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Leadership Changes in China: Domestic & External Impact

At the outset, I would like to thank D.S. Rajan and the Chennai Centre for Chinese Studies for inviting me to address this important national seminar. I would like to congratulate the founders of this Centre and Director Rajan for the yeoman service they are providing in spreading knowledge and awareness about different facets of modern China’s internal and external policies and situation. There is need for many more such centres spread across India. There is still not adequate study and expertise in our country on China – a lacuna that should be corrected in a conscious manner. There is no reason for us to learn about our biggest and most important neighbor from others. There is growing interest in India in matters Chinese and this is a good opportunity to promote the study and analysis of China by homegrown scholars and experts.

The subject we are addressing today is on everyone’s mind all over the world. That is not so difficult to understand for, in particular since the beginning of this century, China has exploded onto the international scene in a rapid and ubiquitous manner such that it cannot be ignored.

China is already the second largest economy in the world and perhaps the largest trading nation bar one. It has an enormous defense establishment that is modernizing in a rapid manner. As part of policy, defense modernization in China goes hand in hand with its rapid development. It is a country that has reached out in search of raw materials, energy and markets and seeks now to protect its internal and external development needs. It is a permanent member of the United Nations Security Council(UNSC) and is increasingly exerting its position and authority in international organizations and institutions albeit not necessarily in a manner beneficial to the global commons but in the interests of its narrow foreign policy objectives.

China has not been unaffected internally by its very rapid economic development in the last 35 years. This is reflected in growing social strains within society, growing inequalities, deep-seated corruption, public disorder, crime and a question mark on the acceptability of the institutions and current system of governance. Why for instance is the budget for Public Security already larger than that for the Ministry of Defense? These facts are not lost on the Chinese leadership and this is clearly reflected in the outcome of the recently concluded 18th Congress of the Communist Party of China (CPC). That Congress has asked the new leadership to squarely address these problems by building on the successes achieved so far and undertaking necessary course corrections. But, the bottom line is that the leadership and sole &absolute control over the institutions of power and governance, including the People’s Liberation Army (PLA) must continue to rest with the CPC. Western style pluralism and democracy is ruled out. It is this which is the greatest challenge before the new leadership team led by Xi Jinping and Li Keqiang.

The new fifth generation leadership led by Xi and Li is not new in the sense of a newly elected president or prime minister in a democratic polity. The team is led by Xi and Li who are seasoned party veterans who have served both in the government and party structures for two to three decades. They are aware of all that ails China and of its strengths; of the pressure from public opinion and the netizens for change, greater equity and relative freedom. The question is whether they have the new ideas that will allow them to meet these and other challenges, including avoiding the mid-income trap syndrome, while maintaining absolute rule by the CPC over China. So far, China has avoided the misguided path taken by the Communist Party of the Sovuiet Union (CPSU) which led to the disintegration of the former USSR. Can it now actually establish a new model where the CPC can continue to retain its dominance after 35 years of rapid economic growth, social change and aspiration in a peaceful manner and without recourse to internal repression? The experts you will listen to in the following sessions will no doubt enlighten you on this and other issues.

For the sake of academic correctness, I must at this stage recall that the process of leadership change in China is not yet complete. Changes in the Party hierarchy at the central level (including the Central Military Commission- CMC) have been made and are underway in the provinces. The latter because the process is sequential. The changes at the State level will be formally announced at the National People’s Congress (NPC) which will meet next week. But one important change is already clear. At least for the next five years, the Prime Minster will be number two in the overall system and not, like during the last fifteen years, the number three. Hence, the head of the NPC may now probably be third in the pecking order. Secondly, the Xi-Li combine are expected, as of now, to serve out a full ten year term while they will be joined by a new set of colleagues on the Politburo Standing Committee (PBSC) and other organs such as the NPC and Chinese Peoples Political Consultative Conference(CPPCC) after the 19th Party Congress in 2017. There will thus be interesting jockeying among the younger Poliburo members who will wish to move into the PBSC in 2017. It remains to be seen whether this competition will be an advantage or a liability over the next five years.

What is, however a major advantage for the Xi-Li team, the downsides notwithstanding, is that during the tenure of Hu Jintao and Wen Jiabao, the Chinese economy has grown from USD 1.45 trillion in 2002 to USD 7.74 trillion in 2012 i.e. more than five times. (In comparison, during the Jiang Zemin era the economy grew from USD 390.3 billion in 1990 to USD 1.45 trillion in 2002 i.e. 3.7 times.) The process of adapting to World Trade Organisation (WTO) membership is also virtually over. China is on course, subject to no further major international or internal shock, to double its Gross Domestic Product (GDP) of 2010 by 2020. During the Hu-Wen period a considerable focus was also placed, not always with much success, on improving the conditions of the rural population, on urban welfare measures, on education, on science and technology, on migrant workers and on planned urbanization. This will have to continue. The issue of environmental degradation has also begun to be addressed and is now a mandate for the Party and state organs to correct. The challenge will be to expend resources on these sectors while maintaining a high growth rate in the background of the continuing global financial and economic crisis. An even bigger challenge, of course, is to make the development paradigm more stable and relatively sustainable by increasing the share of domestic demand, especially private consumption, in the GDP.

