Old guard can still reform China

Are we obsessing about [China's] rise when we should be worried about its fall?", asked academic Minxin Pei in a recent Foreign Policy article. Professor Pei thinks that, rather than worrying about how to contain a stronger China, it would be at least equally sensible to think about China's possible collapse or self-inflicted regime change in the light of the country's recent economic slowdown, bursting property bubbles, power struggles and political scandals.

This seems to echo the perennial theme of China's doubters. Among them, a leading light is Gordon Chang who has been serially predicting China's "coming collapse" since 2001.

Chang's arguments are that China seems to be turning xenophobic, pushing foreign investments away by insisting on "indigenous innovation". China is heavily dependent on trade but there are now more exporting competitors among the emerging economies. China's economy is contracting as its population ages. Moreover, the leadership is failing to respond to a rising tide of social change.

The problems highlighted are by no means exaggerated. Indeed, at the opening session of the 18th party congress, President Hu Jintao announced that reform, particularly fighting corruption, is a matter of life or death for the party and the nation. But China's problems must be put in context. Consider the following.

• The latest OECD report, "Looking to 2060: Long-Term Global Growth Prospects", suggests that, "China will overtake the euro zone in 2012 and the US within the next four years to become the largest economy in the world. By 2060 … the combined gross domestic product of China (27.8 per cent) and India (18.2 per cent) will be larger than that of the Organisation for Economic Co-operation and Development - and the total output of China, India and the rest of the developing world (57.7 per cent) will be greater than that of OECD and non-OECD countries (42.3 per cent)."

• According to a recent Economist article, "In the past 10 years … [China's] economy has quadrupled in size in dollar terms. A new (though rudimentary) social safety net provides 95 per cent of all Chinese with some kind of health coverage, up from just 15 per cent in 2000. Across the world, China is seen as second in status and influence only to America."

• Pew public attitude surveys show that a vast majority of the population (exceeding 80 per cent) remains broadly supportive of where the country is heading.

• Pei and Chang seem to disregard the fact that China's leadership has long realised that the country must undergo reform to stay relevant. Hence the dramatic change in direction in the current five-year plan towards slower, more balanced growth.

• Notwithstanding competition and rivalry - common to all political systems - the different factions, power centres and vested interests of the party polity all embrace and continue to benefit from China's continuing reform and progress. The question is not whether to reform but where, how much, and how fast, and how to apportion power and influence.

• A large body of relatively moderate but yet significant reform measures have already been proposed in a 468-page World Bank report, jointly undertaken with the Development Research Centre of the State Council (a rare occurrence). These include reforming state-owned enterprises, liberalising the financial sector, defining the powers and obligations of local authorities to minimise the chances of "land grabs", changing the hukou household registration system that discriminates against migrant workers, developing a green economy, and promoting civil society. Li Keqiang, who will succeed Premier Wen Jiabao, is said to be a staunch supporter of the report.

• It must be remembered that democracy is not a dirty word in China's politics. The difference is that China remains unconvinced that copying the West's increasingly dysfunctional model is the best answer. China will therefore continue to find its own path towards effective, meritocratic, representative government of the people, for the people, though not directly by the people - at least not at this stage.

• Yes, China's international environment is becoming more hostile and its neighbours are growing more restless. But most of their worries translate into hedging their bets. There is nothing to gain in forming a bloc against their largest trading partner.

So, looking at the near-final list of contenders for the Politburo Standing Committee, why does it seem to be populated largely by "old brooms" not known for their reformist credentials?

First, quite near the 11th hour, the Bo Xilai affair unexpectedly derailed the leadership transition process. The crisis required a rethink of the role and status of politically powerful portfolios in the Standing Committee, especially in regard to public security and propaganda. These were nearly hijacked by individuals like Bo and that must not be allowed to happen again. So a smaller Standing Committee of seven instead of nine was mooted, throwing open an even more fractious battle among factions and vested interests.

Second, a number of very senior, well-tried and well-connected Politburo members are near the age limit of 67 for entry into the Standing Committee. This is their last chance to make it. They include Yu Zhengsheng (67), Zhang Dejiang (66), Zhang Gaoli (66), Liu Yunshan (65), and Wang Qishan (64). Their claims to a seat perhaps for just one term are difficult to brush aside, particularly when some are backed by the likes of former president Jiang Zemin. The younger and perhaps more dynamic hopefuls, for example, Li Yuanchao (62) and Wang Yang (57) may have to bide their time.

Third, given the need to root out the last of the "Bo Xilai gang", stability remains paramount. The party may have reached a compromise to allow more old guards in the Standing Committee for just one term.

There is a consensus that not tackling problems like corruption could undermine the party's stability. This was borne out by Hu's strong words in his opening address at the congress. Regardless of the final choice, Hu emphasised that the party's objective is to achieve a middle- income society by 2020, doubling the 2010 per capita income in the process.

As the Standing Committee's task is to carry out China's collective decisions and ambitious goals, a new line-up of experienced veterans would not mean China is stalling reform. Indeed, they are well qualified for these tasks, which should concentrate their minds and keep their hands full.

Andrew K. P. Leung is an international and independent China specialist, based in Hong Kong