue involving Bo Xilai, he red prince-ling previously considered a srong conender or one o hose op leadership

poss. He and his wie now sand accused o so many wrongdoings i is hard o

keep hem sraigh. His all rom grace earlier his year is sill sending shockwaves

hrough he halls o power in Beijing and across China.


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For Pekingologisshose China expers around he globe who ry o discern

whas going on in Zhongnanhai, he Chinese Communis Parys small enclave

near he Forbidden Ciy in downown Beijingwaching Bo Xilai all and he

Chinese leadership scramble o explain i all has been absoluely ascinaing. Tis

paricular scandal provides a rare glimpse ino he poliical negoiaions ha usu-

ally occur behind closed doors among a iny circle o senior communis cadreswho lead various poliical acions wihin he pary.

Bu we should no ge oo excied abou his paricular inciden. Te Bo Xilai saga

has cerainly been ineresing, bu a he end o he day no much has changed in

Beijing. Te curren sanding commitee will manage o come o a consensus on

heir successors and hose successors will mos likely coninue plodding down

he same economic and social policy pahs ha China has ollowed or he pas 10

years under he leadership o Pary Secreary Hu Jinao and Premier Wen Jiabao.

And herein lies he reason why he nal composiion o he nex PoliburoSanding Commitee doesn really mater as much as how hese new leaders will

acually deal wih some o he bigges challenges acing China since he iniial eco-

nomic reorms iniiaed by Deng Xiaoping in he lae 1970s. In he coming decade

his new leadership eam mus atemp o ransiion he Chinese economy rom an

expor-led juggernau o one dominaed by domesic consumpion and he ypes

o invesmens ha improve he everyday lives o he Chinese people, who, despie

living under an auhoriarian regime, are nding myriad ways o express heir deep

rusraion wih he direcion heir naion is headed.

Several decades ago, acing even more dauning challenges in he wake o Maos

uter desrucion o he Chinese economy, Deng rolled ou a bold se o reorms ha

propelled China hrough is rs big ransiion period rom closed o open markes,

liing ens o millions o Chinese ou o povery and carrying he coasal provinces

o he naion ino he ranks o Eas Asias and Souheas Asias so-called iger and

dragon economies. Bu Deng could do his conden his auhoriarian grip on China

was secure and ha he primacy o he Chinese Communis Pary would remain

unquesioned. He proved hose wo poins in June 1989 by crushing he rs open

opposiion o he pary in iananmen Square and in oher ciies around he naion.

In conras, he new leaders who will ake he helm in lae all o his year will have

o navigae a new economic and social ransiion rom much more precarious

saring poins. Te ransiion rom expor- and invesmen-led growh o domes-

ic consumpion-led growh based on echnology innovaion, and rom liing


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ens o millions ou o abjec povery o saisying a more demanding middle class

will be even harder or he pary o execue. Te reason: I will require he kind o

de governing skills ha auhoriarian regimes are generally no good a using. o

urher complicae maters, based on heir perormances hus ar, i appears here

is no a single bold leader in his new group who can push he necessarily ambi-

ious economic and social reorms while also preserving he Chinese CommunisParys absolue grip on power.

Te new sanding commitee will include an ineresing group o cadres, bu none

o hem appears o be anoher Deng Xiaopinga visionary reormer and seely-

eyed dicaor who could enac sweeping change while mainaining he communis

parys absolue grip on power.

Ta means his new crop o Chinese Communis Pary leaders may no be able

o repea Dengs successes amid wha promises o be a very rocky nex 10 years in

China. And as ineresing as 2012 has been or Pekingologiss, Chinas curren lead-ers and heir incoming replacemens are already dealing wih somehing ar more

imporan: guring how o adap Chinas poliical, social, and economic sysems o

power hrough he nex developmen phase and avoid alling ino economic sagna-

ion and poliical urmoil. o do so, hey mus answer wo quesions correcly:

Wha combinaion o economic growh and social improvemens will hey have

o deliver o mainain popular suppor over he nex 10 years?Wha changes will he Chinese Communis Pary have o make in order o mee

hose goals, and how can hey do so while also mainaining heir grip on power?

Te answers o hese quesions will ulimaely decide how long he Chinese

Communis Pary can say in power and wheher Chinas rise can coninue over he

coming decades. Tis repor akes hese wo quesions as is core mission, atemp-

ing o provide a ramework or considering hem raher han rying deniively o

answer hem, which o course would be impossible. I is dicul o predic exacly

how Chinas new leaders will behave once hey ake over his all. Bu raming he

problems acing China is a perecly ne way o dene he challenges he new leader-

ship mus ackle, which in urn inorms how he Chinese leadership may reac o

hese problems or he good or ill o he pary and he Chinese people.

Tis repor explores hese wo quesions rs hrough he prism o he ongoing Bo

Xilai case o explain why he corrupion scandals and poliical inrigues currenly

making headlines do no pose new or insurmounable problems or he pary. Te

The new standin

committee

will include an

interesting grou

of cadres, but no

of them appear

be another Den

Xiaoping.


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repor hen explores he wo challenges ha could poenially be insurmounable:

overcoming he vesed ineress resising cenral governmen atemps o rebal-

ance he economy and improving qualiy o lie or Chinas growing middle class

wihou sacricing single-pary rule.

In he pages ha ollow, his repor will deail hose anicipaed challenges and howChinas new leaders may deal wih hem. Bu, briey, here is a synopsis o he analysis:

Te Bo Xilai scandal has led many to question how much longer the Chinese

Communist Party can maintain its grip on power, but corruption scandals and

actional infghting are old problems with amiliar solutions. Te real threats

acing the party today are the new problems that do not yet have clear solutions,

two o the biggest being economic rebalancing and fguring out how to satisy

Chinas growing middle class.

Rebalancing the economy will require political capital that this

group may not have

For he pas hree decades, he Chinese Communis Pary has mainained is

grip on power by promising o keep he economy growing and o keep improv-

ing living sandards. Te rs sage o growh (rom lower o middle income)

was enormously successul. Te nex sage (rom middle o upper income) will

be harder o raverse, and ha makes i harder or he pary o keep delivering on

heir promises o he Chinese people.

Te only way Beijing can keep he economy growing and avoid alling ino he

so-called middle-income rapalling ino a period o economic sagnaion, as

happened in Malaysia, he Philippines, and Tailandis o shi rom expor- and

invesmen-led growh (which is producing diminishing reurns) oward a new

growh model based on domesic consumpion and echnology innovaion. o

do ha, Beijing mus reduce governmen suppor or sae-owned enerprises

and radiional indusries such as coal and seel and increase he suppor given o

privae enerprises and he indusries o he uure such as clean energy and nex-

generaion inormaion echnology.

Beijing mus also sop channeling credi hrough sae banks and local governmen

ocials, who make invesmen decisions based on cronyism. Insead, Chinese

leaders need o rely more on commercial banks, which have incenives o lend


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o he bes companies and echnologies regardless o heir poliical connecions.

Expanding he pro incenives and reducing he poliical incenives driving credi

allocaion is he only way ha Beijing can ensure ha he echnologies China

produces will acually be compeiive on he global marke.

Te problem is, all hose reorms require Beijing o ranser money and policysuppor rom he poliically powerullocal governmen ocials, sae-owned

enerprises, and radiional indusrieso he poliically weak, privae enerprises

and inan indusries. Ta is hard o do in any counry. I may ge even harder o do

in China once he new leadership akes he sage his all because his new group

appears o be more divided and poliically weaker han is predecessors.

Beijing faces massive challenges meeting its economic promises

to the Chinese people, and Chinas growing middle class is

demanding even more

For many Chinese people, he rs sage o economic growh provided bigger

homes, beter access o new consumer goods, and he reedom rom worrying

abou having enough o ea. Now hey wan moreparicularly Chinas growing

middle class. Tey wan qualiy-o-lie improvemens such as a cleaner environ-

men, higher ood-saey sandards, and proecion rom local governmen abuse,

bu hose hings could be hard or he Chinese Communis Pary o deliver.

Te Unied Saes can deliver hose hings because we have a srong democracy,

independen cours, and a ree press. In China, local governmens are heir own

litle kingdoms. Tey conrol he cours and he press, and hey don have o

worry abou elecions. As a resul hey are oen more ineresed in making money

han improving he qualiy o lie or local ciizensand here is no much hose

ciizens can do abou i. Local ocials expropriae heir ciizens land and homes

wihou paying or hem and hen le developers move in o build acories ha

pollue he environmen.

In previous decades, many people el ha he opporuniy o work in hose ac-

ories made he oher problems worhwhile. Ta balancing is now shiing. ManyChinese people are no longer willing o pu up wih problems such as excessive

environmenal polluion, and hey are ooding he srees in mass proess ha

give Beijing nighmares.


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I will be exremely dicul or Beijing o address environmenal polluion and

oher qualiy-o-lie problems wihou becoming open o major poliical reorm,

and hey do no wan o do ha quie ye. Unil hen, he bes hey can do is o make

small improvemens and hope ha will be enough o preven major social unres.

Wheher ha works will depend largely on wheher Beijing can keep he economy

growing. As long as he economy is booming, mos Chinese ciizens can pu upwih a leas some poliical rusraions. I growh slows oo much, however, Chinese

Communis Pary rule will begin o look like a bad deal on muliple rons.

The United States will have to learn to deal with a China that is

increasingly divided and uncertain about its future

For he Unied Saes, Chinas neighbors in Asia, and he world a large, how

Chinas new leaders carry heir counry hrough perhaps wrenching social and

economic changes in he coming years will help deermine heir own economicgrowh prospecs.

