WSJ: Behind China's Stability Lies Risk

Suddenly everybody is awakening to the reality of political risk in China, but for the wrong reason. The world's attention has been drawn by the rumors flooding out of Beijing that paramount leader Jiang Zemin -- who holds the posts of general secretary of the Chinese Communist Party, state president and chairman of the Central Military Commission -- is upsetting the apple cart of a planned succession. The possibility of factional conflict breaking out into the open is certainly something to watch. But this isn't the biggest political risk that the Chinese, as well as foreign diplomats and investors, should be worrying about.

First, let's recap the story in the headlines. The word on the street is that Mr. Jiang wants to hold on to the first of his three job titles, instead of handing it over as planned to designated successor Hu Jintao at the 16th Party Congress later this year. If, as is also rumored, Mr. Jiang then keeps the top party position overseeing the military, Mr. Hu would be left with the symbolic post of president, and, probably, diminished clout on the Politburo.

That this transition is running into some problems shouldn't be a shock. The real surprise is that it has stayed on track so long. After the Tiananmen Square massacre, Deng Xiaoping picked Mr. Jiang as a new "core" of the then up-and-coming "third generation" of leaders, and simultaneously fingered Mr. Hu as the core of the following generation. Deng died in 1997, and it would have been natural for Mr. Jiang to later choose his own designated successor. But other factions in the party resisted putting his most able fourth-generation protege, Zeng Qinghong, on the Politburo Standing Committee.

Nevertheless, Mr. Jiang has been very successful in consolidating power by promoting his own circle of favorites, known as the Shanghai clique because many of them worked in that city's government and party structures when he was mayor. Mr. Hu has his own band of supporters, many of them former officials in the Communist Youth League. Handing the top party post from one faction to another would throw the current political system into disequilibrium, costing many cadres their careers. No wonder some of them are lobbying for Mr. Jiang to stay on. […]

A clash between factions might put some decisions on hold for a while, damaging the reform process. Yet even if a committed reformer made it to the top, he couldn' make much of a difference. Policy making in Beijing is like steering a supertanker -- it takes a long time before a policy gets approval and becomes a reality [..].

If Mr. Hu becomes general secretary of the party this year, his reform course might be incrementally faster than now. But even so, Mr. Jiang will still be in the background, exercising considerable influence. It's unlikely that a regime led by Mr. Hu would embark on a radically different reform course than the one today.

That's the real political risk that everyone should be worrying about. The supertanker is headed for the rocks, and the committee of captains is not ready to turn the helm hard in any direction. The country's apparent stability gives a false sense of security.

The post-ideological social contract in China is that the Communist Party provides rising living standards for the masses and in return nobody questions its right to rule. But even with high growth, the rulers have found it steadily more difficult to damp down conflicts created when some groups in society get left behind. Only a few months ago tens of thousands of workers hit the streets of two cities in the industrial northeast to protest unpaid wages and benefits. If growth were to falter, such outbreaks might spread. A new report out this week, written by three professors from Beijing's Peking and Tsinghua Universities and Hong Kong' Chinese University, predicts that a slowing of growth would lead to unrest on a scale similar to Indonesia in 1998. The implication is that the regime would fall, as Suharto's did.

[..] In order to head off unrest, China must embrace more radical moves-and allow elections of both government and party officials in cities and rural counties, for instance, and devolve power to these governments, so that the pressure from dissatisfied groups can be released instead of being bottled up. The succession struggle is a useful reminder that China's political risk is much greater than it has seemed, but this could prove a mere sideshow to the main drama.

Mr. Restall is editorial page editor of The Asian Wall Street Journal.

Updated August 13, 2002