4. Enter Xi Jinping. The reformer?

China's Crisis of Success—4

'Second, they realized that these reforms are painful, and so there's going to be a lot of pushback from all the important power groups of Chinese society. So, they used the Anti-Corruption Campaign as a hammer to push aside these groups who were resisting reform.

Hu Jintao, Xi Jinping's predecessor, presided over China from 2002 to 2012 or, what some call, China's 'Lost Decade.'

'Under Hu, China's top decision making body, the then nine-person Standing Committee of the Politburo worked a little bit like the U.S. Supreme Court - one man, one vote,' says Bill Overholt.

  • 'It wasn't even like the U.S. Federal Reserve, where the Chairman of the Federal Reserve really has tremendous power to drive the outcomes.'
  • 'So, reform just wasn't happening, and China's leaders (those with power, whether in or out of office) decided they needed to centralize power to a much greater degree.'

First, 'the leaders chose a much more charismatic, forceful top leader than Hu - Xi Jinping. And, they:

  • 'Reduced the Standing Committee to seven members from nine.'
  • 'Lobbed off the more extreme political views in order to have an easier consensus. For example, they jailed Bo Xilai, who represented one part of the end of the spectrum.'
  • 'Put the, so-called, extreme reformers in a second tier, in the Politburo, not in the top Standing Committee.' And,
  • 'Created all these small "Leading Groups," as they're called, to handle the most important problems, with Xi Jinping in charge of them all.'
  • 'A tremendous centralization in order to get reform going. That's one part of that consensus decision.'

'Second, they realized that these reforms are painful, and so there's going to be a lot of pushback from all the important power groups of Chinese society. So, they used the Anti-Corruption Campaign as a hammer to push aside these groups who were resisting reform.'

  • 'The most dramatic and the first was going after Politburo Standing Committee member Zhou Yongkang who also ran something called the Petroleum Faction. The Petroleum Faction oversaw controlled energy prices and therefore, hundreds of billions of dollars, which they could extract a share of for themselves.'

'The final piece was Xi Jinping himself. 'Xi had a fairly limited personal political base. He's been very concerned that doing painful reforms in the face of tremendous opposition would not work, or maybe not work and get him unseated.'

  • 'So, he's spent the first five years using his more centralized powers to eliminate all possible rivals and to try to get all the interest groups as much under control as possible.'
  • 'The story has been that the first 5-year term, which just finished recently, is about consolidating power, and the second five years is about implementing the reform process successfully.'
  • 'We’ll have to see.'
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