Wheher he Chinese leaders succeed or ail will also impac how China deals

wih he world around i and wheher China will play a posiive or negaive role

in global peace and cooperaion. Undersanding how his all plays ou in China

could no be more imporan or policymakers around he globe. We atemp o

se he sage in his repor.


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Understanding Chinas

leadership dynamics

Corruption scandals and cadre ousters not uncommon in Chinese

Communist Party politics

Wihou a doub, he ongoing Bo Xilai scandal deniely has some unique elemens

o i. In erms o sheer abloid drama, his paricular case really has no compari-

son in modern Chinese hisory. Previous high-ranking members o he pary have

been murdered, purged, or isolaed indeniely under house arres amid previous

poliical ransiions, bu he dierence in Bos case is in he way he case is unold-ing, he characers involved, and he new media environmen in which i is all being

reporedan environmen where scandalous deails are hard o keep quie.

In shor, he curren and uure pary leadership is engaged in he purge o one o

is own while or he rs ime having o answer o an aware Chinese public abou

he reasons why is happening. Bu i is imporan o remember ha he Bo scandal

is cerainly no he rs major corrupion scandal o rock he Chinese Communis

Pary since Deng led he naion ino he modern economic era. I is virually

impossible now o climb he pary ranks and say compleely clean because Chinas

auhoriarian poliical sysem encourages corrupion a every level.4 Ta means cor-

rupion scandals are ineviable, and he pary knows how o deal wih hem.

When scandals emerge, pary leaders have wo key prioriies: keep he pary

ogeher and keep mos Chinese ciizens convinced ha he curren sysem is sill

working airly well and sill a beter be han pushing or democracy and risking

poliical urmoil. oward ha end, pary leaders go o grea lenghs oday o con-

vince Chinese ciizens ha corrupion scandals are isolaed incidens caused by

a ew bad eggs raher han a sysemic problem wih single-pary rule. Corrupion

scandal response, hereore, is all abou damage conrol, and he pary s handlingo hese cases ollows a predicable patern.

Teir rs sep is o deermine who will ake he all. Tose cadres caugh up in a

scandal will be ramed as hose ew bad eggs, wholly responsible or he problem.


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Pary leaders will pin all o he blame on hem and ake acion agains hose cadres

o appease he public. In 2007, or example, Pary leaders responded o a series o

ood and drug saey scandals by ousing and execuing he head o he Sae Food

and Drug Adminisraion, Zheng Xiaoyu.5 Indeed, harsh remedies, including

capial punishmen, are no uncommon when he pary needs o make an example

o one o is own.6

Corrupion cleanups are always designed o ake ou jus enough key people o

remove inernal hreas and assuage he public. I hey go oo ar by exposing and

removing oo many cadres (and hus publicly airing oo much diry laundry), hen

ha could send a message o he parys rank and le ha heir leaders are no

looking ou or hem. And i could send a message o he Chinese public ha he

enire sysem is problemaic.7

Once pary leaders decide which cadres o axe (eiher lierally or guraively),

hey use he sae-run media as a propaganda machine o pin everyhing on hosecadres and presen he case o he public as a done deal. Media conrol is criical

or cauerizing hese scandals o keep he poliical damage rom spreading. Once

op leaders decide how he scandal will be presened and how i ends, all media

oules mus presen ha version o he acs.8 Any media atemps o indepen-

denly invesigae corrupion scandals and presen an alernae version o he acs

are severely punished.9 Mos journaliss and ediors know beter han o even ry.10

Tese ocial media announcemens also demonsrae o he public ha pary

leadership has reached an inernal consensus on how o handle a paricular case.

Wha is currenly very ineresing in he Bo Xilai case is ha we have no ye heard

much rom he leadership or he sae press. Ta suggess op leaders have no ye

managed o come o consensus on exacly who will be aken ou (oher han Bo

himsel) and wha he various punishmens will be.11

Pary leaders are running ou o ime o make hese announcemens. Tey absoluely

mus do so beore he 18h Pary Congress commences his all. I no, ha will

signal o he Chinese people ha he leadership is seriously racured and encour-

age Chinas social disconens o voice heir complains more boldly, mos likely via

susained mass proess. Ta is somehing he pary mus avoid a all coss.12

From a sricly adminisraive sandpoin, he Bo Xilai case has a preceden. Bo

Xilai was a Poliburo member and a provincial-level pary secreary bu so was

ormer Shanghai Pary Secreary Chen Liangyu when he naional Pary Secreary


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Hu Jinao purged him in 2006.13 Wha complicaes hings wih Bo is he ac ha

he has a revoluionary pedigree. Hes he son o Bo Yibo, a Mao-era revoluion-

ary leader who survived he Culural Revoluion o become one o he Eigh

Immorals, he eigh powerul ocials in Deng Xiaopings inner circle.14 Bo Xilai

was also expeced o ascend o he Poliburo Sanding Commitee his all, and

ha pus him very close o Chinas op echelon. I he pary pains him in oo diryo a ligh hen i may be hard or he leadership as a whole o remain clean in he

eyes o he Chinese public.

Bo Xilai was also a media darlinga new phenomenon in Chinaand his give

everyone a slice o he cake rheoric was a big hi among Chinese peasans and

poor ciy dwellers who eel hey have been le ou o Chinas posreorm economic

success.15 Ta makes i even rickier o ar and eaher him in he Chinese sae press

because any srikes agains Bo could easily make his opponens look like anipopu-

lis eliiss. In modern auhoriarian China, his acually now maters.16

From ha perspecive, he murder allegaions agains Bo Xilais wie were a polii-

cal godsend or Curren Pary Secreary Hu Jinao and his allies. Bo had always

been like he ca wih nine livesenacious, conneced, and exremely hard o ge

rid o. In 2007 Hu Jinao demoed Bo rom commerce secrearya high-prole

naional leadership posiiono he pary secreary o Chongqing, a backwaer

municipaliy in Wesern China. Insead o viewing he Chongqing pos as a pah o

reiremen, however, Bo Xilai urned i ino a naional poliical plaorm. He rolled

ou people-oriened developmen policies, launched a smashing black campaign

o ake ou organized crime rings, and encouraged local ciizens o dress up in red

ous and sing red songs ha harkened back o a more egaliarian era.17

Chinas urban and rural poor were capivaed by he images o Chongqing ciizens

singing en mass and apparenly being lied ino a beter lie by Bo Xilai. Bu many

wealhy elies and liberals were horried by Bos gloricaion o he Mao era. Hu

Jinao and his allies were equally horried. Hu repeaedly snubbed Bo by reusing

o ake an inspecion our o Chongqing and reusing o show up or a red songs

compeiion Bo saged in Beijing. Bu Bo Xilai had oher riends in he cenral

leadership, and hose leaders saw his growing populariy among he disenran-

chised as a major poliical asse.18

(See Undersanding Chinas poliical acionson he ollowing page o his repor.)

Everyhing came crashing down when inernal invesigaions (reporedly

launched by Bo Xilais enemies in Beijing) unearhed a murder and sen his police

Bo Xilai was also

media darling

new phenomen

in Chinaand h

give everyone a

slice of the cake

rhetoric was a b

hit among Chine

peasants and po

city dwellers wh

feel they have

been left out of

Chinas postrefo

economic succe


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chie running o he U.S. consulae wih a handul o scandalous documens las

February.19 Ta gave he Hu Jinao camp enough poliical maneuvering room o

urn Bo Xilais red song campaigns agains him and pain him as a crazed leis

who was rying o drag he counry back o he Culural Revoluion era and wipe

ou decades o reorm.20 Pary leaders removed Bo rom his ocial posiions, bu

hey did no announce wha hey will acually charge him wih or wha urherpunishmens he will receive. Ta par is rickier because ha impacs no only Bo

Xilai himsel bu also a whole hos o his allies, many o whom, like ormer Pary

Secreary Jiang Zemin, are exremely inuenial.

Some analyss believe ha he recen launch o judicial proceedings agains Bo

Xilais wie Gu Kailai signal ha an agreemen has also been reached on how o

handle he corrupion allegaions agains her husband.21 Te Chinese sae press

claims ha when her rial commenced his pas week, Gu Kailai conessed o

he murder charges, acceped responsibiliy or inicing harm on he Chinese

Communis Pary, and promised o accep and calmly ace any senence.22 Tosesaemens cerainly sugges she is keeping up her side o a bargain, bu ha bar-

gain may only include proecion or her sonno leniency or her husband. Only

ime will ell how he res o his case shakes ou.

It is dicult to know or sure how internal negotiations will play out

behind closed doors in Beijing and at the Chinese Communist Partys

decision-making retreat going on this month at Beidaihe, on Chinas

northeast coastline. Based on what we do know, however, the party

appears to be split into two major internal actions.

Current Party General Secretary Hu Jintao and current Premier Wen

Jiabao head one action o cadres. That group is generally called

the populists, or tuanpai, so named because they mostly hail

rom Communist Youth League action o the party.23 Most o these

cadres do not come rom elite amily backgrounds. Instead, they

climbed up the party ranks rom relatively modest beginnings.

Many held positions in the less-developed regions o central or

western China, and many served under Hu Jintao in the Com-

munist Youth League, where he spent much o his career. Lik

uture Premier and Hu Jintao protg Li Keqiang is also cons

a populist, as are likely uture standing committee members

Yuanchao and Wang Yang.

