China’s Communist Party meets the world

ONE of the old rules of Chinese politics is that, when facing the world, the Communist Party is best kept out of sight. State-owned companies and universities have party cells but rarely mention them when talking to outsiders. Officials who spend time brushing up on ideology at party school are more likely to tell foreign interlocutors that they have been in executive training. Those with important roles in both the party and the government generally include only the latter on their business cards.

Under President Xi Jinping, plenty of old norms of Chinese politics have gone by the wayside, including the term limits on Mr Xi’s own post. That the party’s powers should be diligently obscured is among those rules that have been upended. The party is now far bolder about exposing itself. The recently concluded China Development Forum (CDF), an annual meeting in Beijing that brings together business leaders and academics from around the world, was a striking marker of this change.

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China uses the CDF, which it has hosted for nearly two decades, as an occasion to present its story, buffed to a fine sheen, for an influential foreign audience. Guests this year included Tim Cook, the CEO of Apple, as co-chair of the forum; Larry Fink, CEO of BlackRock, the world’s biggest money-manager; and Pascal Lamy, a former head of the World Trade Organisation; along with another hundred or so prominent guests. In past editions of the CDF, China accentuated its professionalism. Ministers laid out their agendas and explained to visitors that reforms, mostly aimed at relaxing the government’s grip on the economy, were proceeding apace. The forum was itself a creation of the civil service, organised by the Development Research Centre, a respected think-tank under the State Council, or cabinet.

But at the latest CDF, which ended on March 26th, the party was visible as never before. Chinese ministers and academics still outlined their reform plans, impressing many of the attendees with their vision, their attention to detail and their cool-headed responses to Donald Trump’s threats of a trade war. Overlaying that, though, was their homage to the party. One simple measure was the number of times it was name-checked. Yi Gang, China’s new central banker, known as a technocrat, mentioned the party five times in his speech. By contrast, his predecessor, Zhou Xiaochuan, had avoided mentioning it entirely in his final two appearances at the CDF, in 2015 and 2016. The vice-minister of foreign affairs, Zheng Zeguang, cited the party four times in his address. Representatives of the foreign ministry had mentioned it only once in both 2016 and 2017, and not at all in 2015.

Even more notable was the way in which the party was discussed. When the party comes up in speeches, it is normally in the form of lengthy preambles. “Under the strong leadership of Comrade Xi Jinping as the core of the Communist Party, we have done X, Y and Z” is the kind of line that rolls off the tongue of any well-trained official in Beijing. But Mr Zheng of the foreign ministry went well beyond that. “The Chinese Communist Party is a party that pursues happiness for the Chinese people. It is also a party that strives to advance the cause of humankind,” he said. If the party was once shy and retiring, it was now out and proud.

The sense of pride, verging in some instances on cockiness, extended to China’s model of development. An audience member asked Liu Kun, the finance minister, to respond to foreign criticism that China’s process of market reforms had, in recent years, gone backwards. Mr Liu scoffed, pointing to China’s remarkable growth over the past four decades. “There is no one who understands market economics as deeply as do Chinese people and Chinese cadres,” he said. Some in the crowd gasped. It is nothing new for Americans or Europeans to get an earful over their governments’ refusal to recognise China as a market economy. But it takes an extra level of brazenness to claim that China in fact gets Adam Smith better than the West does.

The most remarkable part of the forum was a panel discussion devoted entirely to the party. One person involved in the planning said it was the first time in 19 years of CDFs that such a panel had been convened. Titled “Communist Party of China and China’s Modernisation”, it brought together ideologues and academics. For many of the foreign executives and scholars in attendance, the discussion that followed was unlike any they had encountered before.

Chen Jin, vice-chairman of the Party Literature Research Office, began by explaining that the recent revision of the constitution—the one that eliminated presidential term limits—was a vital step towards  modernising the governance system of China. Luo Zongyi, provost of the China Central Party School, tackled the puzzling question of what exactly “socialism with Chinese characteristics” means. The essential characteristic, he revealed, was leadership by the Chinese Communist Party. The great ship of the state needs a helmsman who can stand tall and see far, he said. And, lest there were any doubt, he exclaimed that Mr Xi is that helmsman. Zheng Yongnian, a professor at the National University of Singapore, addressed another seemingly thorny problem: the relationship between the party and the government. It was in fact quite simple, he argued. Mr Xi’s reforms had done away with the distinction by making clear that the party was an essential element of the government.

