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Asia Monthly ASIA MONTHLY November 2004 Topics 4th Plenum highlights China’s political and economic issues ･･･ 1 Indonesia ････････････････････････････････････････････････････ 3 Philippines ･･･････････････････････････････････････････････････ 4 Vietnam ･････････････････････････････････････････････････････ 5 China ･･･････････････････････････････････････････････････････ 6 http://www.jri.co.jp/english/asia/index.html JRI ASIA MONTHLY REPORT Vol.4 No.44 Topics 4th Plenum highlights China’s political and economic issues September’s 4th Plenum of the 16th Central Committee of the Chinese Communist Party decided upon several initiatives to be undertaken for the purpose of improving the Communist Party’s administrative capability. Although the transfer of power has been completed, the issues raised at the conference will not be easy for the Hu Jintao leadership to resolve. ■ Jiang Zemin steps down as Chairman of the Central Military Commission At the 4th Plenum of the 16th Central Committee of the Chinese Communist Party (CPC), held from September 16 to 19, several important personnel and policy decisions were made. In particular, Jiang Zemin’s resignation as Chairman of the Central Military Commission（CMC）was significant in two ways. First, there was the timing of the step down. Jiang Zemin had already stepped down as General Secretary of the CPC and as President but retained the military’s top post of Chairman of the CMC. In the case of the posts of General Secretary and state President, constitutional decrees require that the incumbent retire upon reaching a prescribed age, or after the current term of office is finished. In the case of the post of Chairman of the CMC, however, there were no specific rules and the incumbent could technically remain in office until his death. In 2004, Jiang had carried out his duties as President energetically, and it was expected by many that he would stay on after the 4th Plenum. However, he has submitted his resignation and it has been accepted by the 4th Plenum. According to the statement that was released after the conference, Jiang ‘wished to retire’ in order to promote the rejuvenation of the leadership and to strengthen the succession of power. Some, however, voice doubt as to whether his resignation was completely voluntary. When Jiang Zemin was reelected to the post of Chairman of the CMC at the National People’s Congress in 2003, the percentage of yes votes was lower than the previous time and also lower than those for the Vice-chairman of the CMC and committee members. This would appear to suggest that there was still some dissatisfaction with Jiang, who had remained in the top military post, and that may have prompted him to retire. In any case, Jiang’s retirement will have a considerable impact on the division of power within the Hu Jintao leadership, as well as on its political management. Second, there is the question of whether Hu Jintao, now both General Secretary and President, can control the Military. When President Hu took over as Chairman of the CMC, the former dual power structure, where Jiang Zemin led the military and the President supported him as Vice-chairman of the CMC, disappeared from the system. In comparison with the situation before Jiang’s resignation, Hu Jintao’s wishes can now more easily be reflected in the military. On the other hand, other than Hu, the rest of the CMC are all professional soldiers and more than half of them were made generals by Jiang Zemin. Some doubt whether President Hu, who holds no outstanding military honors and has never directly commanded a military unit, can control the military. Hu Jintao, like Jiang Zemin before him, can increase his support from the military through careful adjustment of related legislation, budget allocations and promotions, and so on. However, this is not likely to be something that can be achieved in a short period of time. “The Party's absolute leadership over the military” is a vitally important political issue for President Hu. ■ Strong sense of crisis with regard to the maintenance of political authority The 4th Plenum Session adopted the "CPC Central Committee Decision on the Enhancement of the Party's Governance Capability". The Decision comprises nine items and proposes action that the CPC should take in order to address important political, economic and diplomatic issues. Two points are particularly noteworthy. First, the sense of crisis felt by the Hu Jintao leadership over the maintenance of their political authority has come to the fore. For example, the first item of the Decision speaks of the ‘importance and urgency of enhancing the Party’s governance capability’. This is the first time that the enhancing of the Party’s governance capability has been described as ‘urgent’ as well as ‘important’. While careful to add the qualifier ‘some’, the document speaks of 1) the loss of functionality of party organizations, 