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Why global oil prices seem likely to remain low throughout 2016

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Iran is looking forward to ‘implementation day,’ when its nuclear energy deal takes effect and global sanctions are relaxed, allowing it to export oil more easily. (Reuters)

In 2015, we saw how falling oil prices affected world politics from Alberta to Nigeria. Net exporters like Venezuela, Russia and the oil-rich Middle Eastern countries are feeling the drop in revenues, and that could accelerate political agitation as oil prices force budget cuts. USflagIran Flag Icon

As Brad Plumer wrote yesterday for Vox, explaining the fall in oil prices is simple. Supply has outstripped demand, and while global demand is still growing, it’s growing at about half the rate that it was even in mid-2015.

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RELATED: Sixteen global elections to watch in 2016

RELATED: Could Norway benefit from the oil price decline?

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The difference between $30 oil (about the current price level), $20 oil or $50 oil could make or break incumbents seeking reelection — lower oil prices mean fewer goodies at election time.

In 2016, that means oil prices could affect Scotland’s May regional elections by dampening the economic case for Scottish independence and, therefore, the electoral support for the Scottish National Party. It means that Russia’s September legislative elections could engender the same kind of political protests (or worse) that met the last elections in 2011. Lower oil prices are already endangering Ghanian president John Dramani Mahama’s hopes for reelection in December, given how much Mahama has staked on Ghana’s oil potential. It could even push Venezuela’s opposition, newly empowered as the majority in the National Assembly, to seek chavista president Nicolás Maduro’s recall even more quickly.

More generally, it could make life difficult for Nigeria’s new president Muhammadu Buhari. Not only will lower oil revenues hurt his capacity to deploy resources across Africa’s most populous country, but Buhari must find a way to deliver to Nigeria’s impoverished Muslim north, where Boko Haram continues to pose a security challenge, and Nigeria’s southeastern Igbo population, including Rivers state and Delta state, where much of Nigeria’s oil reserves are located. The southeastern challenge is particularly precarious, in light of the fact that Buhari defeated Goodluck Jonathan, the first president to come from Nigeria’s oil-rich southeast. A wrong step by Buhari could catalyze long-simmering demands for greater political autonomy or even secession.

On the demand side, the European Union (as a whole) imports more oil than any other country in the world — by a longshot. Lower prices could bring about the kind of truly robust economic growth that has eluded the eurozone for decades. That, in turn, could ameliorate the pressures of democratic backslide among the central European Visegrad Group, and it could goose economic activity in Mediterranean countries like Portugal, Spain and Greece, where no single political party has enough support for a majority government. That, in turn, could reduce support for radical leftist parties and bolster more moderate coalitions. It could, marginally, benefit incumbent governments in Ireland, Romania and elsewhere in 2016 and France in 2017. (The same effect, by the way, relieves a lot of pressure on faltering ‘Abenomics’ policy in Japan, too).

In his final state of the union address last night, even US president Barack Obama bragged about lower oil prices. If prices stay consistently low throughout 2016, it could marginally help Obama’s Democratic Party win the November general election.

Autocratic countries, including Saudi Arabia, the United Arab Emirates, Qatar, Angola, Algeria and Kazakhstan, could face popular protests.

So where are oil prices going? No one knows, but here’s what you have to believe if you think oil prices are going to rise substantially anytime in 2016: Continue reading Why global oil prices seem likely to remain low throughout 2016 →

China

With the end of Bo Xilai’s trial, is Xi Jinping co-opting the ‘Chongqing model’?

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It’s been perhaps the most sensational rise and fall of a top Chinese official in a generation, but the corruption trial against former Chongqing party leader Bo Xilai (薄熙来) wrapped up this week with plenty of surprises, China Flag Iconeven if his guilty verdict for bribery, embezzlement and abuse of power, is all but assured.

On the final day of what has been a sensation hearing by Chinese standards, Bo accused a top aide of becoming romantically involved with his wife, capping five days of what has been a spirited defense by one of China’s most charismatic 21st century party leaders.  Far from showing remorse, Bo (pictured above) has vigorously denied the charges and defended his actions:

He said he never cared for money. “The long johns that I’m wearing now were bought by my mother in the 1960s,” Bo said, suggesting he did not approve of the lifestyle Gu had created for their son, Bo Guagua.  “I have been working like a machine. I really don’t have time to care about air tickets, hotel expenses and travel expenses,” Bo said. He added: “The country did not pick me because I am a good accountant.”

