China Policy Institute

Briefing Series – Issue 17

CHINA’S POLITICS IN 2006: HARMONY ON THE ROAD TO THE 17TH PARTY CONGRESS

by Hongyi LAI, Zhengxu WANG and Sow Keat TOK

© Copyright China Policy Institute

January 2007

China House University of Nottingham University Park Nottingham NG7 2RD United Kingdom Tel: +44 (0)115 846 7769 Fax: +44 (0)115 846 7900 Email: [email protected] Website: www.chinapolicyinstitute.com

The China Policy Institute was set up to analyse critical policy challenges faced by China in its rapid development. Its goals are to help expand the knowledge and understanding of contemporary China in Britain, Europe and worldwide, to help build a more informed dialogue between China and the UK and Europe, and to contribute to government and business strategies.

1 Summary

2006 was a vital year in China’s politics. It marks the final checkpoint before the all­important 17th Party Congress in autumn 2007, which will be President Hu Jintao’s “mid­term” congress in his two­term reign. In 2006, and indeed in the first half of 2007, Hu has been busily setting things in place to ensure that his legacy is preserved in Chinese history books.

President Hu appears to be following three main objectives. Firstly, he is attempting to create a new ideological framework for the Party. This has been labeled “Harmonious Society” (hexie shehui). At the annual Plenum of the Central Committee held in October 2006, Hu’s call for China’s leaders to build a “harmonious society” was formally accepted as the Party’s supreme goal. Termed “theoretical preparation”, this process involves the formulation of an ideological platform by identifying the major challenges the nation is facing. It aims to offer suitable directions and strategies that will guide the Party in the years to come. Prior to this, actions had already been taken to send a strong message across the board: that Hu Jintao is in firm control and that he intends to turn the “harmonious society” concept from ideology into action.

Not surprisingly, the “harmonious society” goal was discernible in all political events of the year. The concept of “building a harmonious society”, apart from being the trademark mantra of Hu’s presidency so far, is also a response to many socio­economic problems the nation faces. Since many of these problems cannot be resolved overnight, the concept of a “harmonious society” has been constructed as an interim measure to gradually fend off social problems and reduce social discontent.

Secondly, Hu is trying to implement policies that reflect this ideological outlook. Throughout the year, Hu has been heavily promoting social, welfare and anti­ corruption programs. Under the banner of building “social harmony”, the government took direct measures to address problems such as local governments’ misappropriation of peasants’ land. Hu also tried to improve on the structure of governance through selective recentralisation of state functions, and by clamping down on corruption. This is done in the hope of harmonising state­ society relations.

Thirdly, he is reshuffling local leadership from the bottom up, and is preparing a list of candidates who are slated to succeed him. This should ensure the faithful following of his policy directions even after he steps down at the 18th Party Congress in 2012. In particular, during the second half of 2006, provincial, prefecture/city, county, and township leaderships in 14 provinces were progressively reshuffled. The remaining 17 provincial units will go through the same process in 2007. Some of these new officials will be in place to serve for the next five to ten years, and will become delegates of the 17th Congress and members of the new Central Committee.

In the past year, Hu has also tried to apply his “harmonious society” ideology to foreign affairs. China was diplomatically very active in 2006, having successfully hosted several international gatherings, such as the Shanghai Cooperation Organization (SCO) Summit and the Sino­Africa Forum. Hu was also busy shuttling between major capitals, including Washington, New Delhi, and Islamabad, and seen forging partnerships with regional and global players. Strained Sino­Japan relations showed signs of improvement, as China chose to receive a visit by Japan’s new Prime Minister, Shinzo Abe.

2 However, these achievements were offset by disappointments in other areas. North Korea’s nuclear test in October tops the list, while China continues to struggle in its economic relations with the United States and the European Union. Mutual distrust continues to beset the relationship between Beijing and Tokyo, and Third World nations remain guarded against China’s recent charm offensive despite Beijing’s generous trade, loan and aid offers.

Even though China’s influence is growing by the day, Hu’s vision for a “harmonious world” appears to have less appeal to its international audience than his domestic one.

3 CHINA’S POLITICS IN 2006: HARMONY ON THE ROAD TO THE 17TH PARTY CONGRESS

Hongyi LAI, Zhengxu WANG and Sow Keat TOK *

“Harmony” as the Defining Feature of Hu Jintao’s Legacy

1.1 2006 was a vital year in China’s politics. It marks the final checkpoint before the all­important 17th Party Congress in autumn 2007, which will be President Hu Jintao’s “mid­term” congress in his two­term reign. In 2006, and indeed in the first half of 2007, Hu has been busily setting things in place to ensure that his legacy is preserved in Chinese history books.

