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Tuesday, April 19, 2011

The Chinese Succession Is One More Thing That Could Go Bump in 2012

The signs are already there, according to Matthew Gertken and Jennifer Richmond, whose intriguing and informative STRATFOR article, ' China and the End of the Deng Dynasty ', is excerpted below.

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Beijing has become noticeably more anxious than usual in recent months, launching one of the more high-profile security campaigns to suppress political dissent since the aftermath of the Tiananmen Square crackdown in 1989.

Meanwhile, the Chinese economy has maintained a furious pace of credit-fueled growth despite authorities’ repeated claims of working to slow growth down to prevent excessive inflation and systemic financial risks.

These security and economic challenges are taking place at a time when the transition from the so-called fourth generation of leaders to the fifth generation in 2012 is under way. The transition has heightened disagreements over economic policy and insecurities over social stability, further complicating attempts to coordinate effective policy. Yet something deeper is driving the Communist Party of China’s (CPC’s) anxiety and heavy-handed security measures: the need to transform the country’s entire economic model, which carries hazards that the Party fears will jeopardize its very legitimacy.

As Hu [ President Hu Jintao ] seeks to step down, his challenges are to prevent economic overheating, counter any humiliating turn in foreign affairs such as greater U.S. pressure, and forestall unrest from economic left-behinds, migrants or other aggrieved groups. Hu cannot allow the Party (or his legacy) to be damaged by mass protests or economic collapse on his watch. Yet, like Jiang, he has to control the process without having Deng’s prestige among the military ranks and without a succession plan clad in Deng’s armor.

More challenging still, he has to do so without a solid succession plan. Hu is the last Chinese leader Deng directly appointed. It is not clear whether China’s next generation of leaders will augment Deng’s theory, or discard it. But it is clear that China is taking on a challenge much greater than a change in president or administration. It is an existential crisis, and the regime has few choices: continue delaying change even if it means a bigger catastrophe in the future; undertake wrenching economic and political reforms that might risk regime survival; or retrench and sacrifice the economy to maintain CPC rule and domestic security. China has already waded deep into a total economic transformation unlike anything since 1978, and at the greatest risk to the Party’s legitimacy since 1989. The emerging trends suggest a likely break from Deng’s position toward heavier state intervention in the economy, more contentious relationships with neighbors, and a Party that rules primarily through ideology and social control.

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