Previous Party General Secretary Jiang Zemin and current Polit

Standing Committee members Wu Bangguo and Jia Qinglin he

other action. That group includes many sons and daughters o

cadres under the late strongman Mao Zedong, which is why th

reerred to as Chinas Communist Party princelings. That group

includes members o the Shanghai gang, who served under Ji

Zemin in that coastal city.24

Continued on next page

Understanding Chinas political factions


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At the end of the day, party elites know they must stick together

Tis case is no doub riggering a huge amoun o inernal debae. A he end

o he day, however, Chinas op pary leaders know ha hey mus eiher sand

ogeher or hey will all all ogeher. Elie splis, i hey become public, would

almos cerainly lead o a decline o pary power and a loosening in social con-

rolwhich could send people ou ino he srees in mass proess, jus as he las

elie spli did in 1989.27 Te lessons o iananmen provide a srong incenive or

all acions wihin he pary o make whaever concessions hey have o make or

he group o reach consensus.28

Bu are curren inernal debaes serious enough o block consensus and leave he

pary suck in limbo? Will he op leadership simply ail o resolve hese poliburo

personnel issues or o gure ou how o deal wih he Bo Xilai scandal beore he

18h Pary Congress? Ta would signal o he Chinese public and o he lower

pary and governmen adminisraive ranks ha he op leadership is divided and

hereore weak. Proesers would see he ailure as a signal ha now is he perec

ime o ake o he srees in mass proess o push or change on conenious

poliical issues such as environmenal polluion and rural land expropriaion.Lower-level ocials would see ha as a signal ha now is he ime o push back

on policies hey do no like. Ta would make governance even harder or he nex

round o pary leaders and urher reduce popular suppor or single-pary rule.

Most party cadres amass wealth by the time the reach the top

echelon, but the princeling camp generally has even more oppor-

tunities to do sodue to elite amily connections, careers in Chinas

more prosperous eastern cities, or both.25 Zhu Rongji, who served as

premier under Jiang Zemin, is considered a member o this action.

Likely uture Party General Secretary Xi Jinping, likely uture PolitburoStanding Committee member Wang Qishan, and scandal-ridden Bo

Xilai are also princelings.

On a policy ront, Hu Jintaos populists are generally seen as more

liberal than Jiang Zemins elitists. In Chinas political context this broadly

means that the populists are more willing than the elites to consider

some extremely tentative steps toward more political participati

the Chinese people. But this broad denition is by no means clea

Indeed, it is not clear to what degree populist versus princeling

actional ties actually infuence the cadres policy positions. Bu

actional ties are most important is in personnel appointmentsOutgoing and retired leaders such as Hu Jintao and previously

Jiang Zemin compete with one another to get as many o their

protgs as possible in top leadership positions because that s

infuences their own political power over the next generation.

orward, though, Chinas actions will have to tackle serious po

problems by taking stands or or against more economic reorm


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Signaling a lack o consensus a he op also would spark absolue panic hrough

Chinese nancial markes and urher desabilize he economy. A healhy conin-

gen o Chinas wealhy elie was already panicking over he possibiliy ha Bo Xilai

would ascend o he Poliburo Sanding Commitee and push or a reurn o ani-

marke socialism, however improbable. His ouser assuaged hose ears somewha,

bu i also pained Beijing in a poliically insable ligh. Chinese elies reaced o hainsabiliy by moving even more capial abroad and ranically applying or oreign

immigraion visas a even higher raes han beore.29 I i begins o look like he pary

is cracking up, hese ears will only escalae and Chinese markes will suer.

So i no poliical limbo, hen could conenious inernal debaes lead a poliical

acion wihin he pary o spli o and acually ry o sand alone as an alernaive

o he Chinese Communis Pary? For ha o succeed, ha acion would need

o somehow conrol he media (o ge he public on is side) and he miliary, ye

he pary currenly has he media and he miliary so locked down ha susained

insurrecion rom eiher side is currenly inconceivable.30

Te pary is sill srong enough o deal harshly wih any cadres who break disci-

pline. Anyone considering such a move need no look any arher han Bo Xilai

himsel. His red song campaign and brazen play or a cenral leadership posiion

broke one o he parys mos imporan rules: Always presen a unied ron and

keep personal career ambiions and inernal divisions ou o he public eye. Once

he broke ha rule, Bo gave his criics wihin he pary major ammuniion o go

aer him, and ha launched he inernal invesigaions ha led o his downall.31

Overall, a his poin, he orces holding he pary ogeher are sill much sron-

ger han he orces pulling i apar. I hings become exremely racious a he

opi Beijing is wracked by anoher epic corrupion scandal, or example, or i

he economy anks and curren leaders are unable o urn hings aroundhen

ha migh creae new openings or elie splis o he iananmen variey. A he

momen, however, China has no reached anywhere near ha kind o crisis poin.

Unil i does, i will sill be in everyones bes ineres wihin he upper echelons o

he pary o reach a consensus and sand ogeher.

I is mos likely, hereore, ha Chinas curren leaders will come o consensus hissummer on who he nex Poliburo Sanding Commitee will be and announce

ha o he world in he all. Pary poliics will go on as usual. Te real quesion,

hen, is wha his new group o Chinese leaders will acually do once hey sep up

o he podium? Tese new leaders will ace wo massive challenges:


16/37


Rebalancing he Chinese economy o power hrough he nex sage o

developmen Saisying he demands o Chinas rising middle class o reduce growing social

pressures or more serious poliical reorm

I is no ye clear how well his group will achieve eiher o hose objecives. ohis we now urn.


17/37


Rebalancing the economy to meet

the demands of Chinas rising

middle class

For he pas hree decades, Chinese economic growh has depended primarily on

expors and sae-unded xed asse invesmens in inrasrucure and real esae.

Ta model is now running ou o seam. Domesic wages are rising, which is erod-

ing Chinas cos advanages as a low-value-added manuacurer. Fixed-asse inves-

mens are consuming oo much energy, polluing he environmen (which riggers

desabilizing mass proess), and concenraing wealh among he leaders o sae-

owned enerprises and heir buddies in he local governmen who dole ou hese big

inrasrucure conracs, someimes in exchange or lucraive kickbacks.

o keep he counry growing and o keep heir ciizens happy enough o suppor

he regime insead o proesing agains i, Chinese leaders mus shi he coun-

ry oward a new growh model ha will depend less on expors and xed asse

invesmens and more on domesic consumpion and higher-end echnology

innovaion. Consumpion and innovaion are conneced and boh bene Chinas

growing middle class.

I Chinese companies can move up he value chain rom lower-end o higher-end

manuacuring, hey can pay heir employees more, which will expand job and wage

opporuniies or average Chinese ciizens. Once Chinese ciizens have beter jobs

and higher wages hey can hen buy more, allowing Chinese companies o sell more

o heir goods domesically insead o depending primarily on expor markes, which

can be unpredicable. Higher wages or Chinese workers would also address one o

he bigges complains abou he curren sysemha wealh is oo concenraed in

he hands o a well-conneced ew a he expense o ordinary Chinese.

echnological innovaion is paricularly imporan in his ques. Tus ar China

has primarily served as a manuacurer or wesern designs. I hey can shi noonly oward higher-end goods bu also rom wesern o indigenous Chinese

designs, hen Chinese rms will ge a larger share o hose pros. oday Wesern

rms hold he inellecual propery righs or mos o he higher-echnology goods


18/37


China produces. Ta means Wesern rms ge a large cu o he pros or every

uni sold. I China can keep more o hose pros a home, ha would provide new

revenue sreams or he Chinese economy.

Unorunaely, hose goals will be very dicul o achieve or wo reasons.

Firs, moving oward a modern, higher-ech, consumer-driven economy will

require he ype o independen regulaory governance and judicial srucure ha

i is very hard or an auhoriarian regime o provide. One o he bigges sumbling

blocks is providing a good domesic environmen or echnology innovaion.

Invesmens in innovaion will no deliver good reurns wihou a good legal

sysem o proec inellecual propery righs. Te Unied Saes has such a sysem,

which is why U.S. echnology enrepreneurs and venure capialiss are willing o

risk so much on new ideas.

In China, however, he Chinese Communis Pary worries independen courswould urn agains i, so he pary keeps he cours on a shor leash. Tere is no

judicial independence in China. I pary cadres do no like he way a judge rules

in a case, hey can have ha judge red. Ta gives pary leaders sway over every

cour decision and opens up he possibiliy ha hey will use ha sway o proec

avored companies. And ha means invesors canno rus Chinese cours o

enorce inellecual propery righs laws in a air and imparial manner.

Ta was all ne and good as long as mos inellecual propery cases were

being led by oreign companies agains Chinese deendans. In ha siuaion,

weak IP enorcemen was jus anoher orm o proecionism. Te American

Semiconducor case is a recen example o ha radiional dynamic. American

Semiconducor Corp., or AMSC, has clear evidence ha Sinovel, he Chinese

wind urbine manuacurer, sole AMSC engineering secres and used hem o

produce a Chinese produc based on AMSC designs.32 American Semiconducor

responded by ling sui agains Sinovel in he Chinese cour sysem. In he Wes

AMSCs sui would be an open-and-shu case, bu Sinovel has srong pary and

governmen backers, so Chinese judges keep hrowing he case ou o cour.33

Chinese leaders may no mind giving oreigners a hard ime, bu now hey wanChinese companies o come up wih heir own engineering secres. I ownership

righs are hard o enorce, however, ew Chinese companies will have an incenive

o do so. Ta is paricularly he case or privae-secor companies who would have


19/37


o inves heir own unds or ake ou large loans o develop new echnologies. And

hose are exacly he ypes o companies China needs o encourage i i wans o

move up he echnology value chain.

