Elite Chinese Politics and Political Economy

Interesting piece on private equity in China.

Private-Equity Pioneer In China Plans First Deal



By RICK CAREW
October 30, 2007

BEIJING -- China's nascent private-equity industry is advancing in its ambition to compete with global players as the first of a new breed of homegrown funds seals its first deal.

Bohai Industrial Investment Fund Management Co., which is controlled by Bank of China Ltd., agreed to pay about 1.5 billion yuan ($200 million) for a stake of less than 20% in Tianjin Pipe (Group) Corp., two people familiar with the situation said.

[The Other Olympics]Bohai Fund and Tianjin Pipe plan to disclose the deal at a signing ceremony Friday in the northeastern port city of Tianjin, where both firms are based.

China's government is nurturing a domestic private-equity industry it hopes will be able to compete with global private-equity firms like Carlyle Group and TPG, which have dominated the private-equity scene in China so far.

Backed by Chinese investors and a war chest of local currency, domestic private-equity firms face fewer bureaucratic obstacles in getting purchases approved than foreign competitors do.

The sizable investment in Tianjin Pipe, China's biggest maker of steel pipes for building oil pipelines, is an ambitious start for Bohai Fund. The deal ranks among the biggest in mainland China this year. Bohai Fund has stated a preference for deals of at least 500 million yuan.

Nonfinancial-sector private-equity investment in China so far this year has totaled just $1.6 billion, a tiny fraction of the deal volume in the U.S. The biggest investment signed this year is Blackstone Group LP's agreement to pay $600 million for a 20% stake in state-owned chemical producer China National BlueStar (Group) Corp.

Even for foreign players, private-equity deals in China are usually an all-cash affair rather than the leveraged buyouts common in the U.S. and other developed economies. That is partly because China has no real system in which private-equity buyers can use a company's assets as collateral, and that deters banks from taking the risk of arranging financing.

Last year, Chinese government regulators gave permission for Bohai Fund's creation to start building a local private-equity industry after banning banks and brokerage firms from such direct-investment deals. The management company, which is 53% owned by Bank of China and its investment-banking arm, BOC International Holdings Ltd., closed its first fund at the end of last year, raising 6.1 billion yuan.

Bohai Fund is different from foreign funds because it invests in yuan rather than in U.S. dollars. Unlike foreign funds, Bohai doesn't need approval from the Ministry of Commerce, which has delayed or scuttled several private-equity deals. Bohai Fund's capital comes from big state-owned players like China Life Insurance Co., China Development Bank and the country's national pension fund.

"We know China better," Simon Ting, BOC International's private-equity head, said in an interview earlier this year. "The Bohai Fund, being a yuan fund, can do lots of business that foreign firms can't touch."

A person close to the Tianjin Pipe deal said he believed there were "many other interested parties" looking to pair up with Tianjin Pipe, but he didn't provide names.

A number of Chinese institutions are taking aim at the potential of private equity in China, looking to join Bohai Fund. In September, China's securities regulator cleared the country's two strongest brokerage firms, China International Capital Corp. and Citic Securities Co., to start making private-equity-style direct investments.

Signals from Beijing that it is keen to build a private-equity industry are drawing more of the country's deal makers to try their hands at starting up funds. For example, Fang Fenglei, Goldman Sachs Group Inc.'s partner in China, is taking a smaller role in the China joint venture he helped start with Goldman to pursue a private-equity fund.

Au Ngai, the Beijing-born chief executive of Bohai Fund, left TPG last year to start up the fund. He helped engineer TPG's landmark 2004 deal to take control of Shenzhen Development Bank, which remains the only Chinese bank controlled by foreigners.

For its first investment, Bohai Fund didn't look far from home. Tianjin Pipe, controlled by the local Tianjin government, produces about a million tons of oil pipe a year, with around 50% of Chinese market share. China's rapidly growing thirst for oil and natural gas has the nation's energy companies laying thousands of kilometers of pipelines to tap central Asia's vast reserves and pump crude oil and refined products around the country.

For example, PetroChina Co., the listed unit of China's largest oil-and-gas producer, said last week it plans to invest over $13 billion to link natural-gas reserves in central Asia's Turkmenistan and Kazakhstan to China's coastal cities of Shanghai and Guangzhou.

Tianjin Pipe's two biggest shareholders are local-government investment firms, with 10% held by China's four asset-management companies, which were created to clear bad debt from the country's state banks. The company recorded a net profit for 2006 of 1.38 billion yuan, up 46% from its 2005 net profit of 947 million yuan. At the end of last year, Tianjin Pipe had total assets of 21.14 billion yuan and 15,828 employees.

Alright, settling of account. Who made the right call on the 17th Party Congress. First of all, I have to say that Willy Lam, former reporter for the South China Morning Post, is 100% right on his prediction days before the congress. Below are predictions by us mortals. The bottom-line: all three of us did not believe that Jia Qinglin would stay another term. Lesson: NEVER HAVE TOO MUCH WISHFUL THINKING WHEN IT COMES TO CHINA.

Me
Hu Jintao (65) 95% correct
Wen Jiabao (65) 94% correct
Li Changchun (63) 92% correct
Wu Bangguo (66) 90% correct

Most Likely to Retire
Luo Gan (73) 5% correct
Huang Ju 0% correct
Jia Qinglin (67) 25% incorrect!
Zeng Qinghong (68) 35% correct
Wu Guanzheng (almost 69) 20% correct

Possible Promotions Into the PSB
Zhou Yongkang (almost 65) 70% correct
Li Keqiang （52）65% correct
Xi Jinping (54) 60% correct
Zhang Dejiang (61) 45% sort of
He Guoqiang (64) 45% sort of
Wang Lequan (62) 35% correct
Wang Zhaoguo (66) 35% correct
Yu Zhengsheng (62) 25% correct
Liu Yunshan (60) 15% correct
Liu Qi (65) 15% correct
Hui Liangyu (63) 15% correct
Wang Gang (65) 5% correct
Politburo
Li Yuanchao correct
Zhang Gaoli (PS of Tianjin) correct

Basically, I missed the Jia Qinglin prediction (too much wishful thinking) and put a bit too much weight on Zhang Dejiang as opposed to He Guoqiang.

Dylan
Hu Jintao correct
Wu Bangguo correct
Wen Jiabao correct
Xi Jinping correct
Li Keqiang correct
Li Changchun correct
Zhou Yongkang correct

Here, (s)he predicted a 7 member PSB, so two predictions were incorrect.

Pierre
Hu Jintao correct
Wen Jiabao correct
Wu Bangguo correct
Zeng Qinghong incorrect!
Xi Jinping correct
Li Keqiang correct
Zhou Yongkang correct

Again, this seven-member scenario did not predict Jia Qinglin or Li Changchun staying.

A bit of an ass-kissing article from Newsweek. I think his ability to bring in more investment to places where he served has everything to do with his princeling status. He was savvy enough to foresee that pork barreling would play an increasing role in gaining inner-party support. He is completely clean? please.

A Princeling of the People
China's new heir apparent is a surprise pick, suggesting that 'intraparty
democracy' is no joke.

By Melinda Liu
NEWSWEEK
Updated: 4:20 PM ET Oct 27, 2007

Not long ago, China's Communist party would never have picked Xi Jinping as
its next boss. For one thing, he's a "princeling"-a derogatory term for the
offspring of party leaders, who are resented by many Chinese because they're
thought to benefit from guanxi (personal connections) and to put on airs.
For another thing, Xi is known for his free-market prowess, not necessarily
his ideological purity. Accordingly, when his name first appeared in Party
Congress ballots in 1992 and 1997 as a candidate for the Central Committee,
Xi got low marks. But over time, his carefully cultivated down-home image
began to win over top leaders. They were impressed by Xi's agriculture
background (he spent part of his teens on a farm) and the way he shunned
Western suits and private cars for windbreakers and riding the bus. Xi
seemed competent as well, with a solid record in every region he'd overseen.
So by the time senior leaders held a secret poll shortly before this month's
17th Party Congress, Xi, according to Li Datong, a former editor turned
political commentator, "got the highest vote."