1.2 President Hu appears to be following three main objectives. Firstly, he is attempting to create a new ideological framework for China. This is represented by the now familiar mantra, “harmonious society” (hexie shehui). Secondly, he is trying to translate his words into actions by implementing policies that reflect this ideological outlook, a stance seen in Hu’s focus on social, welfare and anti­corruption programs. Thirdly, he is reshuffling local leaderships from the bottom up, and is preparing a list of candidates who are slated to succeed him, to ensure the faithful following of his policy directions after he steps down in the 18th Party Congress in 2012.

1.3 In 2006, at the annual Plenum of the Central Committee held in October, Hu’s call for building a “harmonious society” was formally accepted as the Party’s supreme goal. 1 Prior to that, actions had already been taken to send a strong message across the board: that Hu Jintao is in firm control and that he intends to turn the “harmonious society” concept from an ideology into a reality.

1.4 Throughout the year, Hu tried to rein in rising social discontent. Under the banner of building “social harmony”, the government took direct measures to address problems such as local governments’ misappropriation of peasants’ land. Hu also tried to improve the structure of governance through selective recentralisation of state functions, and by clamping down hard on corruption. This has all been done in the hope of harmonising state­society relations.

1.5 In addition, during the second half of 2006, provincial, prefecture/city, county, and township leaderships in 14 provinces were progressively reshuffled. The remaining 17 provincial units will go through the same

* Dr Hongyi LAI and Dr Zhengxu WANG are research fellows at the East Asian Institute, National University of Singapore. Mr Sow Keat TOK is research associate at the China Policy Institute, University of Nottingham. An earlier version of this policy brief was published by the East Asian Institute as “China’s Politics in 2006: Harmony, More Harmony, and the Road to the 17th Party Congress”, EAI Background Brief No. 316, 22 December 2006. The authors would like to thank Professor John Wong for his valuable contributions throughout the preparation of this work. Thanks also go to Professor Zheng Yongnian of the University of Nottingham for his helpful comments on the earlier drafts of this paper. 1 For a detailed discussion of the Plenum and the new ideological formulation, see Zheng Yongnian, Wang Zhengxu, and Tok Sow Keat, “Hu Jintao at the Helm,” EAI Background Brief, No. 309, Singapore: EAI, NUS, 9 November 2006.

4 process in 2007. Some of these new officials will be in place to serve for the next five to ten years, and will become delegates of the 17 th Congress and members of the new Central Committee.

1.6 In the past year, Hu has also tried to apply the “harmonious society” ideology to China’s foreign affairs. China was diplomatically very active in 2006, having successfully hosted several international gatherings such as the Shanghai Cooperation Organization (SCO) Summit and the Sino­Africa Forum. Hu was also busy shuttling between major capitals, including Washington, New Delhi, and Islamabad, and seen forging partnerships with regional and global players. Strained Sino­Japan relations showed signs of improvement, as China chose to receive a visit by Japan’s new Prime Minister Shinzo Abe.2

1.7 However, these achievements were offset by disappointments in other areas. North Korea’s nuclear test in October tops the list, while China continues to struggle in its economic relations with the United States and the European Union. Mutual distrust continues to beset the relationship between Beijing and Tokyo, and Third World nations remain guarded against China’s recent charm offensive, despite Beijing’s generous trade, loan and aid offers.

1.8 Even though China’s influence is growing by the day, Hu’s vision for a “harmonious world” is still quite some way from winning over its audiences. The country has so far progressed little towards its goal of being one of the Great Powers on the world stage.

Promoting the Ideological Framework of Harmonious Society

2.1 The single most important event in China’s politics in 2006 was the creation of the new ideological framework, “harmonious society”. This process (termed “theoretical preparation” by the CCP) involves the formulation of an ideological platform, by identifying the major challenges the nation is facing and offering suitable directions and strategies that will guide the Party for the years to come. 3

2.2 After Hu Jintao and Wen Jiaobao came to office in late 2002, they began to shift the Party’s emphasis from a growth­first model to a more balanced and more equitable development model. Hu Jintao proposed a notion of “scientific development”, suggesting that China should strive for balanced, efficient, equitable and environmentally­friendly growth.

2.3 Over the years, Hu Jintao has developed this concept of “scientific development” into the more encompassing notion of “Harmonious Society”. By 2005, “Harmonious Society” had become a catch­phrase in China’s political discourse. At the 5 th Plenum in October 2005, “building a harmonious society” was formally endorsed as the guiding principle of China’s 11t h Five­Year Plan.

2 “China Says Ties with Japan at ‘New Starting Point’”, Reuters, 4 December 2006. 3 During Deng Xiaoping’s time, the Party’s guiding principle was “one center, two basics”, which referred to sticking to economic development as the center, and staying with the “Four Cardinal Principles” and “reform and open­up” as the two basics. In Jiang Zemin’s era, the “Three Represents” doctrine eventually became the Party’s guiding ideological principle.

