Why democracy does not work - Tom Doctoroff

Tom Doctoroff

One of our top-speakers at Chinabiz Speakers, Tom Doctoroff of JWT, explains in his column in Chinabiz why democracy will not work in China.

Therefore, the middle class, perhaps 10% of the total population, is not itching for democratic reform. Yes, they demand protection of financial interests. They rail against corruption, particularly at the provincial and municipal levels. They might even stage a protest or two. However, in Han eyes, any weakening of central command militates against stable economic advancement. Indeed, the majority of young, educated mainlanders endorse President Hu Jintao's technocratic savvy and support his government's authoritarianism.

The column was earlier published in the Shanghai Daily, but in a watered down edition.

More at Chinabiz.

Ministry uses TV-show to save energy

vice-premier Zeng Peiyan

The failure of China to reduce energy usage and reduce polutions was illustrated this weekend again when hapless authorities turned to a TV-show to urge the masses to reduce their energy consumption. The China Daily:

Chinese vice premier Zeng Peiyan on Saturday called on ordinary people to help save energy and reduce pollution.
"Energy conservation and pollution reduction are related to the sustainable development of the whole society and economy, as well as the interests of the broad masses," Zeng told the opening ceremony of a nationwide campaign in Beijing.

While the campaign involves at least 17 government departments, it looks mainly like a display of dispair and hollow propaganda, as real measures like the increase of energy prices is politically not achievable.

Green knights, on your horses

Earlier this year I listed the long row of urgent priorities by the central government. I found the list impressive and actually none of the subjects could be missed there. Without addressing each of them, China would develop a massive problem. Since then, with the product quality scandals and a few more, the list has only grown. At that time, I was also wondering which of those priorities would survive the year-end. Some things move faster than expected.
Politics in China is governed by negotiations between the central and many, many other governments. Much of the real power is in the hands of local power brokers and state-owned companies and only by getting their consent, the central government can realize some of its priorities. The question is therefore: what urgent priorities will drop off the list?
I have been discussing the subject with a range of fellow China-watchers and there is a consensus that the environment has dropped out. Some actually say, it has never been on it, but for a while at least investments in environmental projects went up. Local authorities do not mind those, since they benefit from every investment.
A few times over the past months, the government departments in charge of the environment had to take severe political hits. One report by the World Health Organization on the number of environmental reports in China and one developed with the World Bank on the Green GDP, a pet-project of Hu Jintao, where killed. They still had some effect because they of course leaked out, but it gave a clear signal that the environment as an issue should back-off.
Some of my friends dismissed those reports anyway as meaningless propaganda tools. That might be true, but when even meaningless propaganda kits gets killed, there is something rotten.
What those reports could and should have done is creating a climate for real measures, like a stiff increase of energy prices, so the usage of energy could slow down and that could force even the economy at large to cool down, something the central government has not yet been able to do. But when anything goes against the interest of the local power brokers, it is a slowdown of the economy. Those in charge are making money on the booming economy now and do not want to share that with a next generation of leaders.
Of course, China is never going to remove the environment as an issue from its political agenda. And of course, next year Beijing needs to have some breathable air for at least a few weeks in August as the Olympics take place. In the official propaganda, the environment will remain an issue, but not one with a high priority.
Knowing this, what can be done?

First, the environmental struggle has seen severe setbacks and the prospects do not look good. But not all is lost yet and the green knights should get on their horses and get their act together.
Second, companies involved in environmental projects should get their things implemented as soon as possible. Funding that is available should be used as much as possible, because a drop on the political agenda will be followed by a drop in funding
For the record, of course I hope this gloomy analysis is wrong.

The details of Chen Liangyu's case

The financial magazine Caijing explains the finer details of the wrongdoings of Chen Liangyu, Shanghai's former party secretary. The bigger political picture gets a bit lost here, but by actually including Chen's parents in the story - although they only add emotion, no facts - makes clear that we are going to see quite a lot of his very special court case.

In an apartment in the Luwan district of Shanghai, an old couple has saved a well-worn newspaper dated July 27, 2007. The headline reads, “China's Central Commission for Discipline Inspection Answers Reporters on Chen Liangyu’s Serious Violation of Principles.”
“We know nothing more than what was printed in the paper,” said the husband, Chen Genghua, an 86-year-old retired engineer,as his wife, Li Mouzhen, bears a look of sadness and distress.
The person mentioned in the headline is Shanghai’s disgraced former party secretary, who has been embroiled in a multi-billion yuan pension fund scandal. Chen is also the eldest of the couple’s three sons.