As a result, Xi has now emerged as front runner to become China's most
powerful man. His coming out last week startled many analysts. For some time
they'd thought party boss and President Hu Jintao was grooming Li Keqiang to
take over when he retired in 2012. Li, like Hu, came out of the clubby
Communist Youth League system. But it turns out party elites didn't want Hu
2.0 as heir apparent. When leaders reshuffled the personnel deck last week,
last-minute horse trading reportedly grew intense. Hu managed to get Li on
to the nine-man leadership committee and to push out a key rival, Vice
President Zeng Qinghong. But Hu had to give up something in return-his pick
for the top slot. Thus Xi, 54, joined the party's lineup one rank above Li,
52. Now, if all goes according to script, Xi will become party boss in five
years, while Li will succeed Wen Jiabao as prime minister.

That Xi rose so far so fast-"helicoptering" to the top, as the Chinese put
it-speaks volumes about the changing nature of Chinese party politics. By
many accounts, his promotion was based on two things: the economic success
of two coastal provinces where he served as party secretary; and his
appeal-or at least factional neutrality-within China's Communist Party. Mass
popularity is not a traditional prerequisite for power in China, where
leaders have been handpicked by a few of their seniors since Mao retired.

But the commissars are not deaf to party opinion. The regime lacks political
legitimacy and it knows it. Accordingly, it's started using polls to
carefully monitor the public mood. And it's begun using "intraparty
democracy" to appoint personnel, in order to provide a facsimile of popular
input. Xi's election shows just how important peer approval has become in
filling top party slots.

Still, his economic acumen made him an unusual pick. Given the stress
Beijing puts on the economy, you might think all of China's recent party
bosses would have been masters of arcane economic data. In fact, that's
never been the case. Since 1995, when Zhu Rongji became prime minister,
financial wizards have been relegated to the No. 2 slot, while the top
job-party boss and president-has been reserved for the ideologist-in-chief.
To become party boss, one needed not financial acumen-which won Zhu support
in the West, but always made him suspect in some local eyes-but successful
postings in at least two provinces, an ideologically moderate pedigree and
no skeletons in the closet. Selection for the post generally had "nothing to
do with whether or not someone has an economic background," says commentator
Li.

Xi, who's been thinking outside the box since his youth, shows how that's
changing. When his father-Xi Zhongxun, a senior communist official-was
publicly denounced during the Cultural Revolution, Xi, then 15, was sent to
a rural commune in Shaanxi for manual labor. Once there, however, he so
impressed the farmers that he became village party chief and won a
recommendation to attend college-"which was unheard of at the time," says a
retired official who knew him in the 1980s. After studying engineering at
Tsinghua University, in 1982 Xi became deputy party secretary of Zhengding
County in Hebei province. The place was a backwater. But when the state-TV
broadcaster showed up to film an adaptation of the epic novel "Dream of the
Red Chamber," Xi saw potential. The series was a megahit, and Xi turned the
set into a popular tourist attraction. At a time when central planning still
dominated China's economy, such enterprise was rare. "Aside from the
Forbidden City, there practically wasn't any tourism" then, recalls the
retired official. "Xi really had the pioneering spirit."

Xi's been steeped in the philosophy of economic reform ever since. His
father helped design China's "special economic zones"-the country's first
major free-market experiments. In 1985, Xi became vice mayor of Xiamen, just
across a narrow strait from Taiwan. In 17 years there, Xi greatly increased
trade between the two sides. And he became known for his can-do spirit,
summed up by his slogan, "Mashang jiu ban": "Do it now."

Xi brought this drive to another thriving coastal province, Zhejiang, in
2002. He set up a council for business leaders to promote links throughout
the Yangtze River delta and became a cheerleader for the "Zhejiang model."
The province has racked up more than 13 percent GDP growth annually for two
decades by tapping into the entrepreneurial zeal of local residents, who've
privatized industry and formed unofficial lending networks outside the
state-run banking sector. "Xi was on the frontier of China's economic
reforms," says Prof. Xie Jian of Wenzhou University.

Zhejiang's high level of private enterprise-accounting for nearly three
fourths of its GDP-also caught the eye of U.S. Treasury Secretary Henry
Paulson. On a September 2006 visit to China, Paulson's first stop was dinner
with Xi, whom he called "the kind of guy who gets things over the goal
line."

Such foreign praise might once have been a black mark. No longer. In Xi, the
party has chosen its first modern politician for its top job. Xi is popular
with colleagues and ordinary Chinese thanks in part to his superstar wife,
the "patriotic folk" soprano Peng Liyuan-described by one Western newspaper
as "Vera Lynn, Maria Callas and Posh Spice rolled into one." Still, he
sometimes strikes Westerners as a bit of a bumpkin. ("Clodhopper" is the
phrase used in his Wikipedia entry-which is blocked in China.) During the
recent Party Congress, the pudgy Xi was seen leaning back in his chair,
showing off white acrylic socks and unfashionably short trouser hems.

This down-to-earth image has helped Xi to overcome his status as a
privileged princeling in a party that still favors humble sobriety. His
hardscrabble upbringing made him acceptable to Hu, whose own early career
was spent in the poverty-stricken boonies. And his pedigree and record in
the dynamic coastal provinces made him appealing to the so-called
Shanghai-or GDP-faction, led by Hu's predecessor, the still-influential
Jiang Zemin. Xi also helped mop up Fujian and Shanghai after massive
high-level corruption scandals in both places, and reportedly called on
officials to declare their assets when he took over in Shanghai. As a
result, "Xi's considered to be very clean," says a Shanghai-based Western
executive who requested anonymity for fear of negative business
repercussions. "The one thing people don't want is more corruption." What
they've got instead is a new type of communist leader, a modern politician
with distinctly Chinese characteristics.

More promotions:
Head of Central Organization Department: Li Yuanchao
Shanghai Party Secretary: Yu Zhengsheng
Party Secretary of Hubei: Luo Qingchuan

Joe Kahn's piece from the week before the PC called the Li Yuanchao promotion into the Politburo as well as Yu's rotation to Shanghai. I speculated at the time that Li would be head of COD, but that He Guoqiang will "breath down his neck." I still think this will be the case.

Also, it's interesting that both Li's replacement in Jiangsu and Yu's replacement in Hubei are local cadres promoted up the ranks of the provincial government. I wonder if this is some kind of pattern. If so, what's the logic behind it??

Settling of account coming up soon!

The new Politburo list is out: Xi Jinping, Wang Gang, Wang Lequan, Wang Zhaoguo, Wang Qishan, Hui Liangyu, Liu Qi, Liu Yunshan, Liu Yandong, Li Changchun, Li Keqiang, Li Yuanchao, Wu Bangguo, Wang Yang, Zhang Gaoli, Zhang Dejiang, Zhou Yongkang, Hu Jintao, Yu Zhengsheng, He Guoqiang, Jia Qinglin, Xu Caihou, Guo Boxiong, Wen Jiabao, Bo Xilai

Secretariat: Xi Jinping, Liu Yunshan, Li Yuanchao, He Yong, Ling Jihua, Wang Hunning
Central Military Commission
Chairman: Hu Jintao
Vice Chairmen: Guo Boxiong, Xu Caihou
Members: Liang Guanglie, Chen Bingde, Li Jiduan, Liao Xilong, Chang Wanchuan, Jing Zhiyuan, Wu Shengli, Xu Qiliang

Whew! Sigh.....