5 2.4 At the 6th Plenum of the Central Committee in October 2006, the Party formally adopted “Harmonious Society” as its supreme goal in governance. “Harmonious Society” refers to a desired society of affluence, justice, and social harmony. The Party seeks to achieve this goal through political and institutional reforms, the promotion of fairness in developing the market and the economy, and the provision of adequate public goods. Many analysts expect that “Harmonious Society” will be the ideological banner for the upcoming 17th Party Congress in 2007 as well as a major theme in Hu’s report at the Congress.

2.5 Not surprisingly, the notion of “harmonious society” was imprinted on all the political events of the year. It has been designed to meet two political objectives. First, Hu wants to create his own ideological hallmarks and secure his legacy. Second, it is an ideological response to many socio­ economic problems the nation faces. Since many of these problems cannot be resolved overnight, the concept of “harmonious society” is seen as an interim measure to fend off social problems and reduce social discontent and tensions. 4

Managing Social Discontent

3.1 Meanwhile, the Hu­Wen leadership tried to address some contentious social issues. These included illegal seizure of land, as well as soaring real estate prices, medical expenses, and educational expenses. The central government has also paid greater attention to complaints and petitions from citizens.

3.2 In recent years, property prices have risen very sharply in many coastal cities and major interior cities. This phenomenon has badly affected ordinary wage earners, who are increasingly experiencing difficulties in finding affordable housing. In addition, looking for quick boosts to their personal appraisals, local officials tend to overzealously promote real estate and development projects. They often bypass laws and proper procedures in seizing land, thus driving many peasants off their land and urban dwellers out of their housing.

3.3 In June 2006 Hu and Wen stepped up efforts to restrain soaring property prices and address irregularities in land use. The State Council ordered all localities to review their land use, and dismissed senior local leaders for corruption involving land.5

3.4 Soaring medical and education expenses are also another public concern. This has been caused by earlier attempts to de­regulate the medical and education sectors. The lack of monitoring measures has led to widespread profiteering behaviour and market collusion between interested parties. One example is the reliance of hospitals on expensive drugs and medical services for profit, and collusion between hospitals and pharmaceutical companies.

4 See Zheng Yongnian, Wang Zhengxu, and Tok Sow Keat, “Hu Jintao at the Helm,” EAI Background Brief, No. 309.

5 “Ministry of National Land and Resources: Strictly Enforce Law and Discipline and Rectify and Reform within a Given Period in order to Stop Law Violation over Land,” Xinhua News, 16 June 2006.

6 3.5 The increasing number of private operators in the education sector is one of the reasons prices are rising; the other is the gradual abolition of agricultural tax, which began in 2004 (the tax was totally abolished in 2006), which administrations in villages and townships relied on to pay for their overheads. Many local administrations in the poorer regions fell deeply into debt, and had to charge supplementary fees to maintain education services.

3.6 In order to ease public discontent, national leaders ordered an overhaul of the pricing of medicine and medical services. 6 Also, seven ministries jointly issued a circular in June 2006, calling for the prevention of illicit school fees. Existing school fees should have been approved by the national or provincial government, and new fees need to be approved by the Ministry of Education or the State Educational Commission. In spring 2006, the state also set up a special fund to finance compulsory basic education in the western region. 7 Starting from the 11t h Five­Year Program, schooling will be free for all rural areas.

3.7 Finally, as required by national leaders, provincial and local leaders throughout the provinces are paying greater attention to people who voice their grievances to the government. The central government attempted to overhaul the “letters and visits” (xin fang, China’s petition system) system so that it can better address citizens’ complaints. Some local leaders (such as provincial party secretaries) now receive a few petitioners every month to help solve their problems.

Recentralisation to Enforce Greater Local Accountability

4.1 In 2006 the Chinese leadership must have realised that its efforts to address the aforementioned social problems can be successful only when accompanied by institutional reforms. The central government has recentralised some functional areas and restructured certain state institutions. The main goal of these reforms is to enhance the accountability of local officials.

4.2 Local resistance to national policies has triggered these institutional changes. In the past few years the Hu­Wen leadership has tried to reduce the social and environmental costs of development by cracking down on illegal land seizure and use, reducing pollution, and limiting price hikes in urban real estate, but these policies were resisted at local levels. Abuse of power and corruption by local officials continue to generate popular discontent.

4.3 The Hu­Wen leadership concluded that rampant local defiance of national policies is an unintended consequence of overly decentralised authority. In response, it has taken measures to recentralise authority in areas such as macroeconomic management and anti­corruption. Local agencies of environmental protection and land management are now held accountable to regional offices of the Central government.

6 “Hu Jintao and Wen Jiabao: Conscientiously Solve the Problems of Difficulties and High Expenses for the Masses in Seeing a Doctor,” Xinhua News, 26 February 2006.

7 “Seven Ministries including Ministry of Education Jointly Issue a Document for the Rigorous Overhaul of Illicit Educational Fees,” Renmin Ribao (People’s Daily), 3 June 2006.

