Ambitions for China's economy


When the seven men in blue suits walked out on the stage after the 18th Communist Party Congress, and Xi Jinping, the freshly installed leader of the world’s most populous nation, began his soothing remarks, it was a carefully orchestrated picture of calm, orderly progress to show a team was in place to secure a stable China in 2013 and beyond.

So will this be the Magnificent Seven who steer the world’s second-biggest economy through possibly choppy waters in 2013, all the while maintaining an iron grip on a population whose economic and social situation has changed dramatically while the party has seemingly remained immobile and unbending.

Xi is keen to give the party a more modern appeal to help it appeal to young, web-savvy middle-class Chinese, a core support for the party.

“I guess they are, amazingly, showing some clear intent at the moment with all this bold rhetoric about corruption, etcetera and, more amazingly, the stuff about needing to use clear language. But call me a cynic: I am not holding my breath for anything superbold any time soon,” says Kerry Brown, executive director of the China Studies Centre and a professor of Chinese politics at the University of Sydney.

The solid front presented by the Standing Committee of the Politburo masked discord in the ranks of the party and questions about what the future may hold.

There are domestic questions that will probably go unanswered, such as what really happened with Bo Xilai, the one-time rising star and Xi’s fellow princeling who has been comprehensively purged and his power base shattered. And where did Xi go during the fortnight he went missing in September?

There are also broader international questions for 2013 that need to be answered. How secure are the state banking system and the shadow-banking sector? What are the prospects for the economy? What exactly is China’s foreign policy and what territorial ambitions does the country hold for the region?

The era of president Hu Jintao and premier Wen Jiabao did not yield much in terms of reform but it was a period of spectacular growth and wealth creation until the economy started to falter, hitting a three-year low of growth of 7.4 per cent in the third quarter of 2012.

Xi, eager to underline his ambitions for the economy, visited Shenzhen in southern China, just like former supreme leader and icon Deng Xiaoping, and called for calm in the face of adversity.

“We should recognise that adverse domestic and overseas effects will be long-term, complicated and winding. We should not run from conflicts and cover up problems,” he said during his visit.

A new focus

Jonathan Fenby, a China analyst who has published Tiger Head, Snake Tails about contemporary China, believes next year will see a mild economic recovery and a focus by Xi and his colleagues on trying to show that the new leadership has people’s livelihoods and concerns at heart.

“There will be a big push against corruption, but how high will it reach? The Bo trial will be the next big political event, but how will it be handled?” says Fenby.

Going by previous administrations, if there is any kind of structural reform, whether economic or social, it is unlikely to happen in 2013 because the party traditionally allows a grace period for its new leaders to get settled in.

“The prospect is that structural changes – economic and social, let alone political – will not be fully addressed nationally in terms of big policies, though there will be movement at provincial and local level,” says Fenby.

“Regionally, the row with Japan has escalated from spats over trawlers going into contested waters to a confrontation that involves state sovereignty on both sides, with neither the new leadership in Beijing nor the new government in Tokyo likely to find it easy to back off even if they wanted to – and with the US presence in the not-so-distant background both militarily and in the form of Obama’s ‘Pacific pivot’,” says Fenby, who recently spoke to the Irish International Affairs Institute in Dublin.

Steve Tsang at China Policy Research Institute at the University of Nottingham expects 2013 to be less eventful, at least in terms of drama arising from the struggle for power or succession behind the curtain.

While the Bo saga will have to be concluded, the prospect of high drama is limited as the party holds all the cards and persuades him to play ball.

“The focus of Xi’s leadership will still be one of maintaining stability and order, and the anticorruption work will be predicated on this basis,” says Tsang.

The leader of a delegation from one of the Communist Party schools said recently the biggest problem now was that the distance between the rulers and the ruled was too big and they had lost their historic moral legitimacy, says Brown.

“So I think we might be seeing something a bit bolder than we were expecting when this seven walked out, though we will have to wait before we start labelling them the Magnificent Seven!”

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