If politics were not their bag, foreign executives attending the panel were also offered some business lessons. Zhou Haijiang, both the CEO and party secretary of Hodo Group, a garment company, explained that modern corporate management, as practised in the West, was fine and dandy for running a company, but that it failed to take account of the interests of the state and society. For that, the solution was modern corporate management with Chinese characteristics. Finally, in wrapping up the discussion, Ye Zhenzhen, president of People’s Daily Online, an arm of the party’s main newspaper, illuminated the deeper forces at work. The Communist Party and one-party rule were, he said, the inevitable product of China’s nearly two-century pursuit of modernisation.

Foreigners in the audience cast bemused and occasionally bewildered glances at each other as the discussion proceeded. Afterwards, one noted wryly that the whole event felt like “Davos in reverse”. Perhaps it should not have been so surprising to see the party placed front and centre. As Mr Xi said last year at an important meeting, “government, the army, society and schools—north, south, east and west—the party leads them all.” One might even give the party credit for its honesty in presenting itself to the good and the great from around the world, much as it portrays itself to a domestic audience.

It was jarring all the same. The message to foreign dignitaries and executives passing through Beijing used to be that China was a deeply pragmatic, bureaucratic state, and that the party, a relic from its past, was quietly humming along in the background. Those at the forum this year ought to have come away with a very different conclusion. The party is still firmly in charge, and ideology still matters.

Contentious by-elections disappoint Hong Kong’s democrats

FOR 16 months, two seats in Hong Kong’s Legislative Council have sat empty. Four more have been vacant for eight. That the seats were empty in the first place was an affront to the city’s pro- democracy movement. The previous incumbents, elected only in 2016, had been disqualified for using their oathtaking speeches to criticise the governments of both Hong Kong and China. In the by-elections to fill four of the vacancies, on March 11th, the democrats suffered a further setback. Their candidates lost two of the four seats, one of them unexpectedly, depriving them of much of their legislative clout.

The Legislative Council, also known as Legco, is a body left over from British rule, part of which is democratically elected. It is riven between two ideological groups: the “pro-establishment” camp, which can be expected to support both Hong Kong’s government and, by extension, the Chinese one; and the “pan-democrats” who routinely oppose them. The establishment has a built-in advantage, in that only half the 70 seats are filled by universal suffrage. Another 30 are “functional constituencies”, selected by members of certain professions or civil-society groups with a pronounced pro-government bias. (The last five, nicknamed “super-seats”, are selected by voters who are not members of any functional constituencies.)

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Analysts had expected the democrats to lose the one vacant functional seat, but to win back the three of the “geographical” ones. Winning all three was important, as it would have given the democrats a majority of the “geographical seats”, enabling them to block some legislation despite the government’s legislative majority.

In the largest constituency, New Territories East, Gary Fan Kwok-wai of the Neo Democrats comfortably beat Bill Tang Ka-piu of the Federation of Trade Unions to regain the seat for the democrats. The democrats also won on Hong Kong Island, despite an administrative ruling that prevented their most popular candidate from running. Before campaigning started, a civil servant decided that Agnes Chow’s affiliation with a political party that advocates “self-determination” for Hong Kong meant that she could not uphold the territory’s mini-constitution, known as the Basic Law, which defines Hong Kong as an “inalienable part of China”.

Instead that seat was contested by Au Nok-hin, a district councillor and activist. Although well known in political circles, Mr Au had worried before the vote about his low recognition among the general public. Nevertheless, with the help of some uber-heavyweight endorsements, including Martin Lee, a veteran democracy campaigner, and Anson Chan, a former chief secretary, he beat his pro-establishment rival by around 10,000 votes.

The surprise of the night came in Kowloon West, which was won by Vincent Cheng, a young district councillor who worked in Sham Shui Po, one of the poorest neighbourhoods in the constituency, since 2007. He is also a member of the Democratic Alliance for the Betterment and Progress of Hong Kong, the territory’s largest pro-government party. Mr Cheng’s democratic rival, Edward Yiu, was the only disqualified legislator to run again. But he had previously represented a functional constituency chosen by architects. His campaign focused on his ill-treatment by the government. Clearly, his dismissal had not energised voters as much as he had imagined.

