Sunday, January 31, 2010

Elite Political Maneuvers

Dear Readers, after a long absence, I post an excellent piece by John Garnault of the Sydney Morning Post. The only issue I take with his piece is that I don't think Hu avoided Shanghai out of fear. That might have been true in Chen Liangyu's last days, but with Yu Zhengsheng in charge and a new PAP commander, I think Hu has nothing to fear. His absence from Shanghai probably was due to intentional neglect stemming from the desire to not raise Shanghai's profile any more than is necessary. With recent consolidation of power (which I agree), Hu feels more secure to give Shanghai more credit in the run-up to the Shanghai Expo. This may also suggest that Hu is trying to make an alliance with Yu Zhengsheng, a princeling with close ties to the Deng family. This would make sense, if Yu would bite, as this would be a good balance against the Jiang-Zeng axis.


Battle for Shanghai takes centre stage in Hu's strategy

February 1, 2010

Just as the world is adjusting to a harsher, more assertive and, frankly, scary China, there are reminders the country could swing back the other way.

The President, Hu Jintao, didn't just surprise Australian diplomats by turning up with four hours notice to the Australian Pavilion at the Shanghai Expo 10 days ago. The visit confirmed that last year's diplomatic rancour between China and Australia had been buried and China wants to be friends again. But Chinese observers saw something more significant: "It's now safe for Hu Jintao to go to Shanghai."

Amazingly, Hu had not been publicly seen in Shanghai for at least two years. In fact I can't find reports of Hu passing through China's most glamorous city since June 2006. That's akin to Barack Obama governing America sans-New York, or Kevin Rudd micro-managing Australia without touching down in Sydney.

In the closet warfare of Chinese elite politics, Shanghai has been the political bastion of Hu Jintao's predecessor and nemesis, Jiang Zemin. Hu's arrival in Shanghai was seen to offer proof that he is getting the upper hand in his war of attrition against Jiang's "Shanghai Gang".

To over-simplify, Hu's key protégés are associated with the China Youth League and a more liberal, egalitarian and intellectual outlook, while Jiang's protégés are more closely linked with the security, propaganda and military apparatus as well as strategic state owned companies, particularly oil. More importantly, when China's elite are divided they tend to make doubly sure the rest of the country is locked down.

If Hu's apparent confidence is well-placed, it explains some other signs that suggest the recent political freeze may not be forever. First is the re-emergence of the super-educated and one-time student leader, Vice-Premier Li Keqiang.

Li was Hu Jintao's chosen heir until Jiang interrupted those succession plans in September 2007. Li seemed in political trouble as recently as July. But since the last key Communist Party Central Committee meeting in September he has been everywhere (as has another of Hu's once-wounded allies in the standing committee, Premier Wen Jiabao ). Li is obviously in line for future premier, or maybe one step higher.

Li's speech at the World Economic Forum in Davos on Thursday was more conciliatory and made more sense than anything we've seen recently from a Chinese leader in the international arena. It was all about China's need to correct its own economic imbalances, rather than dancing on the grave of the US-led global financial order, and co-operation on a slew of global challenges. The significance of Li's speech lies not so much in what he said, but that the internal politics permitted him to say it.

Equally significant was the announcement of a new energy policy body, which strengthened Li's standing just before he took the stage at Davos. Until now, China's energy policy has been notoriously captured by vested interests, particularly those associated with the state-owned behemoth Petrochina and the People's Liberation Army.

Although the new National Energy Commission lacks teeth, two things are notable. First, its formation had been on hold - some would say the whole country has been on hold, including the next leadership transition - while Hu pushed some of Jiang's acolytes out of the Central Military Commission and replaced them with his own. (Some say the new line-up to control the People's Liberation Army has been settled; others caution nothing is settled in China until it is publicly announced.)

Second, the new energy commission is stacked with liberally-oriented policy makers and Hu's men (the two categories are not the same but substantially overlap).

At the head of the commission is Wen Jiabao, followed by Li Keqiang. It includes Li's underling You Quan, leaders of the National Development and Reform Commission (NDRC) who work easily with Hu (Zhang Ping and Zhang Guobao) as well as market-oriented policy makers like Zhou Xiaochuan (head of the central bank) and Liu Mingkang (the banking regulator).

Nowhere to be seen is Xie Zhenhua, who is in charge of climate change policy at the NDRC. Xie is internationally respected for his grasp of climate change policy. But he also owes his political resurrection (after a massive Petrochina oil spill) to the Shanghai Gang. And it was his finger-pointing outburst at Obama behind closed doors at Copenhagen that arguably did more than any other single recent event to turn Western opinion away from engaging China to fearing it.

Another notable absentee is Wang Qishan. Wang is widely known and respected in the West. But he has also been trampling over the economic policy turf that was, some thought, reserved for Li Keqiang.

Gone from the formal energy policy scene is Jiang's crony Zhang Dejiang, who was meant to be in charge of energy policy in the State Council. Zhang has been wounded by a recent corruption probe into Shenzhen Airlines, according to a source with connections with the Central Discipline and Inspection Commission, which Hu controls. Indeed, it seems that most of the top-level corruption scalps over the past year are linked with Jiang in one way or another.

Events since the Tibetan uprising in March 2008 have shown it was naive to assume China is on a slow but inexorable march towards a more liberal political system and a more co-operative international outlook. But it would be equally wrong to assume China's recent political hardening - which spilled into the international arena with the arrest of Stern Hu and aggressive diplomacy at Copenhagen - marks a new, inexorable trend.

Hu Jintao is no Mikhail Gorbachev and China is hardly on the brink of a glasnost moment. But China's future hinges, in part, on the battle for Shanghai.

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