bindex.indd 540 3/14/11 3:26:49 PM China’s development, at least in part, is driven by patriotism and pride. The Chinese people have made great contributions to world civilization. Our commitment and determination is rooted in our historic and national pride. It’s fair to say that we have achieved some successes, [nevertheless] we should have a cautious appraisal of our accomplishments. We should never overestimate our accomplish- ments or indulge ourselves in our achievements. We need to assess ourselves objectively. [and aspire to] our next higher goal. [which is] a persistent and unremitting process. Xi Jinping Politburo Standing Committee member In the face of complex and ever-changing international and domes- tic environments, the Chinese Government promptly and decisively adjusted our macroeconomic policies and launched a comprehensive stimulus package to ensure stable and rapid economic growth. We increased government spending and public investments and imple- mented structural tax reductions. Balancing short-term and long- term strategic perspectives, we are promoting industrial restructuring and technological innovation, and using principles of reform to solve problems of development. Li Keqiang Politburo Standing Committee member I am now serving my second term in the Politburo. President Hu Jintao’s character is modest and low profile. we all have the high- est respect and admiration for him—for his leadership, perspicacity and moral convictions. Under his leadership, complex problems can all get resolved. It takes vision to avoid major conflicts in soci- ety. Income disparities, unemployment, bureaucracy and corruption could cause instability. This is the Party’s most severe test. In seven years under President Hu, the CPC has successfully maintained sta- bility while pushing forward with reform and opening-up. Liu Yunshan Politburo member; Head, CPC Publicity Department ffirs.indd i 3/14/11 3:23:13 PM China’s democratic development should cater to its own condi- tions. the American political system should not be used to judge the Chinese political system. We have our own models and goals for political reform. We will do what is in the best interests of our people—which surely includes the development of democracy and the rule of law. China’s political and legal system is certainly not perfect, and we are certainly not satisfied. This is why President Hu stresses advancing intra-Party democracy and democracy of society. Reformers must take risks. The people must decide. Li Yuanchao Politburo member; Head, CPC Organization Department Our growth model of 30 years, which enriched us rapidly, has come to the end of its cycle. During the economic downturn, we’ve reached consensus on the need to transform our developmental model. We are determined to develop Guangdong’s capability for independent innovation. We’re not interested in ‘facelifts’. Wang Yang Politburo member; Party Secretary, Guangdong Province How China should develop is a hard issue. China has achieved great economic success, but with many severe problems arising as a result— such as widening income gaps and increasingly strained human relationships. So, regarding urban development, the issues awaiting solution are how to produce a harmonious environment between human beings and nature, and among human beings themselves. Yu Zhengsheng Politburo member; Party Secretary, Shanghai Municipality We must have passion for our work, enthusiasm for our career, and care for our people. We stress dedicated work, honest performance, innovation, and unity among our officials. We will go nowhere if we ignore reality or fear innovation. I’m not interested in ‘reports’, only results. Zhang Gaoli Politburo member; Party Secretary, Tianjin Municipality ffirs.indd ii 3/14/11 3:23:14 PM How China’s Leaders Think The Inside Story of China’s Past, Current and Future Leaders Revised Edition Robert Lawrence Kuhn John Wiley & Sons (Asia) Pte Ltd ffirs.indd iii 3/14/11 3:23:14 PM Copyright © 2011 by Robert Lawrence Kuhn. Published in 2011 by John Wiley & Sons (Asia) Pte. Ltd. 2 Clementi Loop, #02-01, Singapore 129809 All Rights Reserved No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as expressly permitted by law, without either the prior written permission of the Publisher, or authorization through payment of the appropriate photocopy fee to the Copyright Clearance Center. Requests for permission should be addressed to the Publisher, John Wiley & Sons (Asia) Pte Ltd, 2 Clementi Loop, #02-01, Singapore 129809, tel: 65- 6463-2400, fax: 65-6463-4605, e-mail: [email protected] This publication is designed to provide accurate and authoritative information with regard to the subject matter covered. It is sold with the understanding that the Publisher is not engaged in rendering professional services. If professional advice or other expert assistance is required, the services of a competent professional person