China peers ahead

The Communist Party of China opens its 19th national congress on Wednesday, a twice-a-decade gathering in Beijing’s Tiananmen Square during which President Xi Jinping is expected to be confirmed for a second term as the party’s general secretary.

Though the title of president carries international prestige, Xi’s party leadership is the true seat of power in China.

In a recent paper, Harvard China analyst Anthony Saich argues that as the nation enters a more complex, problematic future, it faces a daunting set of challenges to maintain economic growth and solidify its stature as a global leader on trade, climate change, and other critical issues.

In a conversation with the Gazette, Saich, the Daewoo Professor of International Affairs and director of the Ash Center for Democratic Governance and Innovation at Harvard Kennedy School, assesses Xi’s leadership thus far and outlines the likely domestic and international challenges ahead.

GAZETTE: Aside from Xi’s re-election as party secretary, what else of significance will you be looking for at this event?

SAICH: Its significance will lie in two or three areas. The first is, we shouldn’t expect any major policy pronouncements. Those don’t happen at the party congress. Those usually happen a couple of years later after leadership has been installed and it sets out his priorities. What will be important to look at are two things. One is whether Xi Jinping gets his ideas written into the constitution. That’s an important milestone for successive Chinese leaders: that they get something that is theirs written into the constitution. It might be his idea of the “Four Comprehensives” (build a prosperous society, deepen reform, govern by law, and manage the party). I doubt it’s going to be the “China Dream” because that doesn’t really mean very much in concrete terms. And also, whether it’s codified in some way that he’s not only the general secretary of the party, but he is the “core leader.” In the Chinese Communist Party parlance, being designated the “core leader” is a very powerful signifier. It really means that he can override the norms and principles of collective leadership to assert his own will.

The second thing to be looking for is who’s up and who’s down, who gets promoted? One of the most interesting things leading up to the congress is that five years ago people thought they knew who would be the party secretary after Xi and who would be the premier after Li Keqiang. Now, the person people thought would be Xi Jinping’s successor [Sun Zhengcai] was arrested on charges of corruption, so he’s clearly not going to be the successor. He’s been expelled from the party and has been put under criminal investigation. One of the things to look at is whether this means, as some people have floated the idea, that Xi’s going to try and get a third term as general secretary. Being president of the country is limited to two terms, but there’s no such limitation within the party constitution, so he could. People will be looking for a sign of someone being promoted who is likely to be Xi Jinping’s successor.

You have to remember these are extremely scripted events, so basically no one is expecting anything untoward to happen; no one is expecting any surprises. Xi Jinping is going to get his next five years. The main consideration will be: Who else? Does the premier stay in his place? Five people, perhaps, have to stand down from the standing committee of the Politburo, which is the most senior organization in the Communist Party, and people will be looking to see who fills in those spaces as a way of trying to project forward.

GAZETTE: How would you grade Xi’s tenure thus far? What are his biggest strengths and weaknesses?

SAICH: You would give him an A for consolidating his own particular position, and he’s been extremely successful, more successful than many would have expected, in terms of consolidating his own particular power. I think when he took over power in 2012–2013, he was brought in as the lowest common denominator. He seemed to be the least offensive to different groups within the party and would be a safe pair of hands in the sense that he’s a child of the party. He wouldn’t seek to rock the boat. But I think people have been taken aback by how quickly he’s moved in terms of his campaign against corruption and the consolidation of his own individual power.

When you begin to look across the policy spectrum, though, with the exception of the crackdown on corruption, which has clearly moved beyond just a measure to get rid of enemies to, more broadly, trying to restore the prestige of the party and trying to shift the party toward an organization that deserves more respect from society. Again, that’s been pretty successful. Beyond that, there’s not much to show for his policy efforts domestically. Now perhaps internationally that might be a different case. But if we look at the kind of things the party was saying it was going to do shortly after he took power in terms of economic reform, instituting other legal institutions, there’s been very little progress. And, of course, there’s been very little progress on something that’s concerned a lot of people, the environmental degradation in China. So it’s been a very mixed package.