7 4.4 The Central government also decided to strengthen its anti­corruption stance. In an experimental move, the Party’s disciplinary and inspection secretaries in the four municipalities of Beijing, Tianjin, Shanghai, and Chongqing were appointed by the national Party headquarters, instead of by the local Party committee. This was meant to enhance the supervision of local officials by the Centre. 8

4.5 Other reform initiatives included the creation of an accountability system (wenze zhi). Earlier this year, China’s national legislature passed the Law on Supervision, giving local legislatures the power to check local governments. Furthermore, through the implementation of the Law on Civil Servants and other laws, as well several Party regulations in 2006, an accountability system began to take shape.9

Underpinning Hu’s Anti­Corruption Drive: the Fall of Chen Liangyu

5.1 Hu’s toughened stance against corruption has sent shockwaves through Chinese officialdom. The most explosive event, without doubt, was the ousting of Shanghai Party Secretary Chen Liangyu on September 24. This was the first time since 1995—when Jiang Zemin stripped Beijing Party Secretary Chen Xitong of his posts—that a Political Bureau member fell from grace because of corruption. Beijing announced that Chen was involved in the misuse of the pension fund of Shanghai, protected culpable subordinates, and used his power to seek improper benefits for his family members. 10

5.2 Chen Liangyu was widely­considered a protégé of Jiang Zemin, China’s former top leader. A key member of the so­called Shanghai Gang, a group of top officials associated with Jiang, Chen’s downfall signals the passing of Jiang’s legacy, and further strengthening of Hu Jintao’s authority. 11

5.3 There are two other likely reasons for Chen’s fall. In 2004 Chen was reported to have openly questioned Hu and Wen on their policy to cool down the economy, effectively challenging their authority. Also, allegedly at Chen’s acquiescence, Zhou Zhengyi, a real estate developer, received a very lenient sentence for bribing and colluding with local officials and evicting hundreds of local residents from their apartments in Shanghai.

5.4 Chen was only the biggest fish in Hu’s anti­corruption drive; other officials were also indicted during in the year. In June, Hu and Wen launched a nationwide initiative to check the run­away estate prices and clean up irregularities in land use in major cities. A number of local officials were

8 “Party Gets Tough in Fight against Corruption,” China Daily, 6 December 2006.

9 See “Zhonggong yu xue xifangfang wanshan wenzezhi” [Chinese Communist Party Wants to Learn from Western Countries to Improvement Government Accountability], Xinbao, 20 October, 2006. 10 “Central Committee of the Chinese Communist Party Decides to File and Investigate the Case of Serious Violation of Discipline by Comrade Chen Liangyu,” Xinhua News, 25 December, 2006. With Chen’s permission, if not direction, 3.2 billion yuan of Shanghai’s social security fund was loaned to an investor, who used it make private profits. Implicated in Chen’s scandal are also Qiu Xiaohua, the Director of the National Statistical Bureau and several others. 11 Hu has apparently secured the support from Jiang and Vice State President Zeng Qinghong (also considered a key member of the Shanghai Gang) for Chen’s ouster. “China’s Jiang Blessed Shanghai Corruption Purge,” Reuters, 28 September 2006.

8 implicated. For examples, Liu Zhihua, Vice Mayor of Beijing in charge of urban development and the Olympic Games projects, was taken into custody for alleged corruption; the Director of the Procuratorate in Tianjian was also arrested for graft.

5.5 In recent years, corruption in China has escalated rapidly and caused serious public dissatisfaction. In 2006, the Central government’s anti­ corruption efforts were primarily targeted at bribery in business, especially construction projects, ownership transfer, medicine procurement and sales, land auction, governmental procurement, and resources exploration. 12 The anti­graft campaign also swept the judicial branch. Between September and November seven former judges in Shenzhen and Shanghai were arrested over corruption scandals. 13

Local Leadership Reshuffles

6.1 Chen’s dismissal can also be seen in context with the ongoing personnel changes in preparation for the forthcoming Congress. In the months before the Party Congress most local leaders are being replaced or reshuffled. New leaders of the provinces will become candidates for the Central Committee of the Congress. In 2006, provincial, prefecture­city, county, and township leaders in 14 provinces were formally re­elected (but actually appointed by the Party). The same will happen to the remaining 17 provinces in 2007.

6.2 This enormous task involved over 100,000 officials across the nation. At each of the four levels of local government, leaders of the two most powerful branches, namely the Party Committee (headed by the Party secretary) and the administration (headed by the Governor at the provincial level and Mayor at the municipal level) were promoted, reappointed, transferred or retired.

6.3 During this round of local leadership changes, the Party also tried to downsize the Party and government establishment. This was achieved through several measures. First, a new limit was imposed on the number of local Party leaders. There used to be one Party secretary and close to a dozen deputy party secretaries in each province. Now, except for in Tibet and Xinjiang, each province is allowed only one Party secretary and three deputy Party secretaries. At county and township levels, one Party secretary and two deputies are allowed.