一、中央政治局委员

（按姓氏笔画为序）

习近平　王刚　王乐泉　王兆国　王岐山　回良玉（回族）　刘淇　刘云山　刘延东（女）　李长春　李克强　李源潮　吴邦国　汪洋　张高丽　张德江　周永康　胡锦涛　俞正声　贺国强　贾庆林　徐才厚　郭伯雄　温家宝　薄熙来


四、中央书记处书记

习近平　刘云山　李源潮　何勇　令计划　王沪宁

五、中央军事委员会主席、副主席、委员

主席 胡锦涛

副主席 郭伯雄　徐才厚

委员 梁光烈　陈炳德　李继耐　廖锡龙　常万全　靖志远　吴胜利　许其亮

The PSC List
Hu Jintao
Wu Bangguo
Wen Jiabao
Jia Qinglin
Li Changchun
Xi Jinping
Li Keqiang
He Guoqiang
Zhou Yongkang

The ordering suggests that Wu is still head of NPC while Jia is still the head of CPPCC. Veteran China watcher Willy Lam, who has been in Beijing covering this, is 100% correct.

十七届一中全会选举胡锦涛为中央委员会总书记 选举胡锦涛、吴邦国、温家宝、贾庆林、李长春、习近平、李克强、贺国强、周永康为中央政治局常委
2007年10月22日 11:32 　 来源：新华社
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新华社十七大快讯：党的十七届一中全会22日上午选举胡锦涛为中央委员会总书记，选举胡锦涛、吴邦国、温家宝、贾庆林、李长春、习近平、李克强、贺国强、周永康为中央政治局常委。

Well, finally, the day has come!!! The list for CC, alt CC, and CDIC members have been released. We know a few crucial things from this already.

1. Zeng Qinghong has definitely retired, as have Luo Gan and Wu Guanzheng
2. Wu Bangguo, Jia Qinglin (!!), and Li Changchun are all staying, as are Hu Jintao and Wen Jiabao. Wang Gang is staying also, though his portfolio will be unclear.
3. It is almost certain that He Guoqiang will serve as the new secretary of CDIC, since he is the only person of note on the CDIC list besides He Yong, who is a career anti-corruption officer (meaning that he has no chance).
4. Guo Shuqing DID NOT make it on to the CC list, but Shang Fulin did. This means that Shang will almost certainly take over the PBOC, instead of Guo. Zhou Xiaochuan and Dai Xianglong are both still in the CC, which means they will get other positions.
5. Poor Lou Jiwei, who was in the CDIC, was moved into the CC pool. Apparently, he did not do so well in the election and only got third to last place in number of votes received in the alternate CC. That's what you get for being so tight-fisted.

Tomorrow, we learn who the new PSC members are. I think Willy Lam's Xi Jinping, Li Keqiang, He Guoqiang call should be right on the money.

　中国共产党第十七届中央委员会委员名单

　　（２０４名）

　　（按姓氏笔画为序）

　　于幼军、卫留成、习近平、马馼（女）、马凯、马晓天、王刚、王君、王珉、王晨、王毅、王万宾、王太华、王正伟（回族）、王东明、王乐泉、王兆国、王旭东、王岐山、王沪宁、王国生（军队）、王金山、王胜俊、王家瑞、王鸿举、王喜斌、乌云其木格（女，蒙古族）、尹蔚民、邓楠（女）、邓昌友、艾斯海提·克里木拜（哈萨克族）、石宗源（回族）、卢展工、田成平、田修思、白立忱（回族）、白志健、白恩培、白景富、令计划、司马义·铁力瓦尔地（维吾尔族）、吉炳轩、列确（藏族）、吕祖善、回良玉（回族）、朱之鑫、朱维群、华建敏、向巴平措（藏族）、刘京、刘淇、刘鹏、刘源、刘云山、刘冬冬、刘永治、刘成军、刘延东（女）、刘志军、刘奇葆、刘明康、刘晓江、刘家义、许其亮、孙大发、孙忠同、孙春兰（女）、孙政才、孙晓群、苏荣、杜青林、李斌（女）、李长才、李长江、李长春、李从军、李世明、李成玉（回族）、李兆焯（壮族）、李克强、李学举、李学勇、李建国、李荣融、李海峰（女）、李继耐、李盛霖、李景田（满族）、李源潮、李毅中、杨晶（蒙古族）、杨元元、杨传堂、杨衍银（女）、杨洁篪、杨崇汇、肖捷、吴双战、吴邦国、吴胜利、吴爱英（女）、吴新雄、何勇、汪洋、沈跃跃（女）、宋秀岩（女）、迟万春、张平、张阳、张又侠、张云川、张文岳、张玉台、张左己、张庆伟、张庆黎、张宝顺、张春贤、张高丽、张海阳、张德江、陆兵（壮族）、陆浩、阿不来提·阿不都热西提（维吾尔族）、陈雷、陈至立（女）、陈国令、陈建国、陈奎元、陈炳德、范长龙、林树森、尚福林、罗保铭、罗清泉、周济、周强、周小川、周生贤、周永康、周伯华、房峰辉、孟学农、孟建柱、赵乐际、赵克石、赵洪祝、胡春华、胡锦涛、柳斌杰、俞正声、姜大明、姜伟新、姜异康、贺国强、秦光荣、袁纯清、耿惠昌、聂卫国、贾庆林、贾治邦、钱运录、徐才厚、徐光春、徐守盛、徐绍史、高强、郭伯雄、郭金龙、郭庚茂、黄小晶、黄华华、黄晴宜（女）、黄献中、曹建明、盛光祖、常万全、符廷贵、康日新、章沁生、梁光烈、梁保华、彭小枫、彭清华、葛振峰、董贵山、蒋巨峰、韩正、韩长赋、喻林祥、储波、童世平、温家宝、谢旭人、强卫、路甬祥、靖志远、蔡武、廖晖、廖锡龙、薄熙来、戴秉国（土家族）、戴相龙、魏礼群（完）

　　中国共产党第十七届中央委员会候补委员名单

　　（１６７名）

　　（按得票多少为序排列）

　　王新宪、焉荣竹、王学军、王建平、刘石泉、杜宇新、符跃兰（女，黎族）、马飚（壮族）、王光亚、旦科（藏族）、朱小丹、全哲洙（朝鲜族）、李玉妹（女）、张连珍（女）、林左鸣、罗正富（彝族）、罗志军、郑立中、赵宪庚、袁荣祥、黄建国、申维辰、任亚平、刘慧（女，回族）、刘振起、孙建国、李希、李买富、杨刚、杨松、余远辉（瑶族）、余欣荣、张成寅、张国清、张裔炯、陈存根、陈敏尔、努尔·白克力（维吾尔族）、林军、骆惠宁、黄康生（布依族）、魏凤和、于革胜、王伟光、艾虎生、朱发忠、刘学普（土家族）、刘振来（回族）、孙金龙、苏士亮、李长印、岳福洪、金振吉（朝鲜族）、秦银河、徐一天、薛延忠、王宪魁、巴音朝鲁（蒙古族）、叶冬松、史莲喜（女）、刘晓凯（苗族）、吴定富、张耕、张基尧、陈宝生、苗圩、林明月（女）、赵爱明（女）、胡泽君（女）、胡振民、咸辉（女，回族）、袁家军、息中朝、徐乐江、徐粉林、黄兴国、谌贻琴（女，白族）、王玉普、王国生（江苏）、尤权、李金城、肖钢、肖亚庆、何立峰、张仕波、张晓刚、金壮龙、胡晓炼（女）、白春礼（满族）、多吉（藏族）、刘伟、刘伟平、刘粤军、江泽林、李克（壮族）、李安东、冷溶、陈润儿、鹿心社、谢和平、王儒林、石大华、叶小文、吉林、苏树林、李康（女，壮族）、李崇禧、杨利伟、杨焕宁、张轩（女）、陈政高、武吉海（苗族）、项俊波、舒晓琴（女）、詹文龙、潘云鹤、刀林荫（女，傣族）、王荣、汤涛、李纪恒、宋爱荣（女）、张杰、陈左宁（女）、竺延风、骆琳、铁凝（女）、褚益民、蔡英挺、邢元敏、李鸿忠、陈川平、梅克保、曹清、焦焕成、雷春美（女，畲族）、翟虎渠、丁一平、闵维方、郭树清、王侠（女）、陈元、陈德铭、姜建清、郭声琨、董万才、蔡振华、王明方、沈素琍（女）、张岱梨（女）、陈全国、乌兰（女，蒙古族）、付志方、夏宝龙、王安顺、吴显国、张瑞敏、赵勇、栗战书、车俊、蒋洁敏、王晓初、刘玉浦、王三运、殷一璀（女）、楼继伟、刘振亚、贾廷安