The establishment is heralding the result in Kowloon West as a breakthrough. Although only 2,400 votes, or around 1% of the total, separated the two candidates, the loss of the seat is still worrying to the pro-democracy camp. For Ma Ngok of the Chinese University of Hong Kong, the result shows that advocating greater political freedom is not enough to secure victory. Its supporters are losing faith in the power of their vote, and staying at home, whereas the richer pro-China parties are good at getting their supporters to the polling booths.

The last two vacant seats in Legco cannot be filled until their former occupants have exhausted their appeals. If those disqualifications are upheld, there will be two more by-elections. It is not clear whether the former incumbents would run, or how they would perform. But it does seem certain that in future the democrats will have to put up even more of a fight just to maintain the status quo.

Xi Jinping is using his growing authority to amass even more

IDEOLOGICAL flexibility has long been critical to success in China. The office of a state-owned company in Wuhan, a big central city, testifies to its enduring importance. On the bookshelf behind a senior manager’s desk are a few red-bound Communist Party tracts, including a collection of speeches from a recent meeting where “Xi Jinping Thought” was written into the constitution. Stacked alongside these is literature of a different breed: two analyses of blockchains, a primer on the “industrial revolution 4.0” and a recently published guide to life and business by Ray Dalio, an American hedge-fund billionaire.

The manager sees no contradiction. Like many of his peers, he is as fluent talking about the business models of semiconductor-makers as he is reciting Mr Xi’s contributions to socialism with Chinese characteristics. Yet the latter has, over the past few years, taken up more and more time. One staff member says they must regularly gather in study groups to pore over Mr Xi’s words and write essays of self-criticism, identifying their failings as party members and state employees. It is, she says, “quite a headache”, though she insists that their business has not suffered as a result.

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There has been a marked shift in Chinese politics under Mr Xi as he has placed more emphasis on the power of the Communist Party, and on his own power within the party. For the economy, as for the Wuhan state-owned company, there has been little downside so far; growth has remained strong. But the test may soon get stiffer. On March 11th the National People’s Congress (NPC), China’s rubber-stamp legislature, is due to vote on a proposed amendment to the constitution to abolish the two-term limit on a president’s tenure, paving the way for Mr Xi to stay in office indefinitely. This shift will carry implications for every aspect of policy-making, including the management of the economy.

The optimistic view is that the change might in fact help the Chinese economy, at least in the short run. “We have stability and clarity,” says Zhu Ning, an economist with Tsinghua University. Mr Xi has amassed enough clout to push through reforms that have hitherto proven tricky. He has presided, for example, over the closure of many loss-making coal mines and steel mills over the past two years, which has helped restore the remainder of those two industries to health, albeit at the cost of some 2m jobs.

The apparent certainty that Mr Xi will be the country’s leader for, at a minimum, another decade should also give officials and enterprises confidence to make longer-term plans. This, in turn, might improve the chances of success for two of his pet projects: the Belt and Road Initiative—a plan to invest vast sums in infrastructure across Asia—and Xiong’an, a new city being built near Beijing.

Others predict a much bleaker outcome. They worry that Mr Xi’s elevation will make the governance of China less, not more, efficient. Local officials might fall in line with national policy more readily than in the past, but an excess of zeal could be more damaging than a shortage, says Yanmei Xie, an analyst with Gavekal Dragonomics, a research firm. A case in point was the environmental campaign which left thousands of residents of Hebei, a northern province, without heating at the start of winter, after local officials choked off coal supplies to meet pollution targets. Over time the risks will become more severe. With Mr Xi unassailable, it will take a very brave bureaucrat to dissent from his script. And as the economy grows ever more complex, the inadequacies of the institutions that underpin it, especially the rule of law, will become more glaring.

The optimists and pessimists have been scrutinising the current session of the NPC, which began on March 5th, for clues about Mr Xi’s intentions. Alas, they have found little evidence for the idea that an empowered Mr Xi will clear the way for deep economic reform. The most important titbit so far has been the unveiling of this year’s target for economic growth. It was contained in the “work report” that Premier Li Keqiang presented to the NPC’s 2,970 members amid the cavernous pomp of the Great Hall of the People in Beijing. The government will aim for growth of “around 6.5%”, as it did last year. But Mr Li omitted last year’s pledge that it would strive for higher growth if possible. Some analysts argued that this constituted a slackening of the authorities’ push for growth at all costs. But it would have been much bolder to abandon a precise growth target altogether, as the International Monetary Fund had urged.

