How far is the crisis resonance away from China

By He Qinglian on September 10, 2012.

At a time when foreign financial institutions frequently issue warnings on China’s economy—its financial sector in particular, Jackson Diehl of Washington Post jumped on the band wagon. In his article published in the September/October issue of World Affairs, Diehl made an even more pessimistic prediction, stating that authoritarians in both China and Russia are facing a coming collapse, and yet neither of the two U.S. presidential candidates has made any preparation on that.

When foreign China watchers observe China, they frequently overlook one thing: the politics with the CPC characteristics is politics without responsibility. The heads of the Party and of the government have never had to shoulder responsibility for their policy mistakes. If half (not all) of the current signs of crises in China emerge in the U.S., Japan or the E.U., the economic crisis of these countries would have long turned into a political one, resulting in the collapse of the government, the resignation of the cabinet, as has happened in Greece.

Without doubt, China’s economy is in dire conditions. The situation is so bad that Hu Jintao has to admit in his topical address delivered at the APEC forum that “there is obvious downward pressure on the economic growth, some small and medium businesses are having a tough time, the export industry is facing more difficulties, and the tasks to tackle the employment issue of the new workforce are onerous.”

On hearing this, those at the venue were said to feel even more pessimistic.

What needs to be deliberated now is that whether an economic crisis would lead to a political crisis and cause a crises cocktail. If so, when would that happen?

Judging from historical experience, the decline and demise of dynasties throughout the history of China was often caused by several crises coming together. Those crises were: frictions within the ruling clique, economic crisis (the most serious form would be fiscal crisis) and invasion. If these crises were to occur one after another and co-exist, topping off with internal opposition forces coming together, a dynasty would be doomed.

This year the signs of those crises have emerged, but they are far from enough to threaten Communist rule. In addition, Beijing has taken many measures to prevent political and economic crises from showing up at the same time; the local authorities, for example, strive to keep the property market afloat, and the central government, too, initiates government investment schemes (the NDRC has recently approved many projects). While these measures would sow the seeds of grave consequences, they could delay the impact of economic crisis.

Based on the following facts, my take is that there would not be a cocktail of crises that would lead to the collapse of the CPC within three to five years.

First, there indeed has been a crisis due to the infighting within the ruling clique. The sense of crisis arose because in the power struggle this time, both sides have made unprecedented use of foreign media outlets to release stories that would deal a blow to and demonize their opponents. Those stories were magnified due to the instantaneous info-dissemination nature of the Internet.

However, the foreign media dislike Bo Xilai to the extent that they overlooked the shared bottom line of the two sides in the power struggle: uphold the rule of the CPC.

The faction that took on Hu and Wen, the princelings and the Red Second generation in particular, felt dissatisfied with the incompetence of Hu and Wen, the dire situation of pervasive social conflicts, civil unrest, and the environment and ecology that became laden with problems emerged during the ten years of Hu-Wen administration.

I have said many times before that the princelings and the Red Second generation have in their hands a non-institutional influence on Chinese politics; they have at their disposal the "politics of the capital city", a feature unique to Chinese politics.

In infighting of the ruling clique like this, if the two sides are evenly matched and at loggerheads, and ends in a lose-lose situation, the crisis would certainly be brewing. But if the struggle ends quickly, the winning side would strengthen internal cohesion. Judging from the recent news reports, there are three indicators that Hu and Wen have lost the fight.

  1. Hu’s henchman Ling Jihua has recently been transferred from the important post of CPCCC General Office director to the sinecure position of the head of the United Front Work Department
  2. On September 3, Japan’s Sankei Shimbun published a report, quoting various information sources from within the CPC that Hu Jintao has decided to step down completely, passing all his titles—CPC general secretary, president of the PRC, chairman of the CMC, and the Supreme Military Command of the People's Republic of China—to his successor Xi Jinping between this fall and next spring.
  3. The trend of domestic public opinion too has shown that Hu and Wen are losing in this power struggle. Deng Yuwen, deputy editor of the Study Times, a publication of Central Party School, published recently a lengthy article deliberating the political legacy of Hu and Wen. He concluded by saying that “in these ten years, huge problems have been bred or created. There are more problems than accomplishments”. Besides, that article listed out ten difficult problems Hu and Wen passed onto to their successors.
After publication, Deng's article was reproduced by many websites, including Caijing, Hexun. Throughout the history of the CPC, there has never been any instance that individuals within the party make daring open criticism of their leaders who are still in office. Being in the Party Central School, a unique place where various rumors and gossips fly, the author would surely have evaluated the scale of political risks he faces (before he wrote that piece).

By now, it could be said that the internal crisis at the highest levels this time would not evolve into the mass killings following disputes at the top of the Taiping Heavenly Kingdom. Power struggle aims not at physical elimination of the rivals could resolve the power distribution issue without causing debilitation to the ruling clique.

Second, the economic crisis is only in its initial stage. Although this affects government revenue, the problem for economically developed regions is mainly the inability to increase revenue, and not fiscal depletion. Judging from the various tax collection measures the local governments took, there are now still room to maneuver. If they could hang on through the second half of this year, when the top has completed the power transition process, they could focus back on economy and would come up with new measures.

Third, China faces a relatively relaxed international environment. While it is true that China is somewhat isolated, it is far from an enemy of the West. In addition, the U.S. is in the election year, the White House doesn’t even have the energy to intervene in the humanitarian crisis of Syria, let alone the South China Sea disputes between China and its neighboring countries. And if Obama is re-elected, China could just sit back and relax.

Fourth, domestic opposition forces remain weak and scattered. As a result of their being compromised by the Chinese government and some other issues of their own, dissidents of various coteries overseas are equally (and sometime more) interested in fighting one another and (than) the CPC, there is hardly any possibility for these groups to come together.

Looking back in history, if political crisis emerges in any countries (including past dynasties of China), the rulers would not be overthrown unless that crisis is made use of by an opposition force capable of organizing people and has appeal to the public. The lack of organized opposition force is not just a sad thing for the dissidents; it is also a sad thing for the country.

When a regime, based upon its own experience, destroys the self-organization capacity of a society and eliminates the opposition forces in it, it has eradicated the regeneration ability of that society.

Based on the analysis made above, a crisis resonance that would trigger the downfall of the CPC regime would not emerge in the next three to five years. In this period, the real issue for Beijing is not how it deals with the crisis, but how it will manage a society where crisis is lurking everywhere like a normal government would do and guide that society onto a correct path.

Judging from the things happening now, the CPC has lost its normal management abilities, with the exception of the apparatus for oppressive maintenance of stability, propaganda and blockage of expression. If the current state of a dysfunctional government hanging on to power without collapse continues for too long, the social rebuilding resources for the Chinese people would be depleted.