Tis pas May curren Pary Secreary Hu Jinao convened a Poliburo meeing

o address his problem. A ha meeing pary leaders alked abou he need obuild a more supporive environmen or innovaion and announced a new goal:

making China one o he worlds mos innovaive counries by 2020.34 Chinese

scholars inerviewed or his repor in Beijing claim Hu Jinao is planning a big

innovaion policy push or his all ha will ocus no on channeling more R&D

unds oward sae-owned enerprises (which has no worked ha well so ar), bu

raher on he sysemic barriers o a more compeiive innovaion environmen,

including inellecual propery enorcemen.

No mater wha he pary comes up wih, however, we can be ha i will no include

judicial independence. As long as he pary insiss on mainaining conrol over hecours, Chinas inellecual propery regime will avor whoever has he bes poliical

connecions, no he bes innovaors, and ha will deer some o Chinas bes and

brighes echnology prospecs rom aking a gamble on new ideas.

Shiing he economy oward a new growh model will also require reducing

governmen suppor or he sae secor, and ha is no easy o do. For he pas

10 years he Beijing leadership direced by Pary Secreary Hu Jinao and Premier

Wen Jiabao has had o ocus more on social sabiliy and less on economic reorm.

When economic problems emerged hey hrew money a hose problems insead

o making dicul poliical adjusmens. Tis culminaed in Chinas 2008 simulus

package, which doled ou RMB 4 rillion ($586 billion) over wo years o keep he

economy running hroughou he global nancial crisis.35

More han 80 percen ($468 billion) o hose simulus unds were earmarked

specically or inrasrucure and consrucion projecs.36 Beijing issued reasury

bonds o nance some projecs and ordered sae banks o suppor he res by

providing long-erm, low-ineres loans o he companies involved.37 Local govern-

men cadres were hrilled because hey go o decide which projecs o build and

which companies o award he conracs o. Overall, he simulus program puChinas local governmen ocials in charge o huge amouns o pork, and pork

can buy a lo o riends in China. Mos o he simulus projecs were conraced

ou o sae-owned enerprises wih connecions o Chinas local governmens and

For the past 10

years the Beijing

leadership direc

by Party Secreta

Hu Jintao and

Premier Wen Jia

has had to focus

more on social

stability and less

economic reform


20/37


sae banks.38 All across China, elie groups o governmen ocials, bankers, and

well-conneced sae-owned enerprises were passing around huge amouns o

money, and hey could no have been happier.

Now Chinese leaders need o redirec ha spending rom local governmens

and sae-owned enerprises o privae-secor innovaion by allowing banks ochoose projecs based on proabiliy raher han poliical connecions. China

mus shi rom leting is governmen ocials pick winning companies based

on hose same connecions o leting he marke pick he winners based on

who has he bes echnology. Ta is he only way China can climb up he value

chain o become a major global innovaor. I will no be easy, however. Local

ocials and he heads o local sae-owned enerprises (oen one and he same)

srongly resis any reorms ha redisribue wealh a heir expense, and hose

are very powerul ineres groups in China.39

In Chinas poliical sysem, he leaders in Beijingwho oday can claim neiherdemocraic legiimacy nor Mao-era ideological legiimacyneed suppor rom

he lower levels o make big policy decisions. Te Poliburo (he op 25 pary

leaders) and he larger Chinese Communis Pary Cenral Commitee include no

only naional leaders based in Beijing bu also powerul provincial ocials. Jus

like congressional represenaives here in he Unied Saes, Chinas provincial

ocials bring heir own ineress o he able when hey paricipae in economic

decision making in Beijing. And key policy decisions are always made via consen-

sus, so Beijing has o ake hose regional ineress ino accoun. op naional pary

leaders such as Hu Jinao oday and Xi Jinping in he uure canno ram reorm

plans down he hroas o heir subordinaeshey have o ge heir suppor.

During he rs era o economic reorms, Deng Xiaoping bough ha suppor by

giving local governmen cadres more auhoriy over he local economy.40 Te nex era

o reorms will require aking some o ha economic auhoriy away. For economic

rebalancing o succeed, local cadres can no longer be in charge o picking winning

rms and awarding lucraive conracs or massive inrasrucure projecs. Insead,

commercial banks will allocae capial o he projecs and echnologies ha show he

mos promise, regardless o which region hey are locaed in or who heir riends are.

Tis would be good or China in he long erm, bu no so good or local govern-

men ocials and sae-owned enerprises in he shor erm, paricularly i hey

have sunk invesmens ino less-compeiive indusries and echnologies ha


21/37


would be phased ou under a more marke-based sysem. Tose ocials and sae-

owned enerprises will gh hard o keep ha rom happening.

Chinese leaders have pleny o cash, so hey can easily unnel resources ino new

indusries. Tey are already direcing unding oward sraegic emerging indusries

such as green echnology producs and nex-generaion inormaion echnologyequipmen and soware. Where hey run ino rouble, however, is in acually ge-

ing hose new indusries o he ground. Ta requires urning o he spigos o

governmen suppor owing oward he older and more inecien indusries and

sae-owned enerprises, a ough ask when local governmen ocials are ghing

hard o keep hem alive.

In green energy, or example, Chinese leaders have direced subsanial resources

oward wind and solar. Ta has paid o in clean energy manuacuring: Chinese

companies are using cos innovaions o manuacure cheaper versions o wind

and solar echnologies developed abroad, and hey are exporing hose producsall over he world. Wha Chinese leaders really wan, however, is o develop heir

own echnologies and sell more o hem a home, and ha is no going so well.

Chinese leaders are doling ou unds or clean energy R&D, bu hey disribue

hem hrough governmen channels, and governmen ocials direc he money

oward old riends insead o new prospecs. Resources go o he well-conneced

insead o o he enrepreneurial. Many privae enerprises canno ge nancing,

and privae enerprises are more likely o generae he new ideas China needs.

Chinas abiliy o buy and insall hose clean energy producs a home is also lag-

ging behind, paricularly in he solar indusry. Chinese solar panel manuacurers

expor more han 90 percen o he producs hey produce, and hose expors

are currenly being hi wih aris.41 Chinese solar manuacurers wan Beijing o

increase domesic solar energy consumpion so hey can sell more solar panels a

home and depend less on expors (hus limiing heir exposure o aris), bu he

growh o solar demand in China is much slower han i could be.42

Tas because Chinas elecriciy secor is dominaed by sae-owned enerprises

ha preer o sick wih he coal inrasrucure hey already have insead o inves-

ing in new echnologies such as solar. Solar generaion is sill more expensive hancoal, and Chinas generaion companies can make a pro even using coal because

Beijing xes elecriciy prices a below-marke raes o keep consumers happy.


22/37


Over he pas ew years, coal prices have gone up, bu elecriciy prices sayed low,

so Chinas sae-owned power generaors have been selling elecriciy a a loss and

geting governmen bailous o balance he books.43 Te las hing hose compa-

nies wan is o increase heir coss and losses even urherand Beijing canno

increase elecriciy prices oo much because ha would slow down he economy

and inuriae consumers.

China has a Golden Sun program ha provides governmen money o build

solar generaion plans, which should help bring down coss, bu local govern-

mens are no managing i well, and many Golden Sun projecs have been plagued

wih raud.44 For he solar generaion projecs ha have been buil, geting con-

neced o he grid is also problemaic because Chinas Sae Grid Corporaion

(a sae-owned enerprise) conrols 88 percen o he counry, and Sae Grid is

dragging is ee on renewable energy connecion.

All o hese acors keep China ied o coal and lock Chinas clean energy economyino he old model o depending primarily on expors insead o selling more goods

a home. Overall, hen, China is locked ino a siuaion where he cenral govern-

men is rying o push heir economy in new direcions, bu cenral-local poliical

dynamics consrain Beijings abiliy o ransorm he sysem in a meaningul way.

o be sure, he counry has made some progress. When measured by annual

growh raes, Chinas domesic clean energy markes are booming, and no one

doubs Beijings deerminaion o urn is counry ino a clean energy powerhouse.

Te problem is ha hings are jus no moving quickly enough, paricularly on

domesic consumpion and home-grown echnology innovaionand hose are

he clean energy improvemens ha China really needs.

Overall, i seems as hough every ime Beijing comes up wih a new idea, vesed

ineress sand in he way. I Chinas incoming pary leaders canno nd new solu-

ions o hese problems, hen economic growh may slow dramaically. And ha

has major implicaions, no only or he economy, bu also or he Chinese polii-

cal sysem more broadly.


23/37


Satisfying Chinas rising middle

class in an era of economic

uncertainty

For he pas hree decades, he Chinese Communis Pary has mainained power

by oering is ciizens a bargain hey could no resis: Te ciizens suppor he

communis parys auhoriarian grip on power, and in reurn he pary keeps he

economy growing and uses he cash o give everyone a beter lie. As China moves

ino he nex developmen phase, is going o be harder or he pary o keep up

heir end o ha bargain. And o urher complicae maters, insead o acceping

less, he Chinese people are going o be demanding even more.