Still, there were plenty of positive messages. The government dropped its growth target for fixed-asset investment and lowered its projected fiscal deficit, a signal to officials to rein in excessive spending. Mr Li included a new target, for the surveyed urban unemployment rate, which he pledged to keep below 5.5%. That could help make for a sharper focus on the welfare of citizens. Mr Li also said that spending on social security, education and health care will rise, even as investment in infrastructure moderates.

Yet these various policies, welcome though they are, are tweaks to the existing economic landscape, not dramatic or difficult reforms. They are the kinds of initiatives that the Chinese civil service has proven itself more than capable of delivering in recent years, without the intervention of an overwhelmingly powerful president. It is possible that when Mr Xi’s team is fully in place, his agenda will become more ambitious. Liu He, Mr Xi’s most trusted economic adviser, is expected to be made vice premier, responsible for economic and financial affairs. He has promised that reforms will “exceed the international community’s expectations”. But the focus for now is on asserting party control. On March 17th the legislature will vote on a plan to shrink the number of state agencies and put them more firmly under party leadership, according to Bloomberg, a news agency. As part of that restructuring, the banking and insurance regulators are expected to be merged, as are the agency that oversees industrial companies and the product-quality watchdog, among others.

Mr Xi’s influence over the proceedings was felt in other, more disturbing ways. The work report mentioned his name 13 times, the most references to any living leader since Mao Zedong. When the constitutional amendment to scrap the presidential term limit was read aloud in Great Hall, the crowd greeted it with boisterous applause. The banner headline on the day of the work report on the website of Xinhua, China’s official news agency, was about Mr Xi’s meeting with delegates from Inner Mongolia, followed by four other stories about his recent speeches and his schedule. It was only the sixth article that covered the work report and the various targets for 2018. They are being overshadowed by the biggest target of all: enhancing Mr Xi’s power.

China’s leader, Xi Jinping, will be allowed to reign forever

THE decision announced on February 25th to scrap term limits for China’s president, Xi Jinping, pierces the veil of Chinese politics. It reveals that, at a time when the ruling Communist Party is presenting China to the world as a modern, reliable and responsible state, capable of defending globalisation, the internal political system that the party monopolises is premodern, treacherous, inward-looking and brutal. It also shows that Chinese leaders’ own attempts to make the party otherwise have not got far.

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Those attempts began in the 1980s under Deng Xiaoping, then the country’s paramount leader. In order to encourage predictability and institutional stability after the chaos of the last years of Mao Zedong, Deng introduced a series of reforms which stressed rules and norms, instead of strongman decision-making. The reforms included mandatory retirement ages and term limits for high-ranking politicians. The constitution of 1982 says the president “shall serve no more than two consecutive terms”. The just-announced proposal by the party’s Central Committee, which has 200-odd members, would get rid of this requirement. The recommendation will be approved at a meeting of the rubber-stamp parliament, the National People’s Congress, which starts on March 5th.

Mr Xi has already turned his back on other Deng-era reforms. In 1980 Deng warned against concentrating too much power in one person, said the country needed to distinguish more clearly between the role of the party and that of the government, and talked about the need to “solve the problem of succession in leadership”. Mr Xi has taken more positions of authority than any of his predecessors since Mao, further eroded the distinction between party and state and postponed, not solved, the problem of who will succeed him.

As a result, the political system is getting more opaque and uncertain, not less. The events leading up to the proposal on term limits show how peculiar and murky Chinese politics can be. The Central Committee issued its constitutional proposals (of which the term-limit abolition is just one example) in a document dated January 26th. But there was no announcement of a committee meeting that day. The committee met earlier, on January 18th and 19th. That gathering had produced a communiqué about constitutional changes, in which few details were given. So proposals for constitutional changes apparently were made both on January 19th and on January 26th. But it was not until the announcement on February 25th that it became clear that a revision to the clause relating to term limits had even been raised.