6.4 Second, some township governments were merged and some agencies were closed down. If two townships are geographically close to each other, and if infrastructural and economic conditions permit, the two townships may be merged into one, retaining only about half of the officials. At various levels functional departments that were no longer relevant were also closed.

6.5 Third, the Party is striving to produce younger and more competent officials. After this round of successions and reshuffling, most provincial leaders are younger, below 63 years of age, with some even under 50. All

12 “Wen Jiabao Stresses Anti­Corruption Focus This Year is to Clean Up Bribery in Commerce,” Xnihua News, February 24, 2006. 13 See “Judges Held on Corruption Charges,” South China Morning Post, 11 November 2006.

9 of the newly promoted provincial leaders, furthermore, hold university or post­graduate degrees. Officials at other local levels are also becoming younger and better educated.

6.6 The Party is also experimenting with some piecemeal democratic reforms. In the election of the Party committees at the local levels, more candidates were nominated than there were seats to be filled. Also, impending appointments to government offices were publicly announced, and citizens were encouraged to supply information about the personality or track record of the candidates. In some provinces, such as Jiangsu, experiments with intra­Party democracy have been conducted. Dozens of cadres and local legislators act as judges to screen and finalise candidates for city mayors and township chiefdoms. 14

Foreign Affairs 2006: China as a Great Power?

7.1 The year ended with an interesting debate on China’s international status. At the centre of this discussion is a 12­episode documentary titled “The Rise of Great Powers” produced by China’s national TV station, CCTV. To some observers, the documentary suggests that Beijing is finally acknowledging its intention to follow the historical paths of the British Empire, the Soviet Union, and the US to raise itself to the rank of Great Power. 15

7.2 However, the true picture is rather complex, as China’s foreign policy pursuits during the year were met with mixed responses. Beijing has gained some headway in improving its relations with its immediate neighbours and amongst the third world countries, while many challenges still stand in the way of better relations between China and the first world (mainly the US and the European Union).

7.3 China has hosted three important summits this year—the 10t h anniversary of the Shanghai Cooperation Organization in Shanghai, 14­18 June; the China­ASEAN summit in Nanning, 30 October ­ 4 November, and the Sino­ African forum in Beijing, 4­5 November. On 16 December, ministers from six nations that consume nearly half of the world’s oil gathered in Beijing for an “Energy Summit”, marking a rare move by China to take leadership on global energy issues. These events substantially raised China’s profile in terms of regional initiatives and cooperation.

7.4 In particular, Afro­China relations came under the spotlight this year. With little subtlety, China stepped up its diplomatic efforts towards African nations through trade, aid, and loans. China’s overall trade with Africa rose to US$40 billion last year and is expected to hit US$100 billion by

14 The Party Secretary of Jiangsu Province, Li Yuanchao, is regarded as a top candidate for the Political Bureau at the upcoming 17 th Party Congress. 15 Joseph Kahn, “China Opens Public Discussion of its Rising Power,” New York Times, 8 December 2006.

10 2010. 16 During the summit in Beijing, China’s President Hu generously pledged to double China’s 2006 assistance to Africa by 2009. 17

7.5 This revitalised vigour in Afro­China relations is a reminder of China’s enthusiasm during the Cold War for the “Five Principles of Peaceful Coexistence”. The main difference lies in Beijing’s motivation: whereas China was previously pursuing a “United Front” strategy based on ideological grounds, it is today more interested in diversifying its natural resource suppliers – hence the notion “resource diplomacy”. This has roused apprehension amongst some African nations, for fear that the resulting unequal relationships are a guise of “new colonialism” by Beijing. 18

7.6 In Northeast Asia, Beijing’s relations with Tokyo have thawed after a turbulent 2005. The departure of Junichiro Koizumi gave Beijing an amicable opening to the ”Koizumi problem”, as Shinzo Abe, Japan’s new Prime Minister, made China his first destination for an official visit in October. While both sides appear willing to improve their relations for now, mutual concerns (over history, territorial disputes, etc) are far from resolved and will continue to hover in the background.

7.7 North Korea is a considerably trickier issue. Beijing’s credibility and international prestige suffered a hit when Pyongyang conducted a nuclear test for the first time in October. This was also deemed a setback for China’s security interests: North Korea, after Russia and India, becomes the third nuclear­armed nation that shares a border with China. North Korea’s new nuclear status has also put pressure on Japan and South Korea to re­examine their strategic options. Beijing is likely to feel uneasy with this development, especially if options for nuclear rearmament or anti­ballistic missile defences come into the picture.

7.8 It can hardly be a coincidence that Beijing chose to work with Japan’s new Prime Minister Abe—a known political rightist—and host his first overseas visit immediately prior to Pyongyang’s nuclear test. The creation of a new nuclear state has also spurred a new­found interest in the six­party talks. Beijing can now draw some consolation from reengaging Japan, the US, and other member­states in the once­stalled process.