中国共产党中央纪律检查委员会委员名单

　　（１２７名）

　　（按姓氏笔画为序）

　　干以胜、于起龙、马馼（女）、马志鹏、王伟、王勇、王为璐、王正福（苗族）、王立英（女）、王华元、王华庆、王寿祥、王志刚、王忠民、王和民、王俊莲（女）、王洪章、王冠中、王莉莉（女）、支树平、仁青加（藏族）、仇保兴、勾清明、巴特尔（蒙古族）、邓天生、叶青纯、田力普、令狐安、冯寿淼、冯敏刚、年福纯、朱明国（黎族）、朱保成、刘玉亭、刘亚洲、刘建华（女）、刘春良、刘晓榕、安立敏（女）、许云昭、许达哲、孙忠同、孙宝树、孙思敬、杜鹃（女）、杜学芳（女）、杜恒岩、李刚、李熙、李小雪、李玉赋、李立国、李汉柏（白族）、李延芝（女）、李金章、李法泉、李适时、李洪峰、李清印、杨士秋、杨传升、杨利民、杨建亭、吴玉良、吴毓萍（女）、邱学强、何平、何勇、沈德咏、宋育英（女）、张军、张毅、张汝成、张纪南、张建平、张研农、张铁健、张惠新、陈希、陈文清、陈训秋、陈际瓦（女）、陈新权、陈冀平、邵明立、邵琪伟、范印华、欧泽高（藏族）、尚勇、金书波、金道铭（满族）、周英（女）、屈万祥、项宗西、赵铁锤、胡玉敏（女）、段录定、祝春林、姚增科、贺邦靖（女，白族）、贺国强、袁贵仁、徐斌、徐天亮、徐敬业、奚国华、高武生、郭永平、郭炎炎、黄作兴、黄树贤、黄殿中、曹康泰、符强、董君舒、蒋文兰（女）、傅成玉、傅雯娟（女）、谢伏瞻、解学智、解振华、蔡继华、臧胜业、臧献甫、雒树刚、翟小衡、魏家福（完）

Yet another top-notch piece by Willy Lam for the WSJ. If things pan out as expected, Hu will only have three votes (out of 9) in the PSB that he can count on.....

Hu's in Charge?
By Willy Lam
1181 words
19 October 2007
The Wall Street Journal Asia
13
English
(c) 2007 Dow Jones & Company, Inc. To see the edition in which this article appeared, click here http://awsj.com.hk/factiva-ns

Avid China watchers have been closely following the ongoing 17th Party Congress for clues about the leadership succession in 2012. But the outcome of that process will have important implications for the rest of the world even before President Hu Jintao hands the reins to his successor.

Mr. Hu's apparent failure to command a solid majority in the new Politburo Standing Committee -- China's nine-man highest governing council -- to be endorsed by the Congress is a signal that he's wielding less influence than his predecessor Jiang Zemin at the height of the latter's power. This will render the cautious current leader even less likely to take bold reform measures, especially political liberalization. He may also take tougher stands on Taiwan and Hong Kong to marshal the support of the generals and to solidify his grip on Party, state and military.

Mr. Hu's weakened position is most evident in the fact that he was able to promote only one of his proteges to the PSC -- Li Keqiang, party secretary of Liaoning province. And due to resistance from incumbent PSC members and party elders such as Mr. Jiang, Mr. Hu was unable to designate Mr. Li as his successor. That job will go instead to Mr. Li's counterpart in Shanghai, Xi Jinping. Messrs. Li and Xi, aged 52 and 54 respectively, are the only members of the so-called Fifth Generation (officials now in their late 40s to late 50s) to join the supreme decision-making body this time around.

It's a fairly safe bet that once the new PSC officially convenes on Monday, only Premier Wen Jiabao and Mr. Li will consistently vote with Mr. Hu. The current president's main opposition will come from the remnants of the Shanghai Clique now led by outgoing Vice President Zeng Qinghong. Two Zeng cronies, Zhou Yongkang and He Guoqiang, are joining the PSC to take charge of the crucial portfolios of law and order, and corruption-fighting. Heir-apparent Mr. Xi, as well as three other incumbent PSC members who are staying for one more term -- Wu Bangguo, Jia Qinglin and Li Changchun -- will likely vacillate between the two sides.

In practice this means that while still being indisputably "first among equals" in the new PSC, Mr. Hu lacks the clout to dictate policy on his own volition. Thus he will have to cleave to noncontroversial formulas, particularly regarding the risky area of political reform.

This is evident in his much-awaited political report to the 17th Party Congress on Monday, which said practically nothing about power-sharing, elections or media freedom -- despite Mr. Hu's pledge in the report that Chinese have the right to "implement democratic elections [and] democratic decision-making according to law." However, the president emphasized that the purpose of political reform was to "provide the political and legal guarantees for the long reign and perennial stability of the party and state." He also called for tougher measures to combat dissent and other "activities relating to separatism, infiltration and sabotage."

Quite a few delegates were also surprised that the president four times saluted the ultraconservative "Four Cardinal Principles," which were cited by Deng Xiaoping to justify the People's Liberation Army's crackdown on the 1989 student movement. Those principles -- Marxist-Leninist-Mao Zedong thought, strict party leadership, the socialist road and the "proletariat dictatorship" -- are at odds with the current trajectory of China's economic development. Since coming to power in 2002, Mr. Hu had seldom resuscitated such concepts from the ancien regime. The fact that he's doing so now may be best read as an attempt to persuade the party's conservative wing of his orthodox bona fides.

In a similar vein, Mr. Hu had precious little to offer even concerning the circumscribed area of "democracy within the party." He vowed to "gradually extend the parameters for the direct election of members of the leadership corps of grassroots Party organizations." Yet there was no possibility for competitive elections to pick senior cadres such as Politburo members or the general secretary. This places China's Party behind even the Vietnamese Communist Party, which last year undertook much bolder experiments in "intraparty democracy."

Nor will Mr. Hu's efforts -- both rhetorical and real -- to boost his credibility end at China's borders. Partly to consolidate his "tough guy" image and partly to win the loyalty of the top military brass, Mr. Hu is expected to further rattle the saber in relations across the Taiwan Strait.

Such a stance would play well within the upper echelons of Party and PLA leadership. Senior cadres have for the past two months characterized Taipei's decision to hold a referendum on joining United Nations as "playing with fire." To be sure, most of Mr. Hu's discussion of Taiwan in his address to the Congress focused on cementing flesh-and-blood ties with Taiwanese. He even held out the possibility of signing a formal "peace accord" with Taiwan. At the same time, however, he warned that China would "never allow" any separatist attempts to succeed. Mr. Hu noted ominously that the PLA would "do a good job in preparations for military struggle."

The president's line on Hong Kong was likewise harsh. He made no mention of efforts by residents of the Special Administrative Region to seek democratic elections. Instead, Mr. Hu warned that Beijing would "resolutely counter efforts by foreign powers to interfere in Hong Kong affairs." It is understood that Beijing cadres think that "American and British influence" was behind the surprise decision by Anson Chan, a popular former civil servant with pro-liberal tendencies, to run in a forthcoming by-election for the Legislative Council, Hong Kong's parliament.

Despite his apparent losses in the future Party leadership stakes, Mr. Hu is still far from a lame duck. In his keynote speech to the Congress, he called for "thought liberation" four times, and the word "innovation" appeared about a dozen times in the 30,000-word report, referring both to reform in general and to high-tech inventions. So it seems his orthodox retrenchment isn't total. And three of his putative theoretical breakthroughs -- the concepts of "scientific development," as well as building a "harmonious society" and a "harmonious world" -- are set to be enshrined in the Party charter at the end of this Congress.

