Can Chinese Think?
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Can Chinese Think? William H. Overholt To understand China’s constitutional amendments one must understand the leaders’ goals. In 2004, Kishore Mahbubani, a Singapore scholar-diplomat, published a provocative book, Can Asians Think?, prodding Westerners to engage seriously with Asian ideas. Our response to Xi Jinping’s elimination of presidential term limits needs such provocation. Western commentary has been almost exclusively about Xi’s ambitions, his crafty strategies, comparisons to Putin, and contemptuous disregard of his Party’s actual goals. This makes XI’s widespread official and public support inexplicable. Chinese leaders desperately fear disintegrative social forces and face massive opposition to vital reforms. Xi’s constitutional amendments respond, rightly or wrongly, to those concerns. We can only understand China by addressing the issues as Chinese leaders see them. Contemporary China’s problems have deep roots. Frenetic market reforms under Zhu Rongji (Vice Premier, then Premier, 1991-2003) gave China extraordinary growth at the cost of extraordinary social stress. For example, he tried to cut the bureaucracy in half and in one decade caused 45 million state enterprise workers to lose their jobs. By 2003 Chinese society was stressed out; anger at Zhu was intense. (He’s now a hero again.) In reaction, Hu Jintao (leader, 2002-2012) promised a “harmonious society.” He largely curtailed market reforms, allowed the bureaucracy to metastasize from 40 million officials to 70 million, and permitted extraordinary corruption. Leaders and scholars became fearful that central authority risked losing control, overwhelmed by huge enterprises, local governments, the military and parts of the Party-state bureaucracy. A leadership consensus reacted with decisive centralization of authority. They cut the Politburo Standing Committee from 9 to 7 members. To facilitate agreement, they excluded outlying reformist and reactionary views. They created new “small leading groups” for key policy areas, and a National Security Council, and subordinated all to a more energetic leader, Xi Jinping. Unlike the transition to Hu, the new leader was given immediate authority over the military and was partially buffered against the influence of retired leaders. None of this happened because of Xi’s guile or powerful political base; his personal political base was relatively weak. It happened because of a workable leadership consensus. Xi has needed all available power. The archetypical obstacle to reform was the Petroleum Faction, earning billions from arbitraging controlled energy prices under the leadership of the nation’s security chief, Zhou Yongkang, a member of the all-powerful Politburo Standing Committee. Major Chinese interest groups are larger than most European countries. The most pervasive problem was hideous corruption among top officials and military officers. Proposed reforms would severely damage the positions of all the most powerful groups in Chinese society, inducing massive opposition. Take local governments. One particularly successful government had debt service payments exceeding its tax and fee revenues. It serviced the debt by seizing land and selling it. Under reforms, land sales would drastically decline, freed interest rates would rise, “innovative” financing methods would be curtailed, and the city would have to begin providing education, unemployment insurance, pensions, and medical insurance to migrant laborers who constitute half the population. Facing such challenges, government, Party, government, business and military units saw resistance as necessary to survival. One top business leader told me: “The atmosphere in Beijing is, you die or I die.” Xi eliminated competitors but that didn’t mean he could implement strong reforms. To control financial risk he needs a property tax. To control geopolitical risks, he needs to bring assertive Chinese fishing fleets under central control. To resolve the gigantic local government debt problem, he needs a vast fiscal reform. To improve the environment he must close hundreds of thousands of small firms and discipline the biggest firms. He must institutionalize his anti-corruption campaign. And many others. Moreover, having broken the taboo against taking down senior leaders for corruption, he needs to protect himself and his reforms against post-retirement backlash from traumatized elites. Xi has won wide public support for the anti-corruption campaign and reform goals, which include strengthening the Party in order to counteract centrifugal forces. The middle class welcomes their new- found ability to reserve restaurant tables previously booked solid by corrupt officials, and bright young graduates love the promotion prospects created by Xi’s dispatch of corrupt officials. This is not Putinism. Yes, both are authoritarian, but Putin’s party is his personal instrument whereas Xi is an instrument of his party. Putin isn’t tackling corruption, improving the environment, and reforming the economy. Xi already has major accomplishments. Overcapacity in steel and other materials is declining fast. China is quickly relinquishing old industries (cheap socks) and building more modern ones (telecoms, biotech). Environmental amelioration is accelerating. His geopolitical vision is inspiring. To understand Xi, and his support, requires us to confront such Chinese policy substance. The leadership believes that the status quo was unacceptable and democratization would unduly strengthen reactionary interest groups. Reformist intentions do not of course assure that an extended presidency will solve China’s problems. Xi’s disruption of the old corrupt elite could give way to a new extractive elite around him. His promises to marketize state enterprises and to enhance the rule of law contradict his determination to exert tighter Party control over enterprises and the courts. His new, decentralized corruption-fighting agency might become a collection of corrupt local satraps. Rising discontent among academics, professionals, private enterprises and religious people could coalesce with interest group power struggles to undermine him. Longer term, even more difficult challenges will arise. If Xi doesn’t successfully reform the economy he will lose authority. If he does reform the economy, public attention will turn to political reform. Just as the economy is now too complex to be managed in detail by Beijing leaders, so is the polity. Xi has articulated no persuasive strategy to manage that. Sitting on the lid of a boiling kettle won’t work forever. (As I have recounted in a new book, the pot is boiling.) In a third term, Xi could so fear retribution for reforms’ injuries of various elites that he might position himself, disastrously, in a defensive crouch. One of the great virtues of the reform years has been that each new leader compensates for the weaknesses of his predecessor; without term limits, that virtue now seems lost. Or maybe the broader Party leadership will refresh policy with or without Xi. China’s future is difficult to predict. But if we understand the leadership goals, we can monitor their trajectory. Watch whether Xi can impose a property tax, control the fishermen, give Beijing more days of blue sky, and recast the division of revenues and responsibilities between central and local governments. William H. Overholt, Senior Research Fellow at Harvard University, is author of the new book, China’s Crisis of Success, and other books about China. .