I think when he took office he basically thought things were in such a bad way that he needed to consolidate the power of the party first, presumably to try to push ahead with significant reforms in his second term. Personally, I think what you see now is what you get: a much tougher crackdown on society, much less willingness to tolerate dissent, a more severe attitude toward institutions in civil society and — despite a lot of talk about an enhanced role for the market — really continued state dominance of key sectors of the economy, and not much evidence that that’s going to change in the next period of time.

In terms of international affairs, we’ve seen the consolidation of China as a much more active player on the global stage, and a lot of that comes down to Xi and his willingness to push a more assertive agenda on the international stage. That has come with carrots and sticks. It’s come with things like the “One Belt, One Road” investment program (building infrastructure in other nations), it’s come with the setting up of the infrastructure bank, but it has also come with threats around territorial issues in the South China Sea and against other countries where China claims it has sovereign claims over parts of their lands.

GAZETTE: In your paper, you say Xi has consolidated power in a relatively short time and to an extent “unprecedented since Mao Zedong,” reversing a trend of diminished powers among China’s leaders over the last 20 years. How has he been able to do this, and has it been good for the country, or is the verdict still out?

SAICH: One of the most important things, a byproduct of reforms, is that for many individuals in China the party doesn’t matter that much anymore. Unless you have a political agenda, unless you’re in a disadvantaged group, or unless you’re really trying to advocate for some particular cause, you can get on with a perfectly comfortable, happy life where the party doesn’t intrude in any way. That’s not just under Xi, that’s been going on over 30 years. The party doesn’t tell you who you’re going to marry, you can travel abroad, you can pick your own jobs, you can move, you can buy your own house. None of those were available in the past. For many ordinary citizens, they’re not things by which they judge the party and the leadership. One thing ordinary people have been impressed with is this continued campaign against corruption because I think they are frustrated, not so much with the high-level corruption, but the ordinary grind of corruption that they see in their daily lives. That has had a positive impact.

For the growing middle class, there is a problem that they see with the degradation of the environment in which they’re living, which has also been a key part of reforms. And you do hear grumblings about the restrictions around internet access, the kind of debates which can be tolerated in China. The limits are much stricter than they were before. Now, I don’t think any of those, at the moment, are things that are incendiary, but over time they build up irritations, they build up frustrations, and a lot of middle-class Chinese whom I speak with just don’t understand why. Why doesn’t the party trust them? Why aren’t they allowed to freely access the internet? I think they also see it as a negative for China that will have disadvantageous impacts on development.

GAZETTE: What are some of the political and economic challenges facing both Xi and China over the next five years? Is China underestimating the potential potholes in its transition to a consumption economic model?

SAICH: I don’t believe they do think it’s going to be easy, and that actually feeds into why Xi Jinping feels that he has to centralize power more than in the past. I think he feels that previous leadership teams were weak in that they weren’t able to push through tough reforms. So you hear the refrain that, “What we need now is a strong person; we need centralized rule because we’ve got a very difficult phase that we have to go through to move to the next stage.” You hear other voices in China saying, “No, centralized rule is not what China needs, and it may frustrate progress and forward momentum with reforms.”

What we’ve seen in the economy is rather than resources being directed to the more productive sectors of the economy, we’ve seen a retrenchment and privileging, still, of the state sector both through the role of state-owned banks and state-owned enterprises. That is not going to help with the shift to consumerism. If China wants to maintain even 6 percent growth, it’s got to undergo a very significant reorientation of its economic priorities. State investment won’t necessarily decline, but it can’t contribute more. The export economy also can’t contribute more, so it really only does leave consumerism as the one route.

Some of the policies today have been frustrating consumer development and enhanced consumer demand. Many people still prefer to save because of uncertainties around health insurance, education costs, trying to buy a home, which is extremely expensive in China in the major cities, rather than unleashing a larger consumer economy. So I don’t think it’s that they’re underestimating the problems, I just think they’re not seeing the way through to the kinds of policies that will get them to where they want to land. Ultimately, the kinds of institutions that China has currently have been very good for its early stage of development. They certainly encouraged a lot of foreign direct investment into China because people think that it’s fairly stable, it’s fairly safe, the party will guarantee investments. But looking forward, it needs a different set of institutions that will constrain the corruption and the inefficient allocation of resources.