Now ha he Chinese people have become more prosperous, economic growh

is no longer enough. Everyday Chinese wan more, especially he counrys rising

middle class. Tey already have decen homes, cars, and pleny o ea. Now hey

wan a more ransparen governmen, cleaner air and waer, saer ood and drug

supplies, and a judicial sysem ha acually works. Basically, hey wan a liesyle

ha looks a lo like wha we have here in he Unied Saes.

Problem is, he Unied Saes is a democracy, and China is no. Beijing answers o

no one, and local governmens are heir own corrup litle kingdoms. Te leaders

in Beijing know hey have o x problems such as environmenal polluion and

poisonous ood producs o keep people rom proesing. Local governmens are

generally more ineresed in making money, however, and no so ineresed in

enorcing regulaions o improve qualiy o lie.45

Beijing can order hem o do so, bu China is a big counry, and Beijing is usually

ar away. Local businesses are much closer and hey have a lo o cash. When local

ocials have o choose beween ollowing Beijings orders versus proecing busi-

ness in exchange or kickbacks, he later oen looks like a much beter deal. Ta

creaes major corrupion problems.

Inrasrucure developmen projecs, in paricular, are hobeds o corrupion.

Businesses can sie hose projecs anywhere in China, so regional governmens

compee wih one anoher o atrac invesors and win he ax revenues and kick-


24/37


backs hose deals can bring. Ta oen involves ignoring laws proecing ciizen

righs. Local ocials kick people ou o heir homes wih litle or no compensa-

ion, lease he land o a developer a exremely low raes, and hen allow ha

developer o violae a whole hos o environmenal sandards. Businesses save mil-

lions in consrucion coss, bu ciizens suer, rs by losing heir land and homes,

hen by exposure o dangerous polluion.

Tis creaes major problems or Beijing, no only because i makes he govern-

men look bad bu also because Beijing has o worry ha angry ciizens will

express heir rusraions in mass proess. And worry hey should. I is dicul

o say or sure exacly how many proess erup in China every year. Saisics

vary depending on how dieren governmen agencies dene he erm mass

incidens, bu over he pas ew years he cenral governmens annual proes sa-

isics have ranged beween 50,000 and 100,000 per year.46 Tis is despie he ac

ha he Chinese cenral governmen budge or public securiy (prevening and

sopping mass proess) has eclipsed he counrys naional deense budge or woyears running. Te 2012 budge allocaed over RMB 700 billion ($110 billion)

o domesic police and paramiliary orces, $5 billion more han Chinese leaders

gave he Peoples Liberaion Army or naional deense.47

Here are jus wo examples o wha he Chinese communis leadership aces. Tis

July in Qidong, a coasal ciy near Shanghai, housands o residens ook o he

srees o proes a wase discharge pipeline ha would have decimaed sher-

ies and pollued drinking waer.48 Enraged proesers did more han jus march

hrough he srees. Tey also atacked ciy governmen buildings and overurned

cars. Ta same monh in Shiang Ciy, Sichuan Province, housands o ciizens

surrounded and atacked governmen buildings o proes a copper acory.49

Tese proess are sprouing all over China and presening Beijing wih a major

red line. I Chinese leaders canno address he corrupion problems and qualiy o

lie issues, he proess will likely ge bigger and more requen unil hey grow ino

somehing he pary canno shu down. Chinese leaders need look no arher han

Hosni Mubaraks regime in Egyp o see wha ha would enail.

One way Chinese leaders are rying o solve hese problems is by borrowing srae-gies rom wesern democracies, wihou going so ar as o acually democraize.

Chinese leaders are rying o improve he uncioning o heir cours, or example, so

ha heir ciizens can sue local ocials when hose ocials ignore Beijings laws (by

kicking people o o heir land wihou providing adequae compensaion).50 Beijing


25/37


is also giving Chinese journaliss and nongovernmenal organizaions a bi more

leeway o expose problems like environmenal polluion and ood saey incidens.

Problem is, hey never go quie ar enough. Te cours are sill no independen,

so cronyism derails mos cases.51 Journaliss and social organizaions are sill kep

on a igh leash. Local governmens can sill have journaliss or aciviss red iheir invesigaions ge oo poliical and ha cus many wachdogs o a he knees.

Overall, Beijing irs wih elemens o a democraic sociey, bu never goes ar

enough o enac real change. Te end resul is ha hey are no ully addressing

heir ciizens growing complains, raising he quesion o wheher Chinese lead-

ers will be able o keep hings going in a more economically developed era.

Some oreign observers saw Chinas reacion o he Wukan proess (in

Guangdong Province) las all as a sign o progress. Pary leaders in Wukan had o

decide how o reasser conrol aer local ocials and police clashed wih angry

residens over corrupion problems and hen rereaed, ceding Wukan Village oproesers.52 Insead o sending in anks as Deng Xiaoping did o clear iananmen

Square in 1989, Guangdong pary leaders sen in represenaives o hear he

peoples complains, and hey even allowed he villagers o hold a special elecion

o appoin one a proes leader as he new village pary chie.53

Tis was a ascinaing and posiive developmen, bu Wukans experience is no

likely o be repeaed naionwide. Wukan is locaed near Guangzhou and Hong

Kong, wo major inernaional ciies, so he Wukan crisis atraced inernaional

media atenion, making he pary s response as much abou public relaions as i

was abou mainaining social sabiliy. Wih mos Chinese proess, local ocials

are more likely o respond wih crackdowns han elecions.

A a undamenal level, Chinese leaders undersand ha here is only one way

orward. Tey have o give heir growing middle class more o wha hey wan, and

wha hey wan is looking more and more like he kinds o governmen goods, ser-

vices, and accounabiliy ha Wesern democracies deliver. Marginal reorms and

small poliical concessions will no achieve ha, hough hey will buy ime, which

alone is a big accomplishmen. Te quesion is how much ime hey have le.

Ta will be largely deermined by how well China ares on an economic ron.

As long as he economy is booming, mos Chinese people can pu up wih some

poliical rusraions, because as long as he poliical rusraions don ge oo bad,

hey sill seem like a worhwhile price o pay or economic growh. I he economy

slows down oo much, however, ha bargain no longer looks like a good deal.

At a fundament

level, Chinese

leaders understa

that there is onl

one way forward

They have to giv

their growing

middle class mo

of what they wa


26/37


Will the next generation

have what it takes?

Te quesion we should all be asking is wheher Chinas new leaders can mee

hese challenges. Tey are a diverse group, bu none o hem appear o be big

hinkers. And none o hem appear o have he poliical clou hey would need o

push big, new ideas pas conservaive inernal opponens.

Xi Jinping, he presumpive nex pary secreary, appears very similar o curren

Pary Secreary Hu Jinao. Like Hu, Xis bigges redeeming qualiy is ha he has

managed o rise up he pary hierarchy wihou creaing major waves, geting caughup in any major scandals, or creaing oo many enemies. Like Hu, ha makes Xi a

good consensus candidae or pary secreary, because alhough he is probably no

anyones rs choice, he is a leas accepable o a wide range o cadres.54

Li Keqiang, he presumpive premier, was mos likely Hu Jinaos counerbalance

agains Xi Jinping, because Xi is a princeling, and Li Keqiang is loyal o Hu Jinaos

populiss. Teir predecessors were already acional allies when hey assumed

hose posiions (populiss Hu Jinao and Wen Jiabao and eliiss Jiang Zemin and

Zhu Rongji), bu, as bes we can ell, Xi Jinping and Li Keqiang are no. I is no

ye clear wheher heir dieren acional ies will make i easier or harder or Xi

and Li o ge hings done in Beijing. (See sidebar on page 10 or a brie explana-

ion o he acions wihin he Chinese Communis Pary.)

Te res o he likely appoinees are a bi more ineresing. Curren organizaion

deparmen head Li Yuanchao, a Hu Jinao prog, will almos cerainly be pro-

moed o he Poliburo Sanding Commitee, and he will be ineresing o wach

on he reorm ron. Te organizaion deparmen is responsible or designing

and operaing Chinas vas personnel sysemi ses he guidelines or how pary

cadres are evaluaed and which aspecs o heir perormance weigh more heavilyin deermining who moves up he ranks.

As head o ha deparmen, Li Yuanchao led he eor o make public opinion

polls an imporan elemen in personnel evaluaions.55 Previously, hose evalua-


27/37


ions were based only on inernal assessmens and he public had no voice in he

process. Now he pary conducs opinion polls across he counry o nd ou how

local people rae heir local leaders, and hey include hose resuls in cadre evalu-

aions. I may no be he U.S. ballo box, bu hose polls do give cadres an exra

incenive o keep people saised.

Li claims ha many cadres srongly opposed ha move bu ha Hu Jinao gave

him he poliical suppor he needed o overcome heir opposiion.56 Ta suggess

Li a leas has a leas some experience pushing new ideas pas inernal resisance.

None o his programs hus ar have been anyhing near major poliical reorm,

however, and i is no clear wheher he would oer anyhing bolder as a member

o he Poliburo Sanding Commitee.

I is also no clear wha he can do wihou he pary secreary backing hose

eors. Xi Jinping, he nex pary secreary, will be rom an opposing acion, and

ha may consrain Lis maneuvering room. As one o he ew candidaes who haveacively promoed a leas some poliical reorms, however, he is cerainly worh

waching. I economic sagnaion hrows Beijing ino crisis mode and he sanding

commitee needs o pu someone in charge o rolling ou more ambiious poliical

reorms o appease an angry public, Li would be a naural choice.