2) rampant corruption among cadres, and 3) the CPC’s alienation from the masses, as important organizational issues facing the party now. The Japan Research Institute. Limited 1 Center for Pacific Business Studies JRI ASIA MONTHLY REPORT Vol.4 No.44 The reason for mentioning problem issues up front may stem from a review of the current situation and a growing awareness within the party of the need to work to resolve these issues, if the break up of the party, such as has been experienced by some ruling parties in other countries, is to be avoided. Recently, the Chinese magazine ‘Liao Wang’ carried an article that compared the former Soviet Union and the CPC and suggested that there was not much time left in which to improve the governance capability of the CPC. The fact that the writer of the article is attached to the CPC’s Central Party History Research Team is an indication of the sense of crisis felt within the party, as regards the maintenance of authority. Also the Decision includes concrete steps for party reorganization and the prevention of cadre corruption. However, the series of measures, in general, depends upon positive the efforts of the organizations themselves and is not expected to be immediately potent. As regards improved monitoring of the party by the National People’s Congress and the media, as long as the premise of the ‘leadership by the Communist Party’ remains intact, the possibility of collusion is high. As regards the punishment of officials found guilty of corruption, the 4th Plenum voted to strip a former minister for national resources of his party membership and some similar progress has been made, but corruption is still far from under control. The improvement of party organizations and personnel as a means of sustaining political authority is a difficult issue for the Hu leadership. ■ Tighter macro-control by the central government Second, in economic terms also, local branches are being exhorted strongly to follow the line set by the ＜Completed Investment in Fixed Assets by party’s center. The Decision mentions repeatedly Sector＞ （％） that ‘local party branches should work to ensure that Central Local central policies are thoroughly implemented’ with 40 reference to political and economic matters. Part of 35 30 the background to this appears to be the confrontation 25 between the central government and local 20 governments on measures to curb investments. 15 Since the latter half of 2003, the glut in 10 5 investments has continued, causing the cost of 0 construction materials to soar and resulting in -5 electrical power shortages. In addition, it has been -10 identified as one factor hindering stable economic 2001 2002 2003 2004 growth. The central government’s response was to （Year） try to limit investment as far as possible without Note： 2004 is from January to August causing any serious deceleration in the economy Source："China Monthly Economic Indicators" overall, but local governments have been negative towards the idea, preferring instead to prioritize the securing of local employment opportunities. As a result, in terms of completed investments for January to August, 2004, while central government projects were only 4.3% up compared to the same period in the previous year, local government projects continued to grow at a high rate, up 36.6%, similarly. As a result of this state of affairs, while aiming to strengthen macro-economic control, the central government has repeated its calls to local governments to toe the economic policy line. Local governments are expected to react against macro-economic control by the central government. While the Decision aims to stimulate the economy of the interior and raise the incomes of agricultural workers, it also talks about the principle of ‘xian fu lun’, encouraging certain regions and people to become rich first. After the Hu leadership began to tackle the wealth gap as one of their most important tasks, the ‘xian fu lun’ concept appeared to take a bit of a back seat, but it has emerged anew, indicating perhaps the extent of regional backlash against central government’s economic policies and the difficulty of balancing the clash of interests between the central and local governments. The transfer of power has been completed, but the issues described above will not be easy ones for the Hu Jintao leadership to resolve. (Junya Sano) The Japan Research Institute. Limited 2 Center for Pacific Business Studies JRI ASIA MONTHLY REPORT Vol.4 No.44 Indonesia Pressure to review the fuel subsidy system ■ Export growth slow ＜Export （Y o Y）＞ Export growth for January to June, 2004, 60 was very poor, up only 3.1%, compared to the same period in the previous year, at $31.4 40 billion. Oil and gas exports, boosted by soaring prices for these items, were reasonably 20 healthy at 6.2%, $7.4 billion, similarly, but non-oil and gas exports could only manage 0 2.2%, $24 billion, growth.
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