7.9 Even as the anti­terror and Iraq wars have ostensibly drawn the US closer to China, economic issues and concerns over strategic competition will continue to trouble relations between the two nations. According to the US government’s statistics, US trade deficits with China in the first 10 months of 2006 totaled $190.6 billion. In this context, both the US Congress and the administration complained that China had not done enough in floating its currency, opening up its financial markets, and protecting intellectual property rights.

16 “In Africa, China Trade Brings Growth, Unease,” The Washington Post, 13 June 2006. 17 “Full text of Hu Jintao’s speech at China­Africa summit,” People’s Daily Online, 4 November 2006, available at (accessed 16 December 2006). This pledge includes providing US$3 billion of preferential loans and US$2 billion of preferential buyer’s credits to Africa in the next three years, setting up a US$5 billion China­Africa development fund to encourage Chinese companies to invest in Africa, cancelling all the interest­free government loans that matured at the end of 2005 owed by African countries, extending zero­tariff treatment to more than 440 export items originating in Africa, and establishing trade and economic cooperation zones in Africa in the next three years, among other offers. 18 “Mbeki warns on China­Africa ties,” BBC News, 14 December 2006

11 7.10 To improve mutual understanding, Beijing and Washington introduced a new level of inter­governmental exchange through the first Sino­US strategic economic dialogue in mid­December. This high­profile event involved seven US cabinet ministers led by Treasury Secretary Paulson. The dialogue yielded consensus on principles of needed reform such as maintaining open investment, but China has yet to announce concrete steps that could satisfy the US Congress. 19

7.11 The China­US strategic competition has already found expression in China­ EU and US­EU relations. Despite its eagerness to establish better relations with China, the EU was caught in the middle of this covert wrestling between Beijing and Washington. China was raised to the status of “strategic partner” to the EU in the China­EU Summit in Helsinki, Finland, in September, but neither the presence of Chinese Premier Wen Jiabao at the meeting, nor the high expectations back home in China, managed to overturn the EU’s ban on weapons sales to China.

7.12 Wen suffered a diplomatic snub during the summit as he also failed to convince the EU to grant China the much­coveted market economy status. Trade imbalances, market protectionism, intellectual property rights issues, and concerns over human rights in China continue to shackle China­EU relations.

7.13 An overview of China’s political situation in 2006 reveals that Hu’s vision for a “harmonious world” is still quite some way from becoming an alternative to Washington’s vision for the world. Surely though, China’s influence is growing, and will continue to grow in the years ahead. The country has so far progressed little towards its goal of being one of the Great Powers of the world stage. China has a lot more persuading to do before its vision for the future can win over audiences in the world community.

19 See “Talks Mark the First Step in a Long Process,” China Daily, December 14, 2006; “US, China Agree to Tackle Global Imbalances,” China Daily, December 15, 2006.

12 Appendix I: A Chronology of Domestic Events in China in 2006

5 March The 4 th Plenary session of the 10 th National Peoples’ Congress opened. Over 2000 delegates congregated in Beijing to discuss the eleventh 5­year plan. 27 March The Political Bureau met to discuss how to develop the central area of China. 14 – 16 April A cross­strait trade forum was held in Beijing. On 16 April, President Hu Jintao met with Taiwan Kuomintang’s honorary Chairman Lien Chan. 3 June Thousands of Taiwanese protesters gathered at a rally, calling for Taiwan President Chen Shui­bian to step down over an insider­trading scandal involving his son­in­law, Zhao Jianming. 24 June China passed new regulations on managing sudden incidents or social emergencies. One stipulation banned journalists from reporting incidents without governmental approval. 1 July The Qinghai­Tibet Railway was put into operation. 3 July The State Council issued the “Opinions of the State Council regarding Comprehensively Augmenting Emergency Management” (《国务院关于 全面加强应急管理工作的意见》). 6 August General Office of the Central Committee of the CCP issued three regulation documents: “Temporary Provisions on the Tenure of Leading Officials of the Party and the Government”, “Regulations on the Transfer of Leading Officials of the Party and the Government”, and the “Temporary Provisions on the Avoidance of Leading Officials of the Party and the Government”. (《党政领导干部职务任期暂行规定》、 《党政领导干部交流工作规定》、《党政领导干部任职回避暂行规定》) 10 August The People’s Publishing House published the “Selected Works of Jiang Zemin” (《江泽民文选》), Volumes I, II, and III. 11 August Zhu Junyi, director of Shanghai Municipal Labor and Social Security, was removed from his position for taking bribes and siphoning money from the social security funds. The misuse of at least one third of a 10 billion yuan city pension fund also led to the removal of Qin Yu, head of Shanghai’s Baoshan District. 24 September Shanghai Party Secretary and Political Bureau member Chen Liangyu was relieved of official posts due to implication in the misuse of the pension fund. 1 October China celebrated its 57 th founding anniversary. Premier Wen Jiabao restated China’s economic reform and liberalisation. 3 October Hunan’s Environmental Protection Bureau Director, Chen Lin, and Deputy Director, Liu Yushu, were sacked over an arsenide spill that caused a water shortage for 80,000 people in the province. 8 ­11 October The 6t h plenum of the 16 th Central Committee of the Party convened and put forward the main objectives and tasks for building a harmonious socialist society by 2020. 10 October In Taiwan Shih Ming­teh, a former member of Chen’s Democratic Progressive Party (DPP), staged a mass rally against President Chen. 12 October Qiu Xiaohua, Director of the National Bureau of Statistics (NBS), was sacked for his alleged involvement in the Shanghai pension fraud. 23 October China held a grand ceremony to celebrate the 70th anniversary of the Long March. Hu Jintao delivered the keynote speech. 3 November Zhang Enzhao, former President of China Construction Bank, was sentenced to a 15­year jail term for receiving cash and property