Wang Qishan, he curren vice premier or economic, energy, and nancial aairs

is considered a srong economic manager, and he has good relaionships wih he

business communiy in China and in he Wes. Bu i is no clear wha role he will

play in he new sanding commitee and how he will ge along wih presumpive

Premier Li Keqiang. Te reason: I is well-known ha many o Chinas princelings

in Jiang Zemins acion lobbied long and hard o give he premiership o Wang

Qishan insead o Li Keqiang.57 Ta eor was no successul, bu i is no some-

hing Li Keqiang is likely o orge.

As he head o Chinas governmen, Li may ry o sideline Wang Qishan o avoid

being overshadowed on economic aairs. I will be ineresing o see how Xi

Jinping, Li Keqiang, and Wang Qishan inerac once hey ake heir places a he

op. Alhough Li Keqiang will ake he premiership and hereore should serve

as Xi Jinpings number wo, acional poliics align Xi Jinping more closely wihWang Qishan. Only ime will ell wheher ha means Wang will play a sronger

rule due o Xi Jinpings backing, or i ha will cause Li Keqiang and oher popu-

liss o see him as a hrea and look or ways o reduce his inuence. Tose popu-


28/37


liss will include soon-o-be reired Pary General Secreary Hu Jinao, who can

sill engage in poliical machinaions behind he scenes and who has an ineres in

proecing his prog Li Keqiang.

Ten heres Guangdong Pary Secreary Wang Yang, who is oen lauded as a

liberal reormer, parly because he has porrayed himsel as he opposie o BoXilai. Whereas Bo called or a reurn o he socialis ideals o he Mao era, Wang

Yang advocaed a more liberal approach and argued ha he only way orward

was more poliical reorm and liberalizaion, no less. His repuaion as a modern

hinker hi a high poin his pas all during he Wukan proess. As pary secreary

o Guangdong Province, Wang Yang is he highes-ranking ocial in ha region,

making him responsible or resolving major proes incidens. Many oreign

observers credied Wang or he relaively so response in Wukan: Insead o

sending in paramiliary roops, he sen in negoiaors and held elecions.

I is imporan o noe, however, ha Guangdong is always a bi more liberalhan oher regions in China. Guangdong residens joke ha when new cadres are

appoined o Guangdong, hey sar ou as hard-liners, bu aer a year or so hey

relax and learn o adap o he local condiions. Guangdong was he rs region

ha Deng Xiaoping opened up o he Wes. I is much closer o Hong Kong han

i is o Beijing, and i is one o Chinas mos prosperous areas. All o hose acors

give local poliical leaders a lo o slack.

Even under hose condiions, however, Wang Yang has no rolled ou any major

reorm programs. Te reorms Guangdong has announced in he pas ew years

such as Guangdongs new and more relaxed regisraion requiremens or social

organizaionshave so ar urned ou o be more rheoric han subsance.

Te bigges problem is ha among all o he likely appoinees o he nex sanding

commitee, none appear o be big hinkers like Deng Xiaoping, and even i hey

were, none appear o have enough poliical migh o push hose ideas hrough he

sysem. Insead o pushing bold change, he nex group o leaders will probably ry

o coninue inkering around he margins o he curren sysem, jus as Hu Jinao

and Wen Jiabao have done or he pas 10 years.

Bu anoher decade o marginal reorms may no be enough. A some poin China

is going o hi a breaking poin, a poin where marginal reorms are no longer

enough o saisy he peoples demands. Ta would mos likely be riggered by

a major corrupion scandal involving he op leadership or prolonged economic

At some point

China is going

to hit a breaking

point, a point

where marginal

reforms are no

longer enough

satisfy the peop

demands.


29/37


sagnaion. Eiher o hose evens would shater he grand bargain holding all o

his ogeher, which is ha he pary keeps he economy growing, and in reurn

he Chinese people allow hem o keep heir sranglehold on poliical power.

Wheher he curren leaders can keep muddling along as heir predecessors did,

hereore, depends o a large exen on he Chinese economy. Tey have o geserious abou economic reorm and successully rebalance he economy o avoid

being pushed ino major poliical reorm. Teir abiliy o do ha will have serious

implicaions or he Chinese people, and also or Chinas relaions wih he Unied

Saes, Asia, and he res o he world.


30/37


Conclusion

The United States needs to better understand China

From a U.S. perspecive, we need o prepare o deal wih a China ha is increasingly

divided and uncerain abou is uure. Going orward, dieren Chinese leaders

may send very dieren signals abou where he counry is headed. Ta will require

U.S. policymakers o spend more ime examining and undersanding wha exacly is

happening in Beijing and wha he Chinese leadership is acing a home.

A presen, a almos every high-level leadership meeing beween he Unied

Saes and China, i is a air be ha he Chinese know more abou wha is going

on in he Unied Saes han vice versa. Ta is parly because he Unied Saes has

a more ransparen poliical sysem, bu also because Chinese leaders consider our

naion o be heir mos imporan counerpar. Beijing hereore places a very high

prioriy on undersanding our sociey and our ederal sysem. Ta prioriizaion

and atenion is no ully reciprocaed.

o be sure, we have op China analyss a he Sae Deparmen and in oher

governmen agencies who do a very, very good job o racking wha he various

elemens in China are up o. Bu we simply do no have enough o hem.

Unil recenly, ha has no been a major problem because as long as he Chinese

Communis Pary spoke wih one voice, China has been airly easy o deal wih.

Now, however, he pary is becoming more ragmened boh in Beijing and around

he counry. Tere is a huge amoun o conusion and indecision in Beijing over

how o deal wih Chinas growing challenges.

All o hese muliplying voices coming ou o he pary are making China a morecomplex oreign policy parner. Te Unied Saes will have o ge smarer and learn

o deal wih his new dynamic. U.S. policymakers mus develop a beter undersand-

ing o where individual Chinese leaders, bureaucraic agencies, and regions sand

on criical bilaeral issues. Approaching China wihou ha undersanding would be


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like approaching he Unied Saes wihou knowing he U.S. Democra/Republican

pary divides or he dieren roles o sae and local governmens and he ederal

governmen. I could easily lead o major oreign policy miscalculaions.

Te Unied Saes will also need o keep a vigilan eye on Chinas domesic problems

and be prepared o deal wih any Chinese leadership atemps o deal wih hoseproblems by poining accusing ngers abroad. When Chinese leaders ail o mee cii-

zen demands on criical domesic issues, one way o deec blame is shi he publics

atenion oward oreign dispues, especially hose involving he Unied Saes.

On economic issues, or example, he Chinese Communis Pary propaganda

machine may blame slowing economic growh on U.S. impor aris, U.S. reus-

als o share key echnologies, or an inernaional rade sysem designed o bene

he Unied Saes and oher developed counries a Chinas expense. I he Unied

Saes is o keep hese ypes o accusaions rom riggering major bilaeral con-

ics, we will have o deploy a seady and knowledgeable hand.

Similarly, he pary migh urn o miliary jingoism o deec rising domesic

anger, pushing already well-developed naionalis butons in he sae media and

even in he independen social media by paying people o pos commens online.

Governmen-paid Inerne commeners are so common in China hey are now

known as he y-cen paryin reerence o he amoun o money hey repor-

edly receive or each pro-governmen posing.58

Te 2008 proess in ibe demonsraed how quickly Chinese leaders can use

naionalis rheoric o hrow he Chinese pubic ino an anioreign uror. Te

ibe proess atraced a huge amoun o media atenion and sparked a wave

o inernaional criicism over righs abuses. Te las hing Chinese leaders wan

o discuss is ibean complains abou righs abuses under Chinese Communis

Pary rule, so hey ramed he inernaional criicism as a case o Wesern naions

(paricularly European naions) inerering in Chinas sovereigny and errio-

rial inegriy. Chinese ciizens responded by rallying behind Beijing and saging

naionalis proess a home and around he globe.

Ta is very dangerous, because once Chinese leaders whip heir ciizens ino anaionalisic ury hey hen have o ake a very hard line o avoid appearing o cave

in o oreign pressure. o avoid unnecessary conics and seer he U.S.-China

relaionship hrough hese challenges, U.S. leaders will have o learn more abou

who hey are dealing wih. Tere is no way around ha. In paricular, U.S. leaders

need o beter undersand:


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Chinas elie leadership poliics in he broades sense o he erm, including lead-

ership ransiions, he ormal and inormal norms ha guide poliical behavior

in China, and he acional poliics ha may grow increasingly conenious over

he nex 10 years. Chinas power dynamics are complex, bu he only way U.S.

leaders can undersanding how heir Chinese counerpars will behave on he

policy ron is o undersand he chess games hey are all playing behind closeddoors in Beijing. China has long ollowed U.S. elecions and congressional

scufes o predic wha our leaders will do. I is ime or us o do he same.

Te problems Chinese leaders are acing domesically and he policy ools hey

have (or do no have) a heir disposal.

Te dynamics beween cenral and local governmen leaders. Beijing makes

a lo o promises, bu local governmens are oen responsible or carrying

hem ou, and hey do no always do so. On issues such as inellecual propery

enorcemen and expor subsidies, mos o he acion is a he local governmenlevel. Te Unied Saes needs o develop beter approaches o hose problems,

and he way o do ha is o develop approaches ha ake Chinas cenral-local

enorcemen problems ino accoun.

Te Chinese ciizens increasing demands and he challenges Chinese leaders

ace when hey atemp o mee hose demands wihou democraizing. Beijings

abiliy o do ha will deermine how long he curren sysem can las.

How China views he Unied Saesboh a he elie level and among he

populaceand how domesic issues impac Chinas oreign policy behavior.