GAZETTE: You say the U.S. withdrawal from Trans-Pacific Partnership (TPP) heralds a decline in our influence in Asia, but that China may not necessarily step in to fill the void. Why not?

SAICH: I think China would like to jump in to fill the void, and it has its own trading agreements it’s pushing. Where it’s going to be challenged is, first of all, as America has found when it’s been the dominant power, people like you and people hate you. Whether you like it or not, you’re going to get criticism. And already what you’re seeing in Southeast Asia are concerns that China is becoming too influential in the local economies. People are becoming much more wary of whether there are strings attached to Chinese investments, whether Chinese investment is actually hollowing out some of the domestic capacities within the regional economies. So that’s becoming an issue.

A second set of challenges is that the “One Belt, One Road” initiative is very much a political demand. Because of the size of it, everybody feels they have to get engaged, including multinational corporations. They don’t feel they can afford to be left out. The real issue is, even though there are tremendous infrastructure needs across the region, are there enough financially viable projects to go around? What might be a risk for China is, given that Xi Jinping has put his weight behind this, will people from China invest for political reasons rather than for economic reasons and feel pushed into riskier projects that might either fail or not show the kinds of returns they would want? Third, the more you put yourself out on the international stage, the more you become a target for people who are opposed to the kinds of views and ideas that you’re espousing. America has experienced that, good and bad, in the way it’s viewed internationally. As China becomes more engaged, it’s going to come under much greater scrutiny. To date, it hasn’t had a lot of experience dealing with those global issues. At least the States, over 60, 70, 80 years of international engagement, has a deep set of institutions and personnel who are skilled in negotiating those global challenges and issues. China doesn’t have that currently.

GAZETTE: How do North Korea’s recent provocations and the U.S. threats affect China’s plans?

SAICH: China doesn’t like things that are unpredictable. And what has happened with North Korea and President Trump’s responses has created an entirely unpredictable situation, and that has been deeply disturbing to the Chinese leadership. They have found themselves under a lot of pressure to be tougher against North Korea. Both the States and China ideally would like a nuclear-free Korean peninsula. Obviously, we’re not going to get it. Whether one likes it or not, North Korea is now a nuclear state. China doesn’t want a collapse of the North Korean state. They’re worried about the flood of refugees that might come across the border, they’re worried about economic consequences they might have to absorb with the collapse of North Korea, and, last but not least, they’re also worried that this might bring more U.S. troops right up to the border. So they’ve always been more cautious about applying sanctions that might lead to undermining the credibility of the North Korean regime. And now, they’re feeling very much pushed into a corner where they have to accept much tougher sanctions.

They might not admit it publicly, but privately they’re embarrassed by the behavior of Kim Jong-Un and just don’t know how to deal with him, or what to do with it, and would like stability to come on the North Korean peninsula. So they’re unsettled by that. They’re unsettled by President Trump’s comments in the way he seems to shift his own position. It can’t have been very reassuring for Xi Jinping, when they were at Mar-a-Lago, when they were enjoying dessert, when Trump suddenly announced, “By the way, I just sent all these missiles into Syria.” That is the kind of thing that the Chinese leadership finds very difficult to deal with — the blaséness of it, and also what they would see as the unpredictability of it. In the past, it’s always been the Chinese leadership that has set a challenge to the new U.S. president. Now, you’ve got a U.S. president who’s setting unexpected challenges to Chinese leadership.

GAZETTE: How is Xi viewed in relation to Trump? Do they see the Trump administration as an opportunity for China?

SAICH: They certainly do see it as a time where they can push their own advantage. The appeal of China resonates with a number of authoritarian regimes throughout the region. China has been making headway in Thailand with the U.S.’s quasi-withdrawal from there. It’s a model that seems appealing: economic growth with a fairly stable, authoritarian political structure. That appeals to a lot of leaders in the region. A lot of it is underpinned by China’s capacity to invest and subsidize projects around the region. Unless there’s a U.S. response in the region, it does open up the possibilities for China to push its own agenda much more strongly than it might have done had President Trump not focused so much on individual trade agreements, if he hadn’t wanted to move away from the TPP, if he hadn’t wanted to move away from the climate agreement. I think yes, it does open up space for China to push its own agenda more assertively.

This interview has been edited for clarity and length.