In the absence of political reform, however, the Party-cum-military apparatus could resort to what Party publicists euphemistically call "nonpeaceful means" to enforce harmony both at home and in China's neighborhood -- and Mr. Hu's shifting power within the Party might constrain his ability to oppose these elements. The likelihood of the fast-rising quasisuperpower flexing its muscles has been enhanced by its top leader's apparent need to buttress his authority.

---

Mr. Lam is a Hong Kong-based China scholar and author of "Chinese Politics in the Hu Jintao Era" (M.E. Sharpe, 2006).

License this article from Dow Jones Reprint Service

Yet another (lack of) revelation. At the 14th PC, 15th PC and the 16th PC, the rising PSC members were also members of the Standing Committee of the Congress Presidium. Thus, I remember it was pretty easy to figure out who was going into the PSC just by looking at the Presidium SC list on the first day of the congress. However, this time, the list only includes current PSC and Politburo members, as well as a handful of retirees. Unless we believe that all the PSC members will come from current Politburo members, this list is not helpful in giving us clues about the new PSC. Maybe the old rule still applies! Then all this talk about Li Keqiang and Xi Jinping was just non-sense?!

中国共产党第十七次全国代表大会主席团常务委员会成员名单

（共36人）

胡锦涛 江泽民 吴邦国 温家宝 贾庆林 曾庆红 吴官正 李长春 罗干 王乐泉 王兆国 回良玉 刘淇 刘云山 吴仪（女） 张立昌 张德江 周永康 俞正声 贺国强 郭伯雄 曹刚川 曾培炎 王刚 李鹏 万里 乔石 朱镕基 李瑞环 宋平 刘华清 尉健行 李岚清 徐才厚 何勇 王忠禹

The game is on: Hu gave his opening speech. Nothing too surprising, but THERE ARE SOME (HINTS OF) PROCEDURAL CHANGES!! First of all, explicit encouragement of standing party congress. Also, further movement to have decisions made by party committees and standing committees. Finally, some vague wording about open nomination for party secretaries....I bet the party secretary of a certain place in Sichuan is mighty joyous now.

Live transcript of the speech from People's Daily


[胡锦涛]:（三）积极推进党内民主建设，着力增强党的团结统一。党内民主是增强党的创新活力、巩固党的团结统一的重要保证。要以扩大党内民主带动人民民主，以增进党内和谐促进社会和谐。尊重党员主体地位，保障党员民主权利，推进党务公开，营造党内民主讨论环境。完善党的代表大会制度，实行党的代表大会代表任期制，选择一些县（市、区）试行党代表大会常任制。 [11:17]

[胡锦涛]:完善党的地方各级全委会、常委会工作机制，发挥全委会对重大问题的决策作用。严格实行民主集中制，健全集体领导与个人分工负责相结合的制度，反对和防止个人或少数人专断。推行地方党委讨论决定重大问题和任用重要干部票决制。建立健全中央政治局向中央委员会全体会议、地方各级党委常委会向委员会全体会议定期报告工作并接受监督的制度。 [11:18]

[胡锦涛]:改革党内选举制度，改进候选人提名制度和选举方式。推广基层党组织领导班子成员由党员和群众公开推荐与上级党组织推荐相结合的办法，逐步扩大基层党组织领导班子直接选举范围，探索扩大党内基层民主多种实现形式。全党同志要坚决维护党的集中统一，自觉遵守党的政治纪律，始终同党中央保持一致，坚决维护中央权威，切实保证政令畅通。 [11:18]

Rumors are flying thick and fast, but I think the end-game is in sight. The latest from Joe Kahn of NYT has the following:
Li: executive VP
Xi: vice president and heir apparent
Zhou and He Guoqiang get promoted into PSB
Li Yuanchao and Liu Yandong: unspecified jobs with promotions into Politburo
Wang Qishan: VP in charge of planning and transport (Zeng Peiyan's portfolio)
Zhang Dejiang: VP in charge of trade and health (Wu Yi's portfolio)
Bo Xilai: PS of Chongqing
Wang Yang: PS of Guangdong
Yu Zhengsheng: PS of Shanghai

Executive VP position for Li Keqiang is a bit weird; well, frankly can't be worse than Huang Ju. Wang Qishan gets to be VP--the only good outcome from all of this!! I think the NDRC will not be too happy with Wang. Zhang Dejiang, who covered up the Guangdong SARS, will serve as VP in charge of health! Good luck China! I'd be interested in what portfolios Li Yuanchao and Liu Yandong get. I have a sneaking suspicion that Wang Zhaoguo will be forced into semi-retirement at the CPPCC, while Liu Yandong takes his former portfolio in United Front work. Li Yuanchao....in charge of organization work? but He Guoqiang will be breathing down his neck. Sadly, I don't think this all will end well for Zhou Xiaochuan....that's Chinese politics for you.


New China Hierarchy May Limit President’s Power

By JOSEPH KAHN
The New York Times
Published: October 13, 2007

BEIJING, Oct. 12 — After intensive bargaining, China’s Communist Party has approved a new leadership lineup that denies President Hu Jintao the decisive consolidation of power that his supporters hoped would allow him to govern more assertively in his final five-year term as China’s top leader.

The party’s Central Committee agreed to elevate four senior officials to the ruling Politburo Standing Committee, but only one of them, Li Keqiang, the party secretary of Liaoning Province, clearly owed his rise in the hierarchy to Mr. Hu’s patronage, people told about the results of a Central Committee meeting said Friday.

Xi Jinping, the party boss of Shanghai, is also expected to join the Standing Committee. He would outrank Mr. Li and become the most likely successor to Mr. Hu as party chief, head of state and top military official in 2012, the people said.

Mr. Xi, whose father was a senior party official under Mao, is viewed as a compromise choice, acceptable to Mr. Hu but also to his now-retired predecessor as top leader, Jiang Zemin, who party officials say exercised broad sway over the reshuffling. Mr. Xi moved to Shanghai from Zhejiang Province just six months ago to replace the now disgraced Chen Liangyu, who was ousted in China’s biggest corruption scandal of the past decade.

Two other new members of the Standing Committee, He Guoqiang, a party organization official, and Zhou Yongkang, China’s top law enforcement officer, are widely viewed as close allies of China’s vice president, Zeng Qinghong, who will step down from the Standing Committee.

Personnel shifts in the ruling party are decided in secret, and the final leadership lineup will not be made public until the conclusion of a party congress, which convenes Monday. In the past, top leaders have continued to bargain and make changes in the hierarchy even after the Central Committee approved a slate of candidates.

The Central Committee issued a public statement on Friday that offered no information about personnel decisions but praised Mr. Hu lavishly.

Under Mr. Hu, the party “vanquished all kinds of hardship and dangers and advanced the work of the party and government to achieve major new successes,” the statement said. Among these successes, it continued, were raising living standards, improving defense forces and managing relations with Taiwan, the self-governing island that China claims as its territory.

The committee also said the party would amend its Constitution. That suggests that Mr. Hu’s concept of “scientific development,” a catch phrase for his policies to promote more balanced, equitable and sustainable development, will be enshrined in the Constitution alongside the political slogans of Mao, Deng Xiaoping and Mr. Jiang.

Even so, the coming party congress seems likely to underscore the collective nature of decision making in the ruling party, as well as Mr. Hu’s clout.

Mr. Hu will still have to work to build a consensus among the nine members of the Standing Committee, a majority of whom owe their rise more to the support of Mr. Jiang or Mr. Zeng than to Mr. Hu. Party members said Mr. Hu had hoped to reduce membership in the standing committee to seven from nine, and to elevate more members of his political base, the Communist Youth League, to the top body.

“If the current name list becomes the final one, it is a poor outcome for Hu,” said one party member who was told about the Central Committee’s deliberations. “It is a victory for collective leadership.”