Chinese leaders are maser sraegiss. Tey have o be o make i up he ranks in

he Chinese Communis Pary. Tey apply hose same acics o heir dealings

wih he Unied Saes, and one o he rs hings hey do is o ge o know heir

opponen very, very well.

Washingon is no a uopian playgroundour own poliicians are also very good

sraegiss. Is ime or us o ollow Chinas example and apply he skills we have

developed a home o beter undersand our oreign policy parners abroad. Tais he only way we can manage his relaionship and proec our ineress while

China deals wih he challenges ahead.


33/37


About the author

Melanie Hart is a Policy Analys a he Cener or American Progress. She ocuses

on Chinas science and echnology developmen policies or energy innovaion as

well as is domesic energy eciency program, environmenal regulaory regime,

and domesic and inernaional responses o global climae change.

Beore joining he Cener or American Progress, Melanie was a projec consulan

or he Aspen Insiue. She also worked on Qualcomms Asia Pacic business

developmen eam, where she provided echnology marke and regulaory analysis

o guide Qualcomm operaions in Greaer China. She has worked on Chinese

domesic and oreign policy issues or Te Scowcro Group and he Universiy o

Caliornia Insiue on Global Conic and Cooperaion, and as a Chinese-English

ranslaor or Caijing Magazine in Beijing.

Melanie has a Ph.D. in poliical science rom he Universiy o Caliornia, SanDiego. Her docoral work ocused on Chinas policy enorcemen challenges

in environmenal proecion, land expropriaion and ood and drug saey. She

sudied Chinese a China Foreign Aairs Universiy in Beijing and has a B.A. in

inernaional sudies rom exas A&M Universiy.

Acknowledgements

Many hanks o Rudy deLeon, Ali Fisher, Nina Hachigian, and Ed Paisley or heir

commens on and conribuions o his repor.


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Endnotes

1 The Chinese Communist Partys annual Beidaihemeetings date bac to 1953. For details on this yearsmeeting, see: Wang Xiangwei, Horse Trading UnderWay in Earnest, South China Morning Post, August 6,2012, available at http://www.scmp.com/portal/site/SCMP/menuitem.2a62ecb329d3d7733492d9253a0a0a0/?vgnextoid=a4eb7dc56778310VgnVCM100000360a0a0aRCRD&ss=China&s=News.

2 The Chinese Communist Party and the Chinese PeoplesGovernment are two separate (but overlapping) hier-archies. Top Chinese leaders have ocial posts on bothsides. Vice president o the Peoples Government oChina is Xi Jinpings highest government position; Polit-buro Standing Committee Member is his high est Partyposition. Li keqiang is the highest-raning vice premierin Chinas State Council, which is Chinas nationalcabinet and the highest-raning oce in the govern-ment hierarchy. I current Premier Wen Jiabao wereincapacitated, Li keqiang would step in to carry outhis duties as premier. Xi Jinping and Li keqiang are theonly two next-generation cadres already serving on thePolitburo Standing Committee and the only standingcommittee members not slated to retire in 2012. Theywere moved into those positions at the previous bigParty Congress in 2007, a move that signaled Xi and Liwould become Chinas top two political heavyweights

ve years down the road.

3 Cheng Li, The Battle or Chinas Top Nine LeadershipPosts,Washington Quarterly35 (1) (2012).

4 Minxin Pei, Chinas Trapped Transition: the Limits ofDevelopment Autocracy(Cambridge: Harvard UniversityPress, 2006).

5 Former SFDA chie executed or corruption, ChinaDaily, July 10, 2007, available at http://www.chinadaily.com.cn/china/2007-07/10/content_5424937.htm; WuJiao, Former drug watchdog head to go on trial,ChinaDaily, May 9, 2007, available at http://www.chinadaily.com.cn/bizchina/2007-05/09/content_868536.htm.

6 Other examples o cadres recently executed or sen-tenced to be executed or corruption include a ormerShanghai land bureau chie, a ormer executive at Chi-

na Mobile, and the ormer deputy mayors o Hangzhouand Suzhou. Their primary ofense was bribe-taing.Former Shanghai land ocial execution ordered orcorruption, given two years reprieve, Peoples Daily,August 14, 2008, available at http://english.people.com.cn/90001/90776/90882/6476098.html; FormerChina Mobile executive sentenced to stay o executionor grat,Xinhua, November 11, 2011, available athttp://news.xinhuanet.com/english2010/china/2011-11/11/c_131241947.htm; Wang Jingqiong, Two ormerocials executed, China Daily, July 20, 2011, availableat http://www.chinadaily.com.cn/cndy/2011-07/20/content_12939151.htm.

7 Susan Shir, China: Fragile Superpower(Oxord: OxordUniversity Press, 2007).

8 Chinas propaganda department bans independentreporting on sensitive issues and sends regular noticesto update all Chinese media outlets on the latestrestrictions. For examples o recent notices, s ee Direc-tives rom the Ministr y o Truth, available at http://chinadigitaltimes.net/2012/06/directives-ministry-truth/ (last accessed August 2012). Recent high-prolecorruption cases with strict nationwide media controls

include the summer 2011 Wenzhou train crash andthe ongoing Bo Xilai scandal. See Sharon LaFraniere,Media Blacout in China Ater Wrec, TheNew YorkTimes, July 31, 2011, available at http://www.nytimes.com/2011/08/01/world/asia/01cracdown.html; HaiyanWang, The return o activist journalism in China, Finan-cial Times, July 15, 2012, available at http://www.t.com/intl/cms/s/0/41a9d86-cce5-11e1-9960-00144eabdc0.html#axzz23MW5Cc9F.

9 There are many examples o journalists and editorsbeing red or jailed ater investigating specic corrup-tion cases or ater developing a reputation or pushingthe limits a bit too oten. For two recent examples, seeDavid Barboza, Chinese Journalist Who Deed theCensors and Wrote about Corruption Is Fired, TheNewYork Times, January 27, 2011, available at http://www.nytimes.com/2011/01/28/world/asia/28china.html;David Bandursy, Chinas Media and Death by Uncer-

tain Causes (Hong kong: China Media Project, 2012),available at http://cmp.hu.h/2012/07/19/25507/.

10 This past all, amous Chinese writer/blogger Han Hanposted an introspective essay on Chinas propagandaregime and the media sel-censorship it engenders.

That essay was removed by Chinese censors, but theChina Media Project reposted it in Chinese and Englishon its Hong kong-based site. See David Bandursi,Han Han: When a Culture Castrates Itsel (Hong kong:China Media Project, 2011), available at http://cmp.hu.h/2011/11/03/17009/.

11 Some analysts believe that the recent murder indict-ments against Bo Xilais wie Gu kailai and the com-mencement o her judicial trial are a signal that somesort o agreement has been reached.

12 Shir, China: Fragile Superpower.

13 Shanghai party chie saced or grat, China Daily, Sep-tember 25, 2006, available at http://www.chinadaily.com.cn/china/2006-09/25/content_696159.htm; Cao Liand Wang Yu, Chen gets 18 years or corruption,ChinaDaily, April 12, 200 8, available at http://www.chinadaily.com.cn/bizchina/2008-04/12/content_7544559.htm.

14 Joseph kahn, Bo Yibo, Leader Who Helped ReshapeChinese Economy, Dies at 98, TheNew York Times,January 17, 2007, available at http://www.nytimes.com/2007/01/17/world/asia/17bo.html.


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15 Zhang Xueeng, Li Peng, and Shang Yu, Bo XilaiHuang Jian zai Chongqing dai biao tuan mei ti aiang ri yu zhong wai ji zhe jiao liu (Bo Xilai and HuangJian Spea with Domestic and Foreign Reportersat Chongqing Delegations Press Day), Chongq-ing Daily, March 11, 2012, available at http://news.ieng.com/mainland/special/2012lianghui/yulu/detail_2012_03/11/13110425_0.shtml; Bo Xilai: gongtong u yu da da jiang di wei wen cheng ben en haodan gao cai neng zuo da (Bo Xilai: Common ProsperityWould Greatly Reduce Cost to Maintain Social Stability;Cae Will Finally Expand Once Divided Evenly), Caijing

Magazine, March 10, 2012, available at http://politics.caijing.com.cn/2012-03-10/111734992.html.

16 Shir, China: Fragile Superpower.

17 Chongqing liang yue zhua huo 1544 ming hei e tuanhuo cheng yuan (Chongqing Arrests 1544 Violent Ma-a Gangsters in Two Months), Nanfang Zhoumo (South-ern Weekend), August 17, 2009, http://www.inzm.com/content/32986; Chen Jibing, Chongqing chang hongde xian wai zhi yin (The Real Meaning Behind SingingRed in Chongqing), Liaowang Zhongguo (OutlookChina), August 23, 2011, http://www.21cbh.com/HTML/2011-8-23/3MMTI1XzM1OTI3Mg.html.

18 Willy Lam, Xi Jinpings Chongqing Tour: Gang oPrincelings Gains Clout, Jamestown Foundation ChinaBrief, December 17, 2010, available at http://www.

jamestown.org/single/?no_cache=1&tx_ttnews%5Btt_

news%5D=37293; Shuai ling hong ge dui jin jing BoXilai bei liang da ju yuan (Leading Red Song Troop En-ters Beijing; Bo Xilai Let Hanging Dry in Big Theatre),Epoch Times, June 13, 2011, available at http://www.epochtimes.com/gb/11/6/13/n3284506.htm.

