On September 19, a peaceful and relatively uneventful change of power in China occurred. This event, which has so many important ramifications for China, received surprisingly sparse coverage in the U.S. After 13 years, Jiang Zemin retired as China’s top military commander, handing the reins of the nation’s armed forces to Hu Jintao. During the past two years, Jiang relinquished his posts to Hu as communist party leader and as president. This third handover effectively concentrates power in Hu’s hands and makes him the undisputed leader of the world’s most populous nation.
The announcement came at a meeting of China’s Communist Party, where the men appeared together and provided the appearance of being friendly. After the meeting, the party released a statement stating that Hu’s assumption of power was “conducive to upholding the fundamental principle and system of the party’s absolute leadership over the military, and is also conducive to the strengthening of the military’s revolutionization, modernization and regularization process.”
This latest news from China should be received with great interest in North America, especially in the U.S. and Mexico. In the U.S., China has replaced Japan as the main global economic concern, as talk in American circles focuses on the destination of China for outsourcing and its appetite for production materials. This has helped drive up the prices in world markets for commodities such as steel and wood products. In Mexico, China is often viewed as a manufacturing nemesis, having attracted thousands of manufacturing and production jobs that had resided in Mexico for years. China also has become a magnet for foreign direct investment, diverting much of this from the U.S. and Mexico.
Other than the sudden announcement, which many people thought might not occur for some time, Hu’s assumption of power in China comes as no surprise. A career politician, the 61-year-old Hu joined the Communist Party in 1964. In the 1970’s his administrative skills caught the eye of Deng Xiaoping, who eventually replaced Mao Tse- tung as China’s supreme ruler. In 1992, Deng promoted Hu to the Communist Party’s ruling Politburo, providing him with a national power base.
Where Hu stands on political and economic reform in China still remains somewhat of a mystery, as is expected. No underling within China would dare to be publicly vocal about such issues and chance hooking horns with the top brass. This would be political suicide. However, the day before Jiang announced the transfer of power, Asian News quoted Hu as stating that “a democratic structure like those in the West is unthinkable in China.” He went on to emphasize that the current political system is “perfect for China,” in that it consists of the supremacy of the Communist Party with "multi-party cooperation" and a party government with "multi-party participation." He called such a centralized structure "a party system with Chinese characteristics."
Hu’s statements should be measured carefully. Are they the words of a leader who doesn’t want to raise waves or expectations of quick change during the initial stages of his leadership? Or are they the words of a leader intent on staying the course in spite of the tremendous pressures on the Chinese political system that has seen its experiment in capitalism flourish during the past 10 years? The $64,000 question remains: How long China can manage its increasingly capitalistic economy with a communist political system?
Whatever the answer, the stakes are high not only for China, but for the world. It’s unnerving to think such a populous and powerful country remains at the behest of an oligarchy headed by one man. History shows us the havoc that has been created by countries such as the USSR, North Korea, Cuba and others that adhered to a communist system controlled by one man or a political clique. To see a communist country change leadership so peacefully and without the former strongman dying in office, as did Mao Tse-tung or Leonid Brezhnev in the old U.S.S.R, is rare. Meanwhile China faces some daunting issues.
The country’s red-hot economy has caused inflationary pressures and tremendous demands on the labor pool and infrastructure. China’s currency is still undervalued and causing problems in the developing world, which struggles to compete with cheaply produced Chinese products. The developed world continues to face an onslaught of Chinese imports which threaten domestic producers.
Internally, China’s banking system is in severe need of reform, with an estimated 50 percent of its loans classified as non-performing. Despite an ongoing crackdown, corruption remains a major cancer within the country’s public sector. All the while, the Chinese leadership has sought to control foreign influences by undertaking hopeless projects such as attempting to limit internet sites to only those that the government has approved.
Internationally, China seems to want to “have its cake and eat it too.” In economic matters, it is still acting like a poor developing country, despite its status as an economic superpower. It still wants to control access to its economy, yet seeks to push its products into foreign markets, which in many cases has resulted in accusations of illegal dumping.
As a group of my business graduate students so insightfully noted, we can compare what China has done to the strategies espoused by Sun Tzu, author of the famous book, The Art of War. Two of the strategies that this publication outlines, “create something from nothing” and "make the host and the guest exchange places," are evident in its economic strategies. It has used its cheap labor to create a huge industrial base which didn’t exist 20 years ago. This new industrial base has been absorbed from traditional manufacturing powerhouses such as the U.S. and Mexico.
Whether Hu will be a new leader adhering to the “old guard” of the communist party or a new leader with new designs on the political system remains to be seen. Upon feeling comfortable in his new position, could Hu like Mikhail Gorbachev promote openness in Chinese politics and society? This and other questions surrounding Hu are unlikely to be answered in the short-term in a country where patience is a virtue and preparing oneself for the long-term is of utmost importance.
