Tuesday, February 05, 2008

Yet another excellent piece by Willey Lam on Shanghai

Hu tightens grip over Shanghai faction
By Willy Lam

Since dumping former Shanghai party secretary Chen Liangyu in late 2006, President Hu Jintao has tightened his control over the east China metropolis - as well as the so-called Shanghai faction in the tangled politics within the Chinese Communist Party (CCP).
At stake is more than the resolution of the longstanding slugfest between the two major CCP cliques - the Shanghai boys under ex-president Jiang Zemin versus the Communist Youth League (CYL) faction under Hu. In Hu's calculus, reining in Shanghai's notorious centrifugalism will go a long way toward establishing the party-and-state headquarters' authority over the nation's "warlords", a reference to recalcitrant regional cadres who refuse to heed Beijing's edicts.

This is despite that many outside the CYL cabal are disturbed by the fact that Hu has planted his underlings in more than half of China's 31 provinces and directly administered cities. Hu, also CCP general secretary and chairman of its Central Military Commission (CMC), has entrusted the job of taming Shanghai to Politburo member Yu Zhengsheng, who took over from "Fifth-Generation" rising star Xi Jinping as party boss of the super-rich city three months ago.

Hu and Yu are political allies despite that the latter never served in the CYL. Like Hu, the 62-year-old Yu was a protege of late patriarch Deng Xiaoping. Yu once worked for Kanghua Corporation, one of China's first "Western-style enterprises" that was set up by Deng's son, Deng Pufeng, in the early 1980s.

Political sources close to the Hu faction note that one of Yu's key missions is to dismantle Shanghai's "city-state within a state" status, which the mega city achieved with the blessing of Jiang, a former Shanghai party chief. Firstly, Yu must ensure that Shanghai will not contravene or water down Beijing's directives. Perhaps more significantly, Yu is gradually ending the age-old practice of "Shanghai people running Shanghai", which meant that top slots in the Shanghai party and government apparatus will be reserved for "native sons".

It is indeed a time-honored tradition for Beijing to install "carpetbaggers" to run a particular province, autonomous region, or major city. In 1998, then-president Jiang Zemin named a northerner, Li Changchun, party secretary of the southern province of Guangdong in 1998 with the explicit purpose of ending the tradition of "Guangdong people running Guangdong" (yuerenzhiyue). This special arrangement for Guangdong was granted by late patriarch Deng in return for the contributions made by Marshal Ye Jianying to ending the Gang of Four's reign of terror.

Shortly after taking office, Yu pronounced his now-famous "Ten Commandments", or what local officials must do to avoid running afoul of the law and morality - and the instructions from the Zhongnanhai party-and-state headquarters. Speaking at a meeting called by the Shanghai Municipal Commission on Disciplinary Inspection, Yu said officials must pledge "not to go against political discipline, to stop 'doing things as one likes', and to remain at a high level of unity with central authorities". On another occasion, Yu vowed that the metropolis would be "at the service of the entire nation". Pointing to how Shanghai's dramatic growth the past decade was predicated on support from all parts of China, the party boss said, "Shanghai has the responsibility to serve the entire nation, and to make the requisite contributions to the economic and social developments of the entire nation."

At the same time, Yu has imposed tighter disciplinary regulations on local officials. For example, mid- to high-level officials have to declare their assets. While these policies may not be popular among Shanghai officials, they have acquiesced in Yu's leadership partly due to the well-known fact that the new Shanghai leader has the full backing of the Hu-Wen team.

Disgraced Shanghai party boss Chen had alienated the leadership under Hu and Premier Wen Jiabao by repeatedly failing to toe the central line. In early 2004, Wen unveiled with great fanfare a series of "macro-level control and adjustment" policies aimed at cooling down overproduction and overheating, especially in sectors such as properties, steel and raw materials. Shanghai, however, refused to go along.

Even worse, many of the glamorous real-estate and infrastructure projects in the metropolis were anchored on corrupt and "insider" deals between municipal officials and their business cronies. Both before and after Chen's arrest in September 2006, two dozen-odd of Shanghai officials and businessmen have been investigated - and in some cases detained - for illegally using the municipality's pension and social-welfare funds to bankroll property acquisition and other ventures.

Equally importantly, Yu, together with the CCP Organization Department - which is headed by long-time Hu protege Li Yuanchao - has begun to chip away at the tradition of "Shanghai people running Shanghai" (wurenzhiwu) by installing more Beijing "carpetbaggers" to senior municipal positions.

