Report ACAF: China’s 19th Party Congress

On the 18th of October 2017 the five-yearly Party Congress of the Communist Party of China (CPC) started. Two days before, on the 16th of October, the LeidenAsiaCentre held its second Asia Current Affairs Forum (ACAF) to shed light on the context of the Party Congress. The ACAF is an initiative designed to periodically assembly experts on the Asian region to debate upcoming or current issues of relevance to a broad audience in line with the goals of the Leiden Asia Centre.

The panelists of the Forum were experts on East-Asian politics: moderator Dr. Lindsay Black (Leiden University), Prof. Frank Pieke (Leiden University), Dr. Jue Wang (Leiden University) and Prof. Dr. Jörn-Carsten Gottwald (Ruhr-University Bochum). Each expert gave their own vision on the Congress and their predictions for its outcome, and answered questions from the audience afterwards.

Dr. Black began with an introduction outlining the importance of the Congress, after which the panelists gave their respective views.
Prof. Pieke warned that even after the Congress, there might still be a lot of uncertainty. Different experts have different opinions, and numerous aspects of the Congress are simply unpredictable. The key question of the Congress is what the new composition of the Standing Committee of the Politburo will be, as well as that of the Politburo as a whole. Will the age of retirement be kept at 68 as it is now? If it stays, 5 of the 7 members of the current Standing Committee will have to retire. This would mean only current premier Li Keqiang and Xi Jinping himself can stay on. Li Keqiang is not an ally of Xi, so it is expected that he might step down anyway. Another person whose possible retirement is closely watched is Wang Qishan. He is the oldest member of the Committee and one of the key figures in Xi’s approach to market reform. He is also the head of the Party discipline committee, which seeks to ensure loyalty and battle corruption within the party – one of Xi’s main principles.
Another thing to watch is Xi’s legacy to the Party. Now that the Congress is underway, more can be said about this. By the end of the Congress, ‘Xi Jinping Thought’ will be enshrined into the constitution. Its contents are a new approach to socialism with Chinese characteristics, with control being concentrated in the hands of the president and a focus on battling corruption. Its goal, according to Xi Jinping, is to provide an alternative to Western capitalism that allows developing countries to modernize using socialist values.
There has been speculation about whether Xi will appoint a successor or aim to stay on for a third term himself. The most likely candidate for succession is Chen Miner, seen as Xi’s protégé, but Hu Chunhua is also still on the list.

Dr. Wang took over to talk about how the decisions that are likely to be made will affect the economy. Since 1978 the Chinese economy has seen growth with ups and downs, with a serious slowdown after the global financial crisis in 2008. The demand for exports dropped, but this was just a trigger. The real problems lie inside China, and have to do with its long-term growth model: China wants to change from an export-based economy to one based on domestic consumption, but isn’t quite there yet.
What effect will the Congress have on these issues? It is certain that Xi’s position will be strengthened. Dr. Wang’s predictions are that Xi will have more power to tackle economic problems. The general direction of the policy in recent years has been towards more market, and less direct control by the state. The key policymakers around Xi are generally liberal, so this reform will likely continue. International demand will also continue, as well as foreign investments. There will be outward investments in strategic sectors like technological innovation, or for example the Belt and Road Initiative. Instead of focusing on short term ‘fire fighting’ solutions to economic problems, Xi will strive for long-term transparent regulatory mechanisms.

Dr. Gottwald then spoke about international relations. China ’s role on the global stage has changed, causing a debate on how this ‘new’ superpower is influencing global affairs. Its growth affects its direct neighbours and China has an increasing presence in global issues like economy or security.
Since the 1950s, China has spoken up on behalf of developing countries and formed coalitions on a global scale that are more inclusive. Since the financial crisis in 2008, the world has been looking at China to take the lead, but China is hesitant to do so. It is still learning, adapting, and developing a strategy. Meanwhile China is testing its relations with the US and Europe, with the objective to create a multi-polar global order. China is neither challenging nor buttressing the existing global order, but is rather calling for more voices to be heard; and this is an innovative approach to international relations.

After the talks by the speakers, they answered questions from the audience. One of the main questions was which areas of the economy caused the greatest risk, and what kind of reforms would be necessary to reduce these risks. Dr. Wang identified three economic challenges: overcapacity, the boost of domestic consumption, and debt. Dr. Wang predicts that the current trend of careful reform will continue, because even if the Congress decides certain things, actual change on a practical level will be slower because of decentralization.
After the question of what Xi Jinping’s policy actually contains, Prof. Pieke explained Xi’s view on Party issues. The Party sees itself not only as an actor, but also as a subject of policy, and Party-building as a tool to develop China. By getting rid of opposition, Xi can actually use the Party to reshape the country and China’s ideology the way he wants to, and he may now get power to do so.
Xi has confidence in own policies, but the problem lies in whether he can implement them in time. The strength of China’s bureaucratic system is its decentralization. Beijing is not very powerful on a local level, and this means national policies are adapted to local needs. But this is actually seen as a problem, and if Xi has the ability to limit local freedom this may cause problems. The desperation for fast change may lead to failure on a local level.
Dr. Wang added that a strong Xi can lay down a long-term mechanism for financial regulation, which sounds good but could also have a negative effect and cause an economic slowdown.
Dr. Gottwald answered questions about the way China is presenting itself as unique, with its own version of ‘modernity’. He was skeptical of the country being unwilling to follow ‘Western’ or ‘general’ rules in international relations, and called it frightening, because countries need a normative ground for debate on policy.

This concluded the workshop.

For a report in Dutch about the workshop and the results of the Party Congress, see Guanxi’s website.