Mr. Hu has earned plaudits for paying increased attention to the country’s growing wealth gap and the environmental costs of its long streak of rapid economic growth. He has strengthened relations with the United States, focused heavy diplomatic attention on Africa, and helped steer North Korea toward a pact to end its nuclear weapons program.

Yet he has also kept a tight rein on news media and done little to improve China’s domestic human rights record or legal system. He has taken few significant steps to overhaul the one-party system or allow more political pluralism.

Some supporters of Mr. Hu, who is 64 years old, have speculated that he might push political change in his second term, particularly if he eclipses the influence of Mr. Jiang, 80, and assumes more decision-making power.

Mr. Hu does appear to have succeeded in promoting many Communist Youth League officials to top provincial posts. The Central Committee also elevated two officials close to him, Li Yuanchao, the party boss of Jiangsu Province, and Liu Yuandong, who supervises the party’s relations with other political entities, to important new positions that carry regular Politburo rank, people told about the committee’s deliberations said.

But after years of careful cultivation, Mr. Hu did not succeed in positioning Li Keqiang, 52, the Liaoning party boss, as his successor, party officials said. Instead, Mr. Li will probably assume the position of prime minister, now held by Wen Jiabao, when Mr. Hu and Mr. Wen retire in five years.

Mr. Xi, 54, is expected to succeed Mr. Zeng as vice president and as the day-to-day manager of Communist Party affairs at this congress as the first step toward succeeding Mr. Hu as No. 1 leader when the next congress convenes in 2012. Just as Mr. Hu owed his designation in 1992 as the party’s future leader to Mr. Deng rather than to Mr. Jiang, who was party chief at the time, Mr. Xi’s rise came mainly at the behest of Mr. Jiang and Mr. Zeng, the people told about the deliberations said.

Mr. Xi is not likely to be identified publicly as Mr. Hu’s successor. The semiofficial China News Service said Thursday in a report that Mr. Hu would not follow Mao’s or Mr. Deng’s lead in picking a successor, but would rely on “collective discussion and collective decisions” within the party.

Some political observers have suggested that by having two younger members of the Standing Committee, the choice of a future leader could become competitive, permitting the 190 members and the 152 alternate members of the Central Committee to choose among candidates rather than ratifying decisions made at the very top.

But party officials said Friday that the party leadership had decided the matter. The discussion about a race for the top jobs was an attempt to make the party’s internal deliberations seem more open than they really are, they said. “Xi will be the general secretary and Li will be prime minister,” one person said. “The party is too concerned about stability to leave the issue undecided.”

The reshuffling will affect a range of other officials who have become well known in the West.

Wang Qishan, the technocratic mayor of Beijing, is now slated to succeed Zeng Peiyan as China’s top economic planner, people told about the Central Committee decisions said. Zhang Dejiang, the party secretary of Guangdong Province, will assume Wu Yi’s portfolio as the country’s trade policy maker and troubleshooter who coordinates responses to medical and safety problems.

Among key provincial posts, Commerce Minister Bo Xilai is expected to become party boss of the municipality of Chongqing in the southwest. Wang Yang, who currently holds the Chongqing job, is expected to move to Guangdong to replace Mr. Zhang. Yu Zhengsheng will assume Mr. Xi’s post as the top party official in Shanghai, the people said.

Alright, the end-game is indeed near. Ben Lim of Reuters' latest words from Beijing:
Zeng retires.
Xi and Li get promoted
Zhou Yongkang and He Guoqiang get promoted
Wu Bangguo, Li Changchun, and Jia Qinglin stay. Jia Qinglin!!! Come'on Hu, you have enough dirt on him, don't you?

The end(game) is near?


China to retire powerful VP, usher in new generation

By Benjamin Kang Lim

BEIJING, Oct 13 (Reuters) - The man waiting in the wings to
take over should Chinese President Hu Jintao falter is set to
retire at a Communist Party meeting next week, while two younger
regional leaders will rise as potential next-generation leaders.

The imminent retirement of Vice President Zeng Qinghong
presents a boon to Hu, who is seeking to consolidate his power at
the five-yearly Congress, the Party's 17th since its founding in
1921 and the most important political event in China this year.

Zeng is expected to give up his seat in the top echelon of
power, the Party's Politburo Standing Committee, at the week-long
Congress opening on Monday, three independent sources with ties
to the leadership said, requesting anonymity.

A stronger grip on power could allow Hu to speed up his drive
to balance breakneck but uneven economic growth, improve the
lives of poor farmers, build a social safety net, halt rampant
environmental degradation and promote "fair and just" policies.

Hu has trumpeted his policy of "scientific development" to
try to correct China's path from that set by the previous
administration of Jiang Zemin, which featured rapid growth at the
expense of the environment.

The sources also said that two provincial leaders in their
early 50s -- Xi Jinping and Li Keqiang -- are near certain to
emerge as successors-in-waiting to Hu and Premier Wen Jiabao.

The final line-up will be made public at a one-day
post-Congress meeting of the new elite Central Committee.

Zeng, who is ranked fifth in the Party hierarchy but punches
above his political weight, had offered to step down because of
age limits, the sources said. He is 68.

He would also step down as president of the Central Party
School, which trains up-and-coming cadres, and from the
Secretariat, which handles day-to-day Party affairs, the sources
said. He would relinquish the state vice presidency at the annual
session of parliament next March.

But Zeng, a top ally of Hu's immediate predecessor Jiang,
would continue to wield some influence through two of his men who
are tipped to join the Standing Committee, they said.

The two are the country's top cop, Zhou Yongkang, and He
Guoqiang, head of the Party's organisation department which is in
charge of personnel changes, according to a new leadership
line-up approved by the Party at a pre-Congress meeting.

RIVALRY EXAGGERATED

"Speculation by the outside world about the rivalry between
Hu and the 'Shanghai Gang' is exaggerated," one source told
Reuters, referring to Jiang's faction, of which Zeng is
standard-bearer.

At a recent meeting with a source who spoke to Reuters, Zeng
was quoted as saying the party had "treated me well".

Xi, 54, will soon step down as Party boss of Shanghai after
just six months in the job and take over Zeng's portfolio
overseeing Party affairs, said the sources, who were briefed
about the new line-up.

But Xi is not necessarily Hu's heir.

Li, 52, who will soon resign as Party boss of the
northeastern province of Liaoning, is still Hu's preferred
candidate, the sources said.

Both Xi and Li would be promoted to the nine-seat Standing
Committee during the Congress, giving them "an opportunity to
compete fairly", a second source said.

Hu is the first among equals in the Standing Committee, but
does not have the revolutionary credentials of Mao Zedong and
Deng Xiaoping and cannot unilaterally decide his successor.

Hu needs to accommodate the Jiang camp and other interest
groups in the Party, including the military, elders and
"princelings" -- the children of the country's political elite.

Xi is a princeling who is acceptable to both Hu and Jiang.

During the Congress, Hu will be given a second five-year
mandate as general secretary of the Party and chairman of the
Central Military Commission.

Hu and Premier Wen will retain their Standing Committee
seats, according to the line-up.

Barring last-minute changes, Jiang allies in the Standing
Committee -- parliament head Wu Bangguo, Jia Qinglin, head of an
advisory body to parliament, and ideology tsar Li Changchun --
will also hold on to their Standing Committee seats.
((Editing by Chris Buckley and Brian Rhoads; Reuters Messaging:
benjamin.lim.reuters.com@reuters.net; +8610 6627-1212))

Latest from the rumor mill in Beijing. If true, it would be quite interesting.

Executive VP: Li Keqiang (replacing Huang Ju)
Secretary General of State Council: Ma Kai (replacing Hua Jianmin)
VPs: Wang Yang and Wang Qishan (replacing Wu Yi and Zeng Peiyan)
Beijing Mayor: Wang Anshun
Vice Chairman of CPPCC: Zhou Xiaochuan!!!!
Party Secretary of Chongqing: Bo Xilai!!!

