China’s once-a-decade leadership change in November brought to focus the opaque character of Chinese politics and what direction it will take in years to come, given the underneath tensions in the heavily guarded Chinese polity which are now being realized in public domain.

The 18th Congress of the Communist Party of China meeting in November, with over 2200 delegates, confirmed Xi Jinping as the next Party Chief as well as the President of PRC, while Li Keqiang will take over as the premier.

The two along with four other new Politburo members will take office in March next year, only after the formal approval of the Chinese Parliament.

China has a way of maintaining secrecy and the entire process was a highly choreographed affair. In fact, the choice of leadership was decided months before, and in the case of Xi Jinping five years ago.

The battle over the positions takes place at the Beidaihe resort on the East China Sea, not far from Beijing, but far away from public eye.

Xi Jinping along with three other members of the Politburo are ‘princelings’, as relatives of former leaders are known in China. Mr. Xi has close contacts with the military and supports state-owned industries, suggesting his conservative political views.  

The outgoing Communist Party of China (CPC) General Secretary, Hu Jintao also handed over control of People’s Liberation Army (PLA) to Xi Jinping. This gives Xi Jinping the added power of leading the 2.3 million strong PLA and means his say in foreign policy priorities would carry greater weight.

Problems

Though China looks calm from the outside, there have been troubles and tensions brewing beneath the surface.

The world’s second largest economy is experiencing a slowdown. China’s population is rapidly aging, which in future could undermine its low-cost advantage.

But that is not all - rampant corruption, social inequality and environmental challenges are issues the new leaders of China have to address.

Further, the Communist Party itself is struggling to contain troubling events and divisions within the party ranks.

In fact, Xi Jinping himself confessed that the Party is facing ‘many pressing problems’ with its officials increasingly being ‘out of touch with the people’.

According to government data from Tsinghua University, China witnesses 180,000 strikes, protests and other mass demonstrations each year. One of the major causes for this is the rise in anger among the people against local level corruption.

The ouster of Bo Xilai over corruption charges was embarrassing for the party as the link between the leaders and corruption was exposed. The political scandal that followed involving his wife, charged with the murder of British businessman Neil Heywood, was further covered with great interest by the media.

Questions were also raised over his timely removal, just before the announcement of the new posts at the 18th CPC Congress, given that Bo Xilai was a top contender for promotion. Further, China is also engaged in conflicts with neighboring countries over territorial disputes in the South China Sea.

A consequence of this is the rise of nationalism in China. In early September nationalist protests over the Diaoyu Islands erupted across China, causing Japanese-owned businesses to close in major cities. A Chinese man was nearly beaten to death for driving a Japanese car in the city of Xian.

The internet and the new social media is making the situation worse with citizens criticizing authoritarian domestic policies and asking for a harder stance on territorial disputes with its neighbors such as Japan.

China is also facing the challenge of delivering a more balanced growth. The urban rural income gap in China stands at 68 per cent, higher than it was in 1985.

Future direction

China’s penchant for maintaining secrecy over its political affairs and even the reclusive nature exhibited by its leaders make policy-making in China appear like a black box.

The nature of China’s politics is such that the outgoing leaders continue to use their influence for a considerable time after they retire to ensure their policies are not undone by the new leadership. Therefore, it could take a couple of years for Xi Jinping to chart out some significant policy changes.

Further, it is expected that the new leaders would be more concerned with domestic stability and economic development rather than foreign policy. The foreign policy decisions too will be guided by how those decisions would benefit domestic priorities.

Another characteristic of China’s politics is that the ‘princelings’ are more conservative, favoring social control over freedom of expression. Therefore stricter censorship of traditional and social media is expected.

China’s current five-year economic plan envisages transformation of state-led export-oriented growth to a domestic consumption driven economy with a high degree of indigenous innovation. This would require the new leaders to make concerted efforts to curtail the influence of state-owned companies, again demanding more attention in domestic matters.

The new leadership also does not favor those hoping for greater access for foreign businesses.

It has also been reported that the ‘princelings’ have amassed much of their wealth from leadership positions.

A  US Cable from 2009 that was released by Wikileaks claimed that senior political leaders in China had ‘carved up China’s economic pie’ and led to the creation of a system in which policy making was driven by vested interests  and stood in way of reforms.

Therefore, Xi Jinping would have to make concerted efforts in fighting corruption. He has already pledged to address corruption in the PLA.

However, recent efforts to fight corruption have met with obstacles. A case in point is the crackdown on Lieutenant General, Gu Junshan, accused of amassing a fortune, by General Liu Yuan. It resulted in the General missing out on a position in the PLA’s Central Military Commission.

As far as India-China relations go, both the countries will continue to increase economic linkages. At the tactical level China will continue to press for advantageous positions in the disputed territories across the India-China border, but strategically Beijing will cooperate with Delhi to maintain stability in Asia.

China’s new leaders will continue to emphasize on strengthening economic relations with India as it would further its own domestic policy priority-its economic development.

China has been quick in this regard as before the new leaders take office, China and India have formulated a strategy for increasing trade and ensuring development and economic growth amid global economic slowdown.

As many as 11 MoUs worth $5 billion have been signed between India and China in November, allowing market access to financial institutions in both the countries to boost investment and expand commercial operations.

Coming to China-US relations, any change in dynamics of their relation will not come from China, but from the US with its focus on Asia. But if the US is seen interfering in China’s affairs, especially in the South China Sea, then the US should be prepared for a more enhanced response by China commensurate with its regional influence.

China believes in leaving nothing to chance as far as political developments are concerned. But with various challenges confronting the new leadership, it is clear that far bolder actions will have to be taken under Xi Jinping to maintain CPC’s grip on power otherwise significant reforms would have to be accommodated.