Economic and social development issues apart, another major challenge before the new leadership will be to continue to maintain absolute control over a much more professional PLA that is rapidly moving into an era of informatization and technological upgradation. This modernizing PLA is also not really battle-tested. There are voices, from within and without, that like in other “normal” countries the PLA should come under State control. This though, is not the only challenge on this score. As the importance of the state and its institutions and the legal system grow in China, how far can the party continue to exercise absolute control over the state? With China’s growing integration into the world economy, it is the institutions of the state and the legal system that come into play and not so much the Party. These are among the contradictions and conflicting pulls and pressures that will need to be addressed by the Party in establishing ‘a socialist economy and system with Chinese style characteristics’.

Before I turn to the external dimension of our subject, I would like to dwell briefly on one other important aspect of the internal dimension namely, the evolution of the cultural and social situation in China. It is important to recall that China has a centuries long cultural and value tradition including of religious beliefs. This was roughly pushed under the carpet during the first few decades of CPC rule in China but has seen a steady revival over the last three decades. Such is the importance of this for social stability that Hu Jintao in his report to the Eighteenth Party Congress spent considerable time on this subject and how it is to be handled. After a gap of many decades he even recalled the need for a Hundred Flowers to Bloom and a Hundred Thoughts to Contend. The question arises though about the limits that the Party will apply for such processes so as to ensure that it does not lose control including for instance with respect to the performing arts, television, the Internet etc. Similarly, the practice of religion has grown by leaps and bounds especially in this century. For instance, Buddhism under the patronage of the Party has revived in a big way. The growth of Christianity and Islam is also happening though it is not viewed in as benign a manner as is the development of Buddhism. This also has an important bearing on external policy. China is for instance seeking a leadership role in the international Buddhist community. It has a dispute with the Vatican on the appointment of Bishops. It carefully selects pilgrims for the Haj. The revival of Confucianism and Taoism is also happening. These developments and the latitude being given in the cultural, social and religious spheres constitute a very important aspect of the evolution of the new China. It will be fascinating to see how the Xi-Li duo handles these aspects which are far more complex than the purely economic development processes.

Permit me now to turn briefly to the external aspect of our subject. In his report to the Eighteenth Party Congress, outgoing General Secretary Hu Jintao has given important pointers to Chinese thinking on where the world stands and what China’s approach will be to international issues.

According to Hu Jintao, China believes that the global trends towards multi-polarity and globalization are deepening but that the world is far from being peaceful and there are signs of increasing hegemonism, power politics, neo-interventionism and local turmoil. Issues of food security, energy and resource security are becoming more acute. World economic growth is overshadowed, China believes, by growing factors of instability and uncertainty and the imbalance in global development has widened.

To react to the above challenges, China, a permanent member of the UNSC, will , inter-alia, according to Hu, get more actively involved in international affairs, play its due role of a major responsible country; take an active part in global economic governance; promote and facilitate free trade and investment and oppose protectionism in all its forms. China will also work to consolidate the social foundation for enhancing China’s relations with other countries and continue to promote friendship and partnership with neighbors. To meet its external objectives, China has also announced that under the new leadership it will continue to build strong national defense and powerful armed forces that are commensurate (what this means is not spelt out) with China’s international standing and meets the needs of its security and development interests. The latter stress is new and particularly important from the perspective of the conduct of international relations. Indeed, guaranteeing China’s security and development interests is identified as a strategic task of China’s modernization drive.

China seeks the great renewal of the Chinese nation in the direction led by the Party. It shall develop itself into a maritime power and enhance the ability of its forces to win local wars in an information age. It will address the issue of cyber security and continue to develop as a space power.

From the purely economic point of view, China intends to make its exports more competitive in terms of technology, brand, quality & service; to develop world class multinational corporations; accelerate implementation of the strategy of building free-trade areas and promote infrastructural connectivity with neighbors. All of this will impact on its trading partners and on the international economic system.

In recent comments general secretary Xi Jinping has made it clear that China shall not compromise on its core interests. Indeed these have now been quite clearly defined to cover: defense of state sovereignty, national security, territorial integrity & national integration, China’s political system, overall social stability and development interests.

It is clear that China has defined its external policy priorities in a manner that fully meets its domestic policy and national security requirements. These have clear implications for its neighbors, the region, the multilateral system and the international economic system. Its recent actions on the islands’ issues vis-à-vis Japan and ASEAN have been aggressive and in some respects this has reduced the margin for manouvre for Xi Jinping and his new team.

A stage has now been reached where China will be increasingly judged by its partners and the international community by its actions. Its rhetoric no longer carries conviction and it will no longer get the benefit of the doubt. Xi & Li will have to increasingly exercise Chinese power and influence in a responsible manner that is credible to its partners and interlocutors.

Thank you for listening with such patience. I have tried to give you a bird’s eye view of how I see the domestic and external impact of the recent and ongoing leadership changes in China. The issues I have covered and several others will be addressed by the distinguished panel of experts in the subsequent sessions.

(Given above is the full text of Inaugural Address delivered by Mr Nalin Surie, IFS (Retd.), formerly Ambassador of India to China and High Commissioner of India to the United Kingdom, at the National Seminar on ” Leadership Changes in China: Domestic & External Impact”, organised by the Chennai Centre for China Studies- C3S, at Chennai on 2 March 2013. The C3S expresses deep gratitude to Ambassador Surie for accepting its invitation to grace the occasion. The text is also be included in the C3S edited volume containing the proceedings of the Seminar, to be published in near future. email of Amb Nalin Surie:nalinsurie@gmail.com)

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