On February 26th the Central Committee convened again in preparation for the parliamentary session. Normally there is a gap of several months or a year between the Central Committee’s meetings. The need to discuss constitutional changes may have required an extra one, but little is known about either of the two recent conclaves. Such meetings are held behind closed doors in almost as much secrecy as they were in Mao’s day.

Another revision to be endorsed by the parliament will strengthen the party’s constitutional right to rule. At present the party’s role is mentioned only in the preamble. The amendment will also make it clear in the constitution’s first article that the party must remain in charge. This will further erode the distinction between party and state. So will the approval the parliament will give to a new organisation called the National Supervision Commission, an immensely powerful anti-corruption body in which the two hierarchies of party and state are inextricably linked.

Over the past year, Mr Xi has sought to present China as a model for other countries, a meritocratic autocracy that has presided over fast economic growth and avoided the muddle and policy lurches that have beset democracies. It is unclear whether a country with a president for life and no distinction between party and state will prove quite such a compelling model.

Chinese police snatch a Swedish publisher and parade him on TV

A LITTLE over two years have passed since five booksellers from Hong Kong vanished into Chinese custody, accused of selling works critical of Communist Party leaders to readers on the mainland. Though four of them—staff and shareholders of Mighty Current Media—have since been allowed to leave the mainland, the firm’s Swedish co-founder, Gui Minhai, remains barred from travelling. His difficulties recently appear to have grown, and with them new tensions in China’s relations with Sweden.

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On January 20th two Swedish diplomats accompanied him on a train from Shanghai to Beijing. His daughter, Angela Gui, told reporters that Mr Gui may be suffering from a neurological condition developed during his recent detention in China (Ms Gui and her father are pictured, in happier days). She says the Swedes had arranged for him to have a consultation with a medical specialist in the capital. Before they arrived in Beijing, plain-clothes policemen boarded the train and bundled Mr Gui away.

On February 9th Mr Gui resurfaced at a detention centre in the eastern city of Ningbo, where pliant journalists had been assembled to hear him give a statement and answer a few questions. He said that Swedish authorities had pestered him into making an attempt to leave the country, even though he was not allowed to do so because of an ongoing investigation into his “illegal” bookselling. Mr Gui said that he had been happy in China but that his “wonderful life” had been ruined by this misadventure. He asked Sweden to stop “sensationalising” his case and said that he would give up his Swedish citizenship if the embassy continued to “create troubles” for him. He ended by saying that he hoped his family would “live a good life” and that he would solve his own problems.

This spectacle, very probably scripted by Mr Gui’s jailers, was the latest twist in a dramatic tale involving him and his fellow booksellers. Born in China, Mr Gui became a Swedish citizen while studying in Europe in the early 1990s. The publishing house he ran in Hong Kong pumped out loosely sourced tales of sex and corruption among China’s political elite—legal in the former British colony, but infuriating to officials in Beijing. In October 2015 Mr Gui disappeared from a holiday home in Thailand; three months later he re-emerged in China, where officials said he was under arrest. Put in front of cameras, he said he had freely returned to China to answer charges relating to a fatal hit-and-run incident a decade previously. “Although I have Swedish citizenship, I truly feel I’m Chinese,” he said.

Sweden’s foreign minister said the decision to prevent Mr Gui reaching Beijing in January was a “brutal intervention” contravening “basic international rules on consular support”. She said that she had understood Mr Gui to be a free man (he was supposedly released from custody in October, having served out a jail sentence handed down in relation to the hit-and-run case). On February 10th a Swedish spokesperson said that Mr Gui’s most recent video “changes nothing” and that they continued to seek access to their citizen. But China appears to be escalating the charges against him. State media allege that Mr Gui is suspected of endangering national security and that he was in possession of state secrets when detained.

Mr Gui’s ongoing troubles—and the months-long detention of his four colleagues—has succeeded in making publishers like them in Hong Kong somewhat more cautious. But it has also been drawing attention to Mr Gui’s output. On February 1st the Swiss-based International Publishers Association gave him an award for taking risks to promote free speech. The longer the party toys with Mr Gui, the more observers who once dismissed his books as just lurid tittle-tattle will start to wonder if he was preparing to publish information about the leadership that was in fact embarrassingly close to the truth. 

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