should be sought. Neither the authors nor the publisher are liable for any actions prompted or caused by the information presented in this book. Any views expressed herein represent those of the authors and do not represent the views of the organisations they work for. Other Wiley Editorial Offices John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, USA John Wiley & Sons Ltd., The Atrium, Southern Gate, Chichester PO19 BSQ, England John Wiley & Sons (Canada) Ltd., 5353 Dundas Street West, Suite 400, Toronto, Ontario M9B 6H8, Canada John Wiley & Sons Australia Ltd., 42 McDougall Street, Milton, Queensland 4064, Australia Wiley-VCH, Boschstrasse 12, D-69469 Weinheim, Germany Library of Congress Cataloging-in-Publication Data: ISBN 978-0-111-808590-5 (paperback) ISBN 978-0-111-810427-9 (e-pdf) ISBN 978-0-111-810426-2 (e-mobi) ISBN 978-0-111-810425-5 (e-pub) Printed in Singapore by Toppan Security Printing Pte. Ltd. Typeset in Plantin, 11 point, by MPS Limited, a Macmillan Company 10 9 8 7 6 5 4 3 2 1 ffirs.indd iv 3/14/11 3:23:14 PM Contents About the Author vii Acknowledgments ix Overview: How China’s Leaders Think xiii PART I GUIDING PRINCIPLES 1 1. Pride 3 2. Stability 14 3. Responsibility 19 4. Vision 27 PART II THINKING REFORM 35 5. Subjugation, Humiliation, Oppression 37 6. Reform’s Epic Struggle 51 7. Tiananmen and Thereafter 66 8. What’s a “Socialist Market Economy?” 73 9. How Communism Adopted Capital and Ownership 93 10. The Hidden Power of Jiang Zemin’s “Three Represents” 105 11. The Driving Relevance of Hu Jintao’s “Scientific Perspective on Development” 120 12. Snapshots of Economic Reform 131 13. The Countryside is Core 143 14. Rebalancing Imbalances 152 15. How Reform Permeates All Society 161 16. Here Come the Lawyers 172 17. Facing Up to Corruption 180 18. Values and the New Social Contract 187 ftoc.indd v 3/9/11 7:12:40 AM vi CONTENTS PART III DOING REFORM 201 19. Provincial Pictures of Reform 203 20. Regional Dragonheads: Pudong (Shanghai) and Binhai (Tianjin) 216 21. What to Do with State-Owned Enterprises? 225 22. The Private Business Revolution 244 23. Banking Reform: The Largest Assets and Greatest Risks 253 24. Reforming Science & Technology with Sparks & Torches 266 25. Education: When Reform and Tradition Clash 276 26. Healthcare and Medical Reform: One Doctor’s Story 281 27. Media and Publishing Reform: Hidden in Plain Sight 290 28. How Telecommunications and the Internet Changed China 308 29. Diversity of Culture; Question of Censorship 320 30. How China’s Leaders Love Film 331 31. Why Religion Became Important 344 32. Foreign Policy Breaks Free 361 33. What does Military Reform Mean? 379 34. Telling China’s Story to the World 391 PART IV REFORM’S FUTURE 405 35. China’s Future Senior Leaders 407 36. China’s New Kind of Leaders 426 37. China’s Economic Future: How Far Can It Go? 447 38. Guangdong Visions 459 39. China’s Political Future: Is Reform Real? 473 40. China Threat or China Model? 491 41. China Reflections and Visions 507 Index 521 ftoc.indd vi 3/9/11 7:12:41 AM About the Author Dr. Robert Lawrence Kuhn is an international investment banker, corporate strategist, China expert, and public intellectual. Since 19891, he has worked with China’s leaders and advised the Chinese government (economic policy, industrial policy, mergers and acquisitions, science and technology, media and culture, Sino-U.S. relations, international affairs, and international com- munications). He has visited more than 50 cities in over 20 provinces and regions in China, working with leaders in government and business. Dr. Kuhn advises leading multinational companies, CEOs and C-Suite executives, on formulating and implementing China strategies (sectors include financial services, technology, energy/resources, industrial, media and entertainment, and consulting), and he works with major Chinese com- panies on structuring their capital markets financings and M&A activities. Specializing in M&A for over 30 years, Dr. Kuhn was president and co-owner of the largest M&A firm in the U.S. representing middle-market companies (which he sold to Citigroup in 2000). Dr. Kuhn advises and works with China senior leaders on special projects. He is recognized as the author of The Man Who Changed China: The Life and Legacy of Jiang Zemin, a precedent-setting biography—the first of a living Chinese leader published in China—which was China’s best-selling book of 2005. He is the author of two event-marking books: China 30 Years: A Great Transformation Of Society (2008, in Chinese), which commemorates China’s 30th anniversary of reform and opening up and emphasizes President Hu Jintao’s political philosophy and policies; and How China’s Leaders Think (this book, first published in October 2009), which commemorates China’s 60th anniversary and focuses on China’s new (“Fifth”) generation of leaders (conversations with ~100 leaders), including Vice President Xi Jinping.