13 bribes totaling more than four million yuan (US$500,000). 3 November Taiwan’s prosecutors charged Wu Shu­chen, wife of President Chen Shui­bian, for corruption. 10 November Five judges in the southern Chinese city of Shenzhen were arrested on bribery charges. 14 November Kuomintang Chief Ma Ying­jeou was alleged to have misused government funds. 24 November Taiwan’s President Chen Shui­bian survived a third impeachment motion. 24 November The National Audit Office revealed that about 7.1 billion yuan (US$900 million) of China’s 2 trillion yuan (US$253 billion) social security fund had been misused. 26 November China Central Television (CCTV) began screening a 12­episode documentary called "The Rise of the Great Powers". 30 November Sun Luyi, Deputy Secretary­General of Shanghai Party Committee, was sacked for his alleged involvement in the Shanghai pension fraud. 30 November The Chinese Communist Party expelled Li Baojin, former chief procurator in Tianjin, on suspicion of bribery and embezzlement. 1 December Chinese tycoon Zhou Yiming, the youngest on Forbes magazine’s list of China’s 400 richest people last year, was sentenced to life imprisonment for contractual fraud involving over 380 million yuan (US$48 million). 9 December Taipei and Kaohsiung municipal elections ended in a stalemate, with the Kuomintang and the Democratic Progressive Party equally sharing the spoils in the two mayoral positions. 10 December 114 candidates endorsed by HK pro­democratic camps were elected into the HKSAR Election Committee, almost certainly assuring a running candidate against incumbent Donald Tsang in the coming Chief Executive elections. 12 December The Chinese Communist Party expelled former Beijing Vice­Mayor Liu Zhihua. Liu had been under investigation for corruption since July 2006.

14 Appendixes II: A Chronology of China’s Foreign Affairs in 2006

1 – 8 April Premier Wen Jiabao took a four­nation tour to Australia, Fiji, New Zealand and Cambodia. In Australia, Wen signed a nuclear deal to import 20,000 tons of uranium from Australia a year from 2010. 18 – 29 April President Hu Jintao took a five­nation tour to the U.S., Saudi Arabia, Morocco, Nigeria and Kenya. Tours to Saudi Arabia and Africa exemplified China’s aim to seek alternative energy sources. 11 – 12 May China expressed concern over Chen Shui­bian’s stopover in Libya and Indonesia, asking them to live up to their commitment to the One­ China principle. 15 June 5 th Anniversary of the SCO (Shanghai Cooperation Organization) Summit convened in Shanghai. 6 July China and India re­opened the Nathula Pass connecting the Yagong village of China’s Tibet Autonomous Region and Indian state of Sikkim. The trade channel had been closed for more than 40 years. 8­9 July At the sixth­round of East China Sea Talk in Beijing, China and Japan agreed to set up a communication mechanism to cope with accidents in the East China Sea. 15­17 July Chinese President Hu Jintao attended the dialogue meeting between the G­8 leaders of the developing countries in Russia. 4 August The second "Beijing­Tokyo Forum" in Tokyo issued a joint statement, calling for efforts from both sides to improve Sino­Japanese relations. 10­11 September Chinese Premier Wen Jiabao attended the sixth ASEM summit held in Helsinki. 8 October Japanese Prime Minister Shinzo Abe made his first foreign visit to China since taking office on 26 September. He is the first Japanese leader to visit China in more than five years. 9 October North Korea conducted an underground nuclear test. Beijing joined the world to condemn Pyongyang on the test. 13 October South Korean President Roh Moo­hyun paid a one­day working visit to Beijing. This was his second visit to China since taking office in 2003. 13 October Beijing convened the first China­Russia Finance Ministerial Dialogue. 14 October UN Security Council voted unanimously for imposing punishing sanctions on North Korea. China inspected first batch of cargo entering North Korea a day later. 15–19 October Beijing dispatched a special envoy headed by State Councilor Tang Jiaxuan to the US, Russia and North Korea to discuss North Korea’s nuclear testing. 20 October Following trips to Moscow, Tokyo and Seoul, US Secretary of State Condoleezza Rice arrived in Beijing to coordinate strategy on North Korea. 25–29 October French President Jacques Chirac visited China. Chirac inked US$5 billion worth of business agreements ranging from aircraft deals to railway projects in China. 30 October China held a Commemorative Summit to mark the 15th Anniversary of ASEAN­China Dialogue in Nanning, Guangxi. 3–5 November China held the third Forum of China Africa Cooperation Summit. Leaders from 48 African countries attended the meeting and Beijing rolled out one of the most lucrative aid and development packages to Africa. 17–19 November President Hu Jintao attended the 14 th APEC meeting in Hanoi, Vietnam. Hu also held talks on the sidelines with US President Bush