Poor Zhou Xiaochuan; I hope it's not true! Also, if the new appointment is true, I bet Bo is plenty upset also, unless his job also comes with a Politburo seat, which would put him slightly above Dad, sort of. Although dad only ever made it to an alternate Politburo seat, Bo senior was later the vice chairman of the Central Advisory Committee, a shadow central committee. This put him on equal footing with Deng, Chen Yun, and Li Xiannian.

Oh man, things are about to get pretty interesting. According to the semi-official China News Service, Hu Jintao WILL NOT unilaterally designate a successor. Instead, the successor will be derived in a "scientific manner." Will there be procedural changes in the party constitution in this regard? I think Hu is doing this out of political necessity. Essentially, since Xi Jinping is now the favorite to win the successor seat, Hu would rather enlarge the selectorate (i.e. "scientific") and the pool of candidates. This way, at least Li Keqiang will have a fighting chance. Also, as I have repeated many times on this blog, creating uncertainty at the 17th Party Congress will allow Hu to make strong claims to stay for another five years at the 18th Party Congress due to fear of "instability."

ZTS: Hu Jintao 'Not' To Designate Successor at 17th Party Congress
CPP20071010063002 Hong Kong Zhongguo Tongxun She in Chinese 1130 GMT 10 Oct 07
["Special" report by ZTS contributing correspondent Zhuang Gong: "Hu Jintao Will Not Designate His Successor"]
Beijing, 10 Oct (ZTS) -- High-level personnel arrangements during the upcoming 17th Party Congress have drawn most attention in the outside world, particularly the selection of candidates for Hu Jintao's successor. This has evoked all kinds of endless speculation in media outside the country. However, an informed source in Beijing confirmed to ZTS today that Hu Jintao will not designate a successor during the 17th Party Congress, nor will he do so in the future.
The CPC practice of designating successors started with Mao Zedong and continued until Deng Xiaoping. This was a product of the special era. Only special leaders like Mao and Deng, who enjoyed absolute personal authority, could do that. Today, internal and external environments related to Zhongnanhai have undergone great changes. Particularly since Hu Jintao took up the post of CPC Central Committee general secretary, they have proposed administering the country according to law as well as drawing up policies in a scientific and democratic manner. Political democracy has become an irreversible trend in China. Designating successors is doomed to end in history.
Recently the CPC Central Committee Political Bureau convened a meeting to discuss the central authorities' political work since the Sixth Plenary Session of the 16th CPC Central Committee. It reiterated the need to implement democratic centralism and adhere to the principle of holding collective discussions and making collective decisions on major issues. Important information disclosed was that the CPC high-level leadership is determined to push forward democratic politics, and "major issues requiring collective discussions and collective decisions" has become a system. The informed source said that the ongoing Seventh Plenary Session of the 16th CPC Central Committee has been extended to four days for the Political Bureau to report to the plenary session on, among other issues, the deliberation of personnel arrangements. The pace of systemization in various aspects has markedly speeded up. This also shows that the selection of candidates for CPC successors in the future will not be decided by an individual. "Imperial designation" of successors has been replaced by "collective discussions and collective decisions." In this connection, the CPC will no longer select one person to become a successor; instead, it will observe and foster a group of people. The CPC is currently building a mechanism for the selection and cultivation of a successors contingent in a scientific manner.
The informed source pointed that speculation in the outside world on Hu Jintao's successor runs counter to Hu Jintao's idea to promote inner-party democracy. The Hu Jintao-led CPC is moving in a more open and more democratic direction. How to accomplish the transformation from a revolutionary party into a ruling party and further promote inner-party democracy and social harmony is a major hotspot during the 17th Party Congress.

We are moving ever closer to the all-important party congress. Right now, the central committee is having a final powow on personnel issues and the issue of how to revise the party constitution. I attach an official announcement of the 7th plenum currently in session. Note at the end of the piece, it states "this meeting will summarize the work in the five years since the 16th party congress and make strategic arrangements for the comprehensive promotion of China's reform and opening and socialist modernization construction, as well as comprehensively push forward a new great project in party building." Cryptic enough yet?

A bit of tea-leaf reading nonetheless, since that is the sort of cheap thrill this blog offers. First of all, the phrase "comprehensively building the well-off society" (quanmian jianshe xiaokang shehui) could have easily been used in this sentence. Yet, it appears no where in the announcement. At least, this reflects some hesitation to plaster the phrase all over the place, which signals something. Instead, the old Dengist formulas of reform and opening are used.

Second, I am not sure if my translation is correct, but "a (or the) new great project in party building" suggests some change in the procedural parts of the party constitution (see blog on 9/17). Party building implies procedures and organization, not ideology. So, we'll see.....perhaps this speculation is what lays behind the SCMP piece on the possibility of more inner party democracy. We'll see....



十六届七中全会在京举行 讨论十七大报告稿
http://www.sina.com.cn 2007年10月09日12:08 新华网

　　新华网北京10月9日电 (记者孙承斌 李亚杰) 中国共产党第十六届中央委员会第七次全体会议9日上午在北京开始举行。根据此前召开的中共中央政治局会议，这次全会将讨论十六届中央委员会向中共十七大的报告稿、《中国共产党章程(修正案)》稿和中共中央纪律检查委员会向中共十七大的工作报告稿。

　　今年8月28日召开的中共中央政治局会议，决定中共十六届七中全会于2007年10月9日在北京召开。中共中央政治局将向中共十六届七中全会建议，中国共产党第十七次全国代表大会于2007年10月15日在北京召开。这次会议还审议了中央纪委向中共十七大的工作报告稿，同意将这一工作报告稿提交中共十六届七中全会讨论。

　　9月17日召开的中共中央政治局会议，研究了拟提请十六届七中全会讨论的十六届中央委员会向中共十七大的报告稿和《中国共产党章程(修正案)》稿，决定根据这次会议讨论的意见进行修改后把这两份文件稿提请十六届七中全会讨论。

　　据了解，十七大报告稿和《中国共产党章程(修正案)》稿已在一定范围征求意见。各地区、各部门、各方面和中共十六大代表、新选出的中共十七大代表对文件稿提出了意见和建议。

　　中共十七大是在中国改革发展关键阶段召开的一次十分重要的大会。大会将认真总结中共十六大以来5年的工作，对全面推进中国改革开放和社会主义现代化建设、全面推进党的建设新的伟大工程作出战略部署。大会还将选举出新一届中央委员会和中央纪律检查委员会。

The predictions are coming in! This one from Pierre (yes, THE Pierre...)

Hu Jintao
Wen Jiabao
Wu Bangguo [shift to CCPCC]
Zeng Qinghong [shift to Renda Zhuren]
Xi Jinping [to become executive vice-premier next march]
Li Keqiang [to become vice-president and anointed successor]
Zhou Yongkang [replaces Luo Gan]

Sadly, no one but dylan took up the challenge of coming up with their own predictions. But here are dylan's predictions! Thanks!

Hu Jintao
Wu Bangguo
Wen Jiabao
Xi Jinping
Li Keqiang
Li Changchun
Zhou Yongkang

Already then, with the 17th Party Congress coming up soon (October 15th) and rumors flying thick, I will issue my list of personnel predictions on the Congress. Please note that this is purely for fun, and I don't mean to offend anyone or political party, nor do I seek to offend any colleagues. Of course, this list is generated from all the publicly available information I gathered, including lists issued by my senior colleagues. I think this list comes closest to the one issued by senior China watcher Willy Lam. Below, I also give their age and approximate odds of being in the Politburo Standing Committee. I also attach a NYT article on the topic below. READERS, SUBMIT YOUR OWN PREDICTIONS! I WILL POST THEM ANONYMOUSLY IF YOU WANT!