19 Steven Lee Myers and Mar Landler, Frenzied Hoursor U.S. on Fate o a China Insider, TheNew York Times,April 17, 2012, available at http://www.nytimes.com/2012/04/18/world/asia/details-emerge-on-us-decisions-in-china-scandal.html?pagewanted=all.

20 John Garnaut, The Revenge o Wen Jiabao, ForeignPolicy, March 29, 2012, available at http://www.oreign-policy.com/articles/2012/03/29/the_revenge_o_wen_

jiabao?page=ull.

21 kathrin Hille, Beijing reaches consensus on Bo Xilaicase, Financial Times, July 26, 2012, available athttp://

www.t.com/intl/cms/s/0/43da962-d739-11e1-a378-00144eabdc0.html#axzz23MW5Cc9F.

22 Details o intentional homicide trial o Bogu kailai,Zhang Xiaojun,Xinhua, August 11, 2012, availableat http://news.xinhuanet.com/english/china/2012-08/11/c_131776969.htm.

23 Cheng Li, Hus Policy Shit and the Tuanpais Coming-o-Age, China Leadership Monitor 15 (2005), availableat http://media.hoover.org/sites/deault/les/docu-ments/clm15_lc.pd.

24 Poon Siu Tao, Shanghai Gang Losing Power Struggle,Asia Times, September 1, 2006, available at http://www.atimes.com/atimes/China/HI01Ad01.html.

25 David Barboza and Sharon LaFraniere, Princelings inChina Use Family Ties to Gain Riches, The New Yor

Times, May 17, 2012, available at http://www.nytimes.com/2012/05/18/world/asia/china-princelings-using-amily-ties-to-gain-riches.html?pagewanted=all.

26 Cheng Li, The Battle or Chinas Top Nine LeadershipPosts, Washington Quarterly 35 (1) (2012), available athttps://csis.org/les/publication/twq12winterli.pd.

27 Susan Shir, The Legacy o Tiananmen or ChinesePolitics, The Hungton Post, June 3, 2009, availableat http://www.hungtonpost.com/susan-shir/the-legacy-o-tiananmen-_b_210787.html; Susan Shir,China: Fragile Superpower.

28 Ibid.

29 Jason Chow and Angus Loten, More Wealthy ChineseSaid to Prepare Exits, TheWall Street Journal, May 11,2012, available at http://online.wsj.com/article/SB10001424052702304203604577393841014313050.html.

30 Richard McGregor, The Party: The Secret World of ChinasCommunist Rulers (Harper Collins, 2010).

31 Jeremy Page, China Purge Sets Up Scramble at Top,TheWall Street Journal, March 15, 2012, available athttp://proessional.wsj.com/article/SB10001424052702304459804577282280904864936.html?mod=WSJ_hp_MIDDLENexttoWhatsNewsSecond&mg=reno64-wsj; Jonathan Anseld and Ian Johnson, OustedChinese Leader Is Said to Have Spied on Other TopOcials, TheNew York Times, April 25, 2012, availableat http://www.nytimes.com/2012/04/26/world/asia/bo-xilai-said-to-have-spied-on-top-china-ocials.html?pagewanted=all.

32 Michael Riley and Ashlee Vance, Inside the ChineseBoom in Corporate Espionage, Bloomberg BusinessweekMarch 15, 2012,available at http://www.businesswee.

com/articles/2012-03-14/inside-the-chinese-boom-in-corporate-espionage.

33 Ibid; China court rejects American SuperconductorsIPR lawsuit, Peoples Daily, February 10, 2012, availableat http://english.peopledaily.com.cn/90778/7725402.html.

34 CPC Central Committee Politburo urges deepeningtechnological reorm,Xinhua, May 28, 2012, availableat http://news.xinhuanet.com/english/china/2012-05/28/c_131616005.htm.

35 The stimulus pacage began in ourth quarter 2008and ran through ourth quarter 2010. Zhang Hong,Macro Review: Stimulus Plan Not Good Enough, Cai-jing Magazine, November 17, 2008, available at http://english.caijing.com.cn/2008-11-17/110029140.html;Wang Changyong, Facelit or Chinas Economic Stimu-

lus Plan, Caijing Magazine, March 6, 2009, available athttp://english.caijing.com.cn/2009-03-06/110114405.html.

36 Wang Changyong, Facelit or Chinas Economic Stimu-lus Plan, Caijing Magazine, March 6, 2009, available athttp://english.caijing.com.cn/2009-03-06/110114405.html.

37 Barry Naughton, Understanding the Chinese StimulusPacage, China Leadership Monitor, No. 28, May 8, 2009,available at http://www.hoover.org/publications/china-leadership-monitor/article/5588.

38 Chinese Entrepreneurs Are Getting Screwed AsStimulus Funds Go To State Firms, Business InsiderInternational, July 8, 2012, available at http://www.busi-nessinsider.com/chinese-entrepreneurs-are-getting-screwed-as-stimulus-unds-go-to-state-rms-2012-7.

39 John Lee, Chinas Corporate Leninism,The AmericanInterest, Summer 2012, available at http://hudson.org/les/publications/ChinasCorporateLeninism--JohnLee052012.pd; O emperors and ings: Chinasstate-owned enterprises are on the march,The Econo-mist, November 12, 2011, available at http://www.economist.com/node/21538159.


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40 Susan L. Shir, The Political Logic of Economic Reformin China (Bereley, Caliornia: University o CaliorniaPress, 1993).

41 keither Bradsher and Diane Cardwell, U.S. SlapsHigh Tarifs on Chinese Solar Panels, TheNewYork Times, May 17, 2012, available athttp://www.nytimes.com/2012/05/18/business/energy-envi-ronment/us-slaps-tarifs-on-chinese-solar-panels.html?pagewanted=all.

42 Grid issue taing wind out o energy plans sails,

China Daily, February 16, 2011, available at http://www.china.org.cn/2011-02/16/content_21933267.htm; Liu Yiyu, Photovoltaic industry poweringahead,China Daily, August 13, 2012, available at http://www.chinadaily.com.cn/cndy/2012-08/13/content_15669054.htm.

43 China to ofer 10 bln yuan in subsidies or powersector,China Daily, January 20, 2009, available athttp://news.xinhuanet.com/english/2009-01/20/content_10686856.htm; Jim Bai and Chen Aizhu,China power rms may get $4.8 bln capital injec-tion, Reuters, March 27, 2012, available at http://www.reuters.com/article/2012/03/27/china-power-idUSL3E8ER43F20120327.

44 Yuan Ying, Burned by the Sun, Southern Weekend(English version available rom Chinadialogue),March 24, 2010, available at http://www.chinadia-

logue.net/article/show/single/en/4232.

45 Pei, Chinas Trapped Transition: the Limits of Develop-ment Autocracy.

46 Will Freeman, The Accuracy o Chinas Mass Inci-dents,Financial Times, March 2, 2010, available athttp://www.t.com/intl/cms/s/0/9ee6a64-25b5-11d-9bd3-00144eab49a.html#axzz22kW38Ii.

47 Chris Bucley, China boosts domestic securityspending by 11.5 pct, Reuters, March 4, 2012, avail-able at http://www.reuters.com/article/2012/03/05/china-parliament-security-idUSL4E8E408F20120305.

48 Lu Chen and Liang Chen, Order Restored to QidongAter Protest, Global Times, July 30, 2012, available athttp://www.globaltimes.cn/content/724061.shtml.

49 Fiona Tam, Rally o thousands orces actory halt,South China Morning Post, July 3, 2012, available athttp://topics.scmp.com/news/china-news-watch/ar-ticle/Rally-o-thousands-orces-actory-halt; Shiangprotest needs law-based conclusion,Global Times,July 5, 2012, available at http://www.globaltimes.cn/content/719095.shtml.

50 Randall Peerenboom, Chinas Long March TowardRule of Law(Cambridge: Cambridge University Press,2002).

51 Yongshun Cai and Songcai Yang, State Power andUnbalanced Legal Development in China,Journalof Contemporary China 14 (42) (2005): 117134;Feng Yugao, Diang baohu zhuyi sunhai shichang

jingji jichu (Local Protectionism Undermines theFoundation o Maret Economy), Zhongguo PinglunXinwen (China Review News), April 5, 2007, availableat gb.chinareviewnews.com/doc/7_0_100342045_1.

html.

52 Martin Patience, China rebel village o Wuan headsto the polls, BBC News, March 1, 2012, availableat http://www.bbc.co.u/news/world-asia-chi-na-17229078.

53 Wang Jing, Wei wen de Guangdong tan xing (Sta-bility Preservations Guandong Flexibility), CaixinMagazine, June 18, 2012, available at http://maga-zine.caixin.com/2012-06-15/100401167.html?p0.

54 Cheng Li, The Battle or Chinas Top Nine LeadershipPosts,Washington Quarterly35 (1) (2012); SusanLawrence, Chinas Vice President Xi Jinping Visitsthe United States: What is at Stae?,CongressionalResearch Service Report for Congress, February 6, 2012.

55 Guo Xin, Zhang Yunlong, and Liu Jingyang, Min

yi diao cha zheng cheng wei zhong guo gan buxuan ba ren yong de zhong yao zhi biao (PublicOpinion Polls Becoming Important Target inChinese Cadre Personnel Appointments)Xinhua,June 2, 2009, available at http://gov.rednet.cn/c/2009/06/02/1769901.htm.

56 Li Yuanchao, meeting with the author and Center orAmerican

china’s real leadership question

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