15 and Japanese PM Abe. 24 November Former Japanese Prime Minister Yoshi Mori visited Taiwan. China expressed strong dissatisfaction and regret over Mori’s visit. 11 December Chinese Foreign Minister Li Zhaoxing and US Undersecretary of State Nicholas Burns held the Third China­US Strategic Dialogue in Washington. 13­15 December US Treasury Secretary Henry Paulson led a high­profile delegation to visit China. They held the first China­U.S. strategic economic dialogue with their Chinese counterparts. Both sides agreed on policy principles to address trade imbalance but produced no timetable. 18 December Ministers from the United States, India, Japan, South Korea and China, nations that consume nearly half the world’s oil, gathered for the first major energy summit in Beijing. 18 December Six­Party Talks resumed in Beijing to discuss North Korea’s nuclear program.

Compiled by East Asian Institute Research Officers Tin Seng LIM, Soon Heng TAN, Siow Song TENG and Yi ZHENG. (Edited by Sow Keat TOK)

16 Appendix III: List of Provincial Leaders and Their Affiliations (Bold indicates Party leaders who were appointed or reappointed in 2006)

Provincial Party Secretary Mayor/Governor Units

Anhui Guo Jinlong (郭金龙) Wang Jinshan (王金山) Beijing Liu Qi (刘淇) ⊕ Wang Qishan (王岐山) Chongqing Wang Yang (汪洋) •⊕ Wang Hongju (王鸿举) Fujian Lu Zhangong (卢展工) Huang Xiaojing (黄小晶) Gansu Lu Hao (陆浩) Xu Shousheng (徐守盛) (Acting)⊕ Guangdong Zhang Dejiang (张德江) Huang Huahua (黄华华) • Guangxi Liu Qibao (刘奇葆) •⊕ Lu Bing (陆兵) Guizhou Shi Zongyuan (石宗源) Lin Shusen (林树森) (Acting) Hainan Wei Liucheng (卫留成) Wei Liucheng (卫留成) Hebei Bai Keming (白克明) Guo Genmao（郭庚茂）(Acting) ⊕ Heilongjiang Qian Yunlu (钱运录) • Zhang Zuoji (张左己) Henan Xu Guangchun (徐光春) Li Chengyu (李成玉)• Hubei Yu Zhengsheng (俞正声) Luo Qingquan (罗清泉) Hunan Zhang Chunxian (张春贤) ⊕ Zhou Qiang (周强) (Acting)• ⊕ Inner Mongolia Chu Bo (储波) Yang Jing (杨晶)• Jiangsu Li Yuanchao (李源潮)•⊕ Liang Baohua (梁保华) Jiangxi Meng Jianzhu (孟建柱)•⊕ Wu Xinxiong (吴新雄)(Acting) Jilin Wang Min (王珉) ⊕ Han Changfu （韩长赋）(Acting) Liaoning Li Keqiang (李克强)•⊕ Zhang Wenyue (张文岳) Ningxia Chen Jianguo (陈建国) Ma Qizhi (马启智)• Qinghai Zhao Leji (赵乐际) Song Xiuyan (宋秀岩)• Shaanxi Li Jianguo (李建国) Yuan Chunqing (袁纯清) (Acting)•⊕ Shanxi Zhang Baoshun (张宝顺)•⊕ Yu Youjun (于幼军) ⊕ Shandong Zhang Gaoli (张高丽) Han Yuqun (韩寓群) Shanghai Han Zheng (韩正) (Acting) ⊕ Han Zheng (韩正)•⊕ Sichuan Du Qinglin (杜青林) • ⊕ Zhang Zhongwei (张中伟) Tianjin Zhang Lichang (张立昌) Dai Xianglong (戴相龙) Tibet Zhang Qingli (张庆黎)• Qiangba Puncog (向巴平措) Xinjiang Wang Lequan (王乐泉)• Ismail Tiliwaldi (司马义·铁力瓦尔地) Yunnan Bai Enpei (白恩培) Qin Guangrong（秦光荣）(Acting)• ⊕ Zhejiang Xi Jinping (习近平)⊕ Lu Zushan (吕祖善)

Legends • CCP Youth League ⊕ Postgraduate degree

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