Most Likely to Stay

Hu Jintao (65) 95% (hey, nothing is certain)
Wen Jiabao (65) 94%
Li Changchun (63) 92%
Wu Bangguo (66) 90%

Most Likely to Retire

Luo Gan (73) 5%
Huang Ju 0%
Jia Qinglin (67) 25%
Zeng Qinghong (68) 35%
Wu Guanzheng (almost 69) 20%

Possible Promotions Into the PSB

Zhou Yongkang (almost 65) 70%
Li Keqiang （52）65%
Xi Jinping (54) 60%
Zhang Dejiang (61) 45%
He Guoqiang (64) 45%
Wang Lequan (62) 35%
Wang Zhaoguo (66) 35%
Yu Zhengsheng (62) 25%
Liu Yunshan (60) 15%
Liu Qi (65) 15%
Hui Liangyu (63) 15%
Wang Gang (65) 5%

Due to age, Wu Yi, Zeng Peiyan, Zhang Lichang and Cao Gangchuan have negligible chance of being promoted into the PSB. Guo Boxiong will likely stay another term in the Politburo.

Likely Politburo Candidates:

Li Keqiang (in the event that these two don't get into the PSB)
Xi Jinping
Li Yuanchao
Zhang Gaoli (PS of Tianjin)

Other possibilities

Wang Yang
Wang Qishan
Bo Xilai
Zhou Xiaochuan
Ma Kai
Liu Yandong
Li Jianguo

China's Leaders Deadlocked Over Succession
NYT
By JOSEPH KAHN
Published: October 5, 2007

BEIJING, Oct. 4 — Just days away from a major leadership reshuffle, China's Communist Party bosses remain deadlocked over who should sit on the ruling Politburo Standing Committee and who should be anointed to succeed President Hu Jintao as China's No. 1 leader five years from now, party officials and political observers say.

The uncertainty has contributed to a tense political climate in Beijing, where worries about economic overheating and talk of military action to keep Taiwan from moving toward legal independence have complicated the ruling party's already delicate internal succession process.

The Communist Party plans to convene a congress on Oct. 15 to ratify a slate of leaders who will serve under Mr. Hu through 2012. But party officials say Mr. Hu and his still-powerful predecessor, Jiang Zemin, have yet to reach a consensus on the leadership line-up.

Among the most significant questions that remain unanswered is whether Mr. Hu will succeed in forming a team that consists of people who owe their power mainly to him instead of to Mr. Jiang or other party elders.

The party elite also has failed to rally behind a younger leader to succeed Mr. Hu when his second term ends in 2012. If that does not change, Chinese politics could become more volatile in coming years, as interest groups form around rival contenders.

Horse trading ahead of the congress has colored almost everything Chinese leaders have done or said in recent weeks.

Top officials have issued fresh warnings that China may take military action if Chen Shui-bian, the president of Taiwan, follows through with his plan to hold a referendum on whether Taiwan should apply to join the United Nations under the name Taiwan rather than its legal name, Republic of China. Chinese leaders view the referendum as a backdoor attempt to sever Taiwan's remaining ties to mainland China, which they claim would trigger a military response.

Party officials say that Mr. Hu intends to make Taiwan a focus of the upcoming congress. They say he may be seeking to garner support for using force if Mr. Chen does not back down. But he also may hope the Taiwan issue will unify the party around his leadership at a time when he faces political pressure from Mr. Jiang on domestic matters.

Arguably the most important function of the congress, the first in five years, will be to select someone to replace Mr. Hu. Two provincial party leaders, Li Keqiang, 52, the party secretary of Liaoning Province in northeastern China, and Xi Jinping, 54, the newly appointed party boss of Shanghai, are seen as contenders to join the Politburo Bureau Standing Committee and take over the most senior positions five years from now.

Mr. Li, viewed as Mr. Hu's favorite, may now have to settle for second place behind Mr. Xi, who has stronger support from Mr. Jiang, said several people informed about the jockeying. They spoke on condition of anonymity because China treats all elite political maneuvering as a state secret.

One slate of candidates discussed among party leaders in recent days has Mr. Xi replacing Zeng Qinghong as vice president and head of the ruling party's secretariat, the day-to-day manager of party affairs. Mr. Li would become executive vice premier.

Both would join the Politburo standing committee, with Mr. Xi outranking Mr. Li in the hierarchy by a slim — but potentially decisive — margin, putting him in line to succeed Mr. Hu as party chief. Mr. Li would stand to inherit the post of premier, now held by Wen Jiabao, in 2012.

The party chief generally assumes the additional titles of state president and head of the Central Military Commission. That would mean that Mr. Xi, a "princeling" whose father, Xi Zhongxun, was also a senior party official, would become the presumed future leader of China.

But these people cautioned that Mr. Hu had not endorsed Mr. Xi as his successor, leaving open the possibility that he could still mobilize support for Mr. Li or leave the designation of "fifth generation leader" — after Mao, Deng Xiaoping, Mr. Jiang and Mr. Hu — up in the air.

Some party officials suggest that this could open the door to a form of "intraparty democracy," in which a bigger group of senior officials selects a candidate rather than affirming the choice of the top-most echelon.

China's authoritarian system lacks a reliable way to pick future leaders. After Mao's volatile rule, Deng Xiaoping overthrew Mao's chosen successor and became the top boss himself. He then dismissed two chosen successors of his own before settling on Mr. Jiang and anointing Mr. Hu to succeed Mr. Jiang.

Neither Mr. Jiang nor Mr. Hu has sufficient clout to name a future leader single-handedly. But Mr. Jiang, who retired from his last official post, as military chief, in 2004, retains sufficient sway to effectively veto Mr. Hu's choice. Party officials described Mr. Jiang, 80, as determined not to give Mr. Hu more say over his successor than Mr. Jiang had over the choice of Mr. Hu.

With the headline race undecided, competition to fill the other powerful slots on the Standing Committee has also run on longer than expected.

Mr. Hu once hoped to reduce the number of people who sit on the ruling body to seven from nine, making it easier to reach consensus on major policy matters. But Mr. Jiang increased the membership to nine from seven in 2002, partly so that he could stack the committee with his own loyalists. Party officials say he vetoed Mr. Hu's proposal to slim down the body.

Deaths and mandatory retirements have opened at least three positions on the Standing Committee that Mr. Hu and Mr. Jiang have competing candidates to fill.

The fate of a fourth member, Mr. Zeng, has prompted speculation for months. Mr. Zeng is seen as the most powerful party leader after Mr. Hu. He controls the daily affairs of the ruling party. More informally, he heads what is referred to as the princeling faction, consisting of people who, like himself, are the children of first-generation party elite.

Mr. Zeng served as the right-hand man of Mr. Jiang for many years. But he also became indispensable to Mr. Hu over the past five years, party officials said. Mr. Zeng helped Mr. Hu to implement a political program that includes paying more attention to the country's wealth gap, its rural poor and its degraded environment.

Mr. Zeng reached the formal retirement age of 68 this year, and party officials say he has stated repeatedly that he intends to step down.

But they say that Mr. Hu has sought to retain Mr. Zeng. This is partly because Mr. Hu's grasp of the party's internal workings remains incomplete, they say. Mr. Zeng's departure would also increase the likelihood that two officials seen as core Jiang loyalists, Jia Qinglin, who heads the group that manages the party's ties to other sectors of Chinese society, and Li Changchun, in charge of propaganda work, could retain their Standing Committee seats.

On the economic front, Mr. Wen has long been viewed as likely to continue as prime minister for another term. But he has recently come under attack within the party because he has failed to reduce economic growth to a more sustainable pace, party officials said.

Inflation, driven by surging food prices, has begun to create social discontent. China's trade surplus has ballooned to record levels, sparking widespread international concerns about manipulation of its currency.

Party officials said Mr. Wen is still likely to retain his post, but that the volatility in the run-up to the congress makes his hold on power less secure.

So, there is now even more rumors of Xi Jinping being elevated into the Standing Committee. Perhaps he may even take over from Zeng as the vice secretary of the party. That would truly be shocking.....But then there is a "princeling" advantage. Princelings tend to have many more allies than an "ordinary" cadre who rises up the ranks because an ordinary cadre only has allies in places where he or she has worked, but princelings have allies everywhere. Also, because they can more easily access central subsidies and private investment through connections, they tend to be very popular everywhere they serve since they are able to bring in the money.