Chen Liangyu, a real Jiang man

Chen Liangyu

Ahead of the corruption trial of former Shanghai party secretary Chen Liangyu, Howard French summarizes the political side of this prosecution, a part that will most likely never be part of any public proceedings.
Chen was the man of the mega-projects, focusing on mega growth, the mantra of Jiang Zemin. He followed the Jiang Zemin line even when the new central government under Hu Jintao had decided to a drastic policy change and became both a political and an economic liability.
His plan to give Shanghai a beach, his plan to extend the useless maglev to Hangzhou, the World Expo in 2010, the Formula One, his tennis complex of USD 290 million.
The cancellation of the extension of the maglev in May under public pressure was the signal the days of Chen Liangyu were really over.

Not too much lingdao, please

former lingdao Chen Liangyu

Today we have been working on the website for our Speakers Bureau and one of the tasks was to find a captive slogan to go along with the name. With the help of some online friends (thanks Marc!) I came up with: Chinabiz Speakers Ltd. A leader in opinion leaders.

Near brilliant I would say, if I wouldn't be the author myself and it would allow us also to, eh, get some help from Google and Yahoo in promoting our service. By systematically combining the worlds "China" and "opinion leader" in for example all the fifteen profiles where it would be appropriate, I was sure we would be scoring very high in the combination of those two words in the search engines. A sure winner.

Unfortunately, my Chinese partner did not agree. In the Chinese translation that would create a bit too much lingdao, and that could attract the kind of attention we did not want. I still hope he finds a good way to translate this slogan in a less harmful way.

From traitor to military hero

Lin Biao

The naming of the former successor of Chairman Mao Zedong, Lin Biao, as a military hero in an exhibition of the Beijing Military Museum, did get very little traction outside the state-media. The event is remarkable for a few reasons.
Lin Biao, a former leader of the People's Liberation Army fell out of grace as the Cultural Revolution (1966-1976) moved on and started to eat its own children. He was accused of organizing a coup against Mao Zedong and died mysteriously in 1971 during a plane accident. His disappearance triggered off a larger "cleanup" of the military leadership and he was officially qualified as a "traitor". Of course the China Daily did not mention too many of those nasty incidents, but the re-emergence of Lin Biao as a military hero is remarkable enough.
China also has no long-standing tradition in reversing verdicts that have been given. The labelling of - for example - the 1989 Tiananmen "disturbance" seemed to be in place for eternity. Now, starting a history of reassessing China's recent history might be seen as a positive move.

The power pendule between central and local government

China Law Blog points at a remarkable analysis at the China Leadership Monitor by Dr. Barry Naughton. Key argument, the central government is getting more cloud over local government by asserting more influence on real estate, the major source of income for governments in China:

Since the beginning of the 2006 round of macroeconomic contraction, central government officials have evinced a willingness to directly criticize and confront local government officials over economic issues. As we noted in the previous issue of CLM, the State Council openly rebuked the government of Inner Mongolia for failing to mplement macroeconomic policies at an early stage of the contractionary policies.

This assertiveness has continued throughout the policy changes in land regulation, with a persistent willingness to state that the targets of increased regulation and oversight are local government officials.

Of course, the fall of Shanghai's party secretary Chen Liangyu plays an important part in his argument.
In short: I do not buy his argument and would rather see a central government that has so many priorities on its political agenda, its success depends very much on a negotiated balance it can strike with local governments rather than sheer power play. Local governments will never allow the central government to get too much influence in real estate, since much of the power of the local governments depend on that income from real estate.

Getting dividend - the WTO-column

The story that the central government from now on will ask state-owned companies for dividend got very little attention, while it potentially can be a turn point in Chinese politics. Power depends very much on the ability to control money and the central government has been very much lacking that ability. The government abolished the dividend system at the beginning of the 1990s when there was not much to ask anyway, since most of the state-owned enterprises was close to bankruptcy.

