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Xi Jinping in full control? What an anonymous interview tells you about power struggle in China

PUBLISHED : Friday, 13 May, 2016, 11:12pm
UPDATED : Monday, 30 May, 2016, 5:11pm

Rivals felled, army reformed and the party apparatus bent to the will of one power centre. So you thought President Xi Jinping is in full control? Not so fast.

The recent People’s Daily interview with an unnamed “authoritative person” not only exposes a deep rift between him and Premier Li Keqiang and other top officials entrusted with the economy, it also shows the power struggle has got so bitter that the president had to resort to the media to push his agenda.

Yes, the “authoritative person” was Xi, judging from three revealing words in the interview – kai men hong,which literally means “open the door to see red lucky sight”, referring to a good start.

“Our economy is seeing unexpected new problems. It cannot be described with simple concepts like kai men hong…Our economic trend is not U-shaped and absolutely not V-shaped. It is L-shaped. It is not going away in a year or two,” said the “authoritative person” in the interview.

Mixed signals on Chinese economy from the ‘authoritative’ figures at the top

Take that as a resounding slap on the face for Politburo Standing Committee member and Vice-Premier Zhang Gaoli, who is in charge of the economy. In a public conference late March, Zhang said: “From the numbers, I expect kai men hong in the first quarter. This year we tackle the difficulties. Next year will be blue sky and gentle water.”

Now, who but Xi could have trashed the vice-premier’s sunny projections so bluntly. The president is eager to push through his “supply-side structural reform”, trimming excess production capacity to free up resources for the right goods and services.

The term first popped up in early November, followed by various speeches and papers on the subject, offering very little by way of details. The financial chaos in January reduced the term to mere political rhetoric, however, as officials began to make desperate moves like credit expansion and debt-equity swaps to save the economy.

Xi is apparently not on board. He believes the country’s economy is big and young enough to endure low growth, and that any “blind” credit expansion would delay the process of weeding out inefficient enterprises and hinder reforms.

Guessing game: who is mystery ‘authoritative figure’ claiming major shift in China’s economic policy?

And, he is preaching not just with a Bible, but a sword as well. A week before the interview, the People’s Daily published the transcript of one of his speeches laced with cultural-revolution idiom, sending chills down the spines of party cadres.

“Some cadres have been changing positions on major policies, paying lip service to the decision of the central leadership. We ask cadres not to make groundless comments against the central leadership. This does not mean they cannot air opinions or cannot criticise. But one should not contradict the central leadership on important political issues.

“There are careerists and conspirators in our Party undermining the Party’s governance…We must respond resolutely to eliminate the problem.”

During one of the darkest periods of Chinese history, words like careerists and conspirators used to be reserved for leaders such as Lin Bao, successor-designate of Mao Zhedong who allegedly tried to kill Mao.

Xi gave the speech to graft fighters in January. Whatever the rationale of publishing the speech four months later, the message is clear – fall in line, or else.

Xi Jinping, China’s debt time bomb, and the art of saying nothing

This is not the first time the leadership appears split on economic policy. In the early ’90s, Deng Xiaoping resorted to a private train tour when the then Party secretary Jiang Zemin was opposing his open-door policy. Touring Shenzhen, Zhuhai, Guangzhou and Shanghai, the 86-year-old patriarch said: “Development is the absolute principle…Whoever refuses to reform should step down.”

His remarks – published by a Shenzhen newspaper – was applauded across the nation, forcing Jiang to back down. The rest is history.

So why is Xi using threats rather than a similar strategy of political persuasion? The reason is, while Xi commands unrivalled power comparable only to Mao, Deng had the political standing and charisma. Also, Deng’s push for market economy had something for everybody. Xi’s reform, on the other hand, will leave a long trail of losers – in particular debt-fuelled state enterprises and local officials fattened by easy money.

The dangerous cost of China’s debt-fuelled growth: delays to much-needed structural reforms

But there are similarities too. Deng paved the way for reformers like Zhu Rongji to enter the top echelons of power. Xi’s denouncement of detractors in the People’s Daily also sets the stage for the ousting of some bigwigs when their term expires next year.

Whatever is driving the current bout of shadow-boxing, the future is worrying for China. Lay low and stay passive is the best survival trick in choppy political waters. “Dare you” can be a strategy that works. That’s because Xi and his men are yet to build a track record in running the economy. Fixing a debt-ridden economy, after all, takes a lot more than fixing corrupt officials.

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