One of Deng's most memorable dictums is that leaderships at both the central and regional levels must come from "the five lakes and the four seas" (wuhusihai), meaning they had to come from different factional and geographical backgrounds. Last month, Tu Guangshao and Ai Baojun, two Sixth-Generation cadres - those born in the 1960s - who hail from Hubei and Liaoning provinces respectively, were named vice mayors. Tu, 48, a former vice chairman of the Beijing-based State Securities Regulatory Commission, is a fast-rising technocrat who is expected to shepherd Shanghai toward its goal of becoming a major financial center of the Asia-Pacific Region.

Ai, 47, is a specialist in the steel industry with experience in Shanghai's giant Baogang Steel Mill. The US-trained Ai is expected to be in charge of industry and infrastructure in the mega city. Political circles in Shanghai are also rife with speculation that Mayor Han Zheng would soon be posted elsewhere after Yu had acquired a better handle on municipal affairs. This is in spite of the fact that on assuming office late last year, Yu had tried to boost morale among Shanghai officials by saying that Han, who had spent his entire career in the metropolis, would stay on to help him run the city.

Since the CCP swept to power in 1949, Shanghai has been administered mostly by politicians who were either born in the metropolis and neighboring cities - or who have spent a good chunk of their career there. The Shanghai-based Gang of Four, led by Mao's wife Jiang Qing, managed to not only dominate local politics but also install Shanghai cadres in senior posts in Beijing. The Shanghai faction had their heyday from 1990 to 2002, when former Shanghai party secretary Jiang Zemin was CCP general secretary and president. Jiang was even able to pack the Politburo Standing Committee with Shanghai faction affiliates such as Wu Bangguo, Zeng Qinghong, and Huang Ju - all former party secretaries - on his retirement from the top party post in 2002.

Since Jiang's retirement from the CMC chairmanship in September 2004, however, most Shanghai faction heavyweights have either retired or crossed over to the Hu-Wen camp. It is a mark of Hu's "magnanimity", as well as his cautious observation of the CPP tradition of "not beating up a dog which is already down in the water", that most of the tainted Shanghai faction affiliates - as well as their kinsfolk - will likely escape punishment. It is perhaps due to such Byzantine considerations that Chen's case has still not been heard in a court of law.

Similarly, the large number of Shanghai officials who had profited from their association with former Shanghai real-estate billionaire Zhou Zhengyi - who was in late December sentenced to a 16-year jail term for market manipulation and corruption-related practices - will not be penalized.

Zhou was allegedly a business partner of the sons of two Shanghai faction stalwarts; while the latter have never been charged, they have dropped out of the media limelight since Zhou's shenanigans were first exposed in 2003. It is understood that in return for Hu not going after the cronies and relatives of selected Shanghai faction heavyweights, the latter have agreed to unreservedly profess their loyalty to his new reign.

Some observers believe that Hu does not want to alienate the Shanghai faction too much because he seems to be following in the empire-building footsteps of ex-president Jiang by vastly expanding the clout of the CYL faction. In the run-up to and after the 17th CCP Congress last October, Hu and the CCP Organization Department had appointed Hu's allies to senior slots in cities and provinces including Beijing, Shanghai, Guangdong, Sichuan, Guizhou, Shaanxi and Shanxi.

Moreover, several of the new leaders of strategic regions, such as the party secretaries of Guangdong and Sichuan - Wang Yang and Liu Qibao, respectively - had barely served in their former posts for two years or so. This has given the impression to observers that Hu has put the aggrandizement of his own clique above the efficient deployment of talent.

At a time when central initiatives are sourly needed to cope with urgent problems such as runaway inflation, many in China are perhaps willing to back the Hu-Wen team's emphasis on the fail-safe implementation of Beijing's edicts. On the inauguration of his second cabinet in March, Wen is expected to call on localities to sacrifice parochial interests to guarantee the attainment of national goals to bring about a soft landing in the economy and to restore the country's badly damaged ecological system.

Recentralization of powers is a major reason behind the imminent formation of a number of "super-ministries" in fields including energy, finance, agriculture, transportation and the environment. In the absence of genuine political reform, however, the party-and-state apparatus lacks institutional means to ensure an equitable balance of power between the center and the localities.

After all, the Hu-Wen team has to use the "anti-corruption card" to get rid of unwieldy warlords such as Shanghai's Chen. Moreover, Hu might even lose his moral high ground if the large number of CYL faction members he has installed in regional administrations were unable to pass muster in being both "red and expert" (youhongyouzhuan); that is, loyal to Beijing in addition to doing their jobs well in the eyes of the paramount leader.

Willy Wo-Lap Lam is a senior fellow at The Jamestown Foundation. He has worked in senior editorial positions in international media including Asiaweek newsmagazine, South China Morning Post and the Asia-Pacific Headquarters of CNN. He is the author of five books on China, including the recently published Chinese Politics in the Hu Jintao Era: New Leaders, New Challenges.

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