"We have a strong central government, we have also a very strong local government." A famous Chinese economist summarized one of China's most difficult problems quite pointedly a few months ago at a dinner. Because the central government is, compared to local governments in the richer provinces, relatively underfunded, it often has more slogans than money to offer when trying to solve the nation's problems. When looking at the total take from the government of China's GDP, that is as a percentage not so much different from other countries. The China problem is that most of that revenue comes from land use rights and property rights and stays out of the hands of the central government. Of course, tax revenue has gone up too with the booming economy, but is still lagging behind, leaving education, health care and social care greatly underfunded.

Already in 2002 the World Bank figured out that when the government would get 4.8 percent in dividend from the state companies, all school tuition could be waived. Now, a few more fees could be waived.

Actually, that is what the central government has been doing by waiving much of the school fees at the country side and abolishing the agricultural tax in the past few years. While those decisions were being applauded, it was only one half of the action that was needed. By abolishing the agricultural tax individuals had a bit more too spend, but if left local governments at the country side virtually without money. One of the consequences has been that the experiments with grass-root democracy have ran into trouble, since nobody wants to run for a government with no money to spend.

Allowing the central government - and to a lower degree other government departments holding state-owned assets - to collect dividends again might shift the power balance from the local governments to the centre.

Not surprisingly the destination of this new revenue stream has been the cause of much internal quarrels. An argument between the Ministry of Finance and SASAC, the State Asset Supervision and Administration Commission, has halted the execution of the plan up to recently. In the compromise the Ministry of Finance had to give in and cannot use the dividend for health care or education directly, but the money has been earmarked for R&D that would benefit the state-owned companies directly.

That means that another struggle is laying ahead. But by creating this new fund, the central government does have a bit more leverage over competing departments.

Fons Tuinstra

Enemy of the State

family picture of Zha Jianguo when thirteen

Zha Jianying, sister of the idealist Zha Jianguo, who serves a prison sentence in Beijing, writes in The New Yorker. (h/t Billsdue).

China power list: the top 50

Hu Jintao: nr.1

The Chatham House in London has published a first edition of its top-50 most influential people in China. A good initiative that for sure is going to cause a lot of debat.
One solid criterium is that you have to be alive, but otherwise everything goes.
Some of the longer explanation:

The list has two useful functions. First, the people on it really do have the power to affect the lives of citizens around the world, and we need to know much more about them. Second, the list will illuminate common points of power in modern China and in the outside world. Is China in 2007 as dominated by the influence of the wealthy as is the United Kingdom? Or does "purer" political influence - a good background, good political connections - matter more?

You will find people like Bill Gates and the younger George Bush on the list and that is causing some debate already. Of cause, in this digital age, you can not only see the list, but also add, comment and vote here

Shanghai's new party secretary?

Unconfirmed rumors suggest that Liu Yandong (left on the picture) has been appointed as the new Shanghai Party Chief. China Digital Times noted the story in the (dissident) Boxun.

According to the story the current head of the United Front Work Department of the Communist Party would replace Han Zheng, who has been taken over from Chen Liangyu, who was detained for corruption in September last year.

The story also alledges that Shanghai Vice-mayor Liu Genyun will take over the post of Shanghai Mayor of Han Zheng. That would mean a de facto demotion of Han Zhen, a move that is rather uncommon in the Chinese bureaucracy, where officials only move upward - or end in jail of course.

politics - The Party is here to stay

For years people with different political sympathies in the West did find common ground in the conviction that China's political systems was going to change. The country could not manage its economy and other problems without more political participation of its citizens. Economic growth would push China's middle class to more political demands.
Tha arguments were different, but the outcome would be the same: after the economic changes, political changes were inevitable.
I have never been too sure about that. In China you could see how the government was able to manage it multiple crises and learn from it. And as long as the economic growth continues, there are not reason to expect much to change in the mostly a-political attitude of its citizens.
Arthur Kroeber points in the same direction in the Financial Times, here in a pick up by A Glimpse of the World:

The China-must-reform-as-we-say-it-must fantasy has been most clearly articulated by two recent books. China’s Trapped Transition, by Minxin Pei of the Carnegie Endowment, claims that corruption has so overwhelmed the Chinese state that it is rapidly losing the capacity to deal with all sorts of social problems. The Writing on the Wall: China and the West in the 21st Century, by Will Hutton (reviewed by Martin Wolf in the FT on February 2), asserts that “the Chinese economy and the Chinese Communist Party are in an unstable halfway house” between socialism and capitalism, and that the party must surrender its monopoly on power – soon – or risk economic collapse.