That Bo has been allowed to mount such a public (and political) defense is not surprising, given his status as one of the second-generation ‘princelings’ of the Chinese Communist Party (中国共产党).  Even if Bo goes to prison for a decade or longer, the trial will have helped to cement his image as the leader of a ‘New Left’ movement within Chinese politics and society.

But what does that mean for the ‘Chongqing model’ that Bo championed as party secretary in Chongqing from 2007 to 2012?

The ‘Chongqing model’ is a vaguely neo-Maoist approach to governing China that involves a redoubling of state power and control, strengthening state-owned enterprises and aggressively attacking organized crime, while bringing back some truly unique vestiges of the era of former Chinese leader Mao Zedong (毛泽东), such as encouraging the singing of revolutionary-era songs.  It’s often contrasted against the ‘Guangdong model’ — a leadership style that encourages private development to blossom instead of through state-sponsored economic policy and at least a passing respect for the rule of law and other institutional reforms.

You can place the two models on the familiar left-right ideological axis — the Chongqing model prioritizes equitable distribution among all classes, the Guangdong model prioritizes the highest economic growth possible.  In reality, however, the line between the two models is blurrier.  Though the ‘Guangdong model’ is associated with the relatively liberal former Guangdong party chair Wang Yang (汪洋), now a vice premier (though not a full member of the Politburo Standing Committee) in Xi’s government, it was Wang who served for two years as Chongqing party chair as Bo’s direct predecessor.  Realistically, the differences among China’s political elite remain smaller than their shared values.  Just as there’s little chance that China will return to the days of Mao-era socialist state planning, there’s also little evidence that economic liberalization and reform has led (or will lead in the future) to greater political freedom.

Over the weekend, The Wall Street Journal reported that Xi Jinping (习近平), who took power as Chinese president earlier this year after assuming leadership last November as the general secretary of the party’s Politburo Standing Committee, is also lurching to the left in the first year of what is expected to be his ten-year stewardship of the People’s Republic of China: Continue reading With the end of Bo Xilai’s trial, is Xi Jinping co-opting the ‘Chongqing model’? →

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Photo of the Day: Henry Kissinger meets Li Keqiang

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So this is pretty amazing.China Flag Icon

Henry Kissinger, the U.S. secretary of state and national security adviser who paved the way for U.S. president Richard M. Nixon’s historic visit in February 1972 and thereafter, the normalization of U.S.-Chinese relations, met with Li Keqiang (李克强), the new premier of the People’s Republic of China on Tuesday:

[Li] said China is willing to work with the US to develop an unprecedented type of relationship in order to allow both sides to benefit from bilateral cooperation and play their due roles in maintaining world peace.

Kissinger highlighted the vital importance of US-China relations in promoting world peace and development, suggesting that both sides should work on long-term planning and strengthen communication to foster ties.

It must have been quite a stunning chat, considering that the current ‘Fifth Generation’ of leadership is essentially four generations of Chinese governance removed from the generation that Kissinger and Nixon encountered — Chinese premier Zhao Enlai (周恩来) and Chinese Communist Party chairman Mao Zedong (毛泽东).  Like him or love him, Kissinger remains one of the top old-school Sinologists in the United States, writing at age 89 a new book, On China, just last year.  When Nixon visited China, Li was just 17 years old.  The change that China has seen in the ensuing 41 years is one of the most amazing transformations of any human society in such a short period of time.

More background here on Li from my seven-part series from November 2012 on the seven members of the Politburo Standing Committee of the Chinese Communist Party (中国共产党).  Li speaks fluent English; unlike many of his colleagues on the Standing Committee, he is a protégé of Hu Jintao (胡锦涛) and unlike Chinese president Xi Jinping (习近平), Li is not a princeling.  An economic reformer, Li served as the Party secretary of Henan province previously, and he’s emphasized since becoming premier that his chief tasks will be to roll back Chinese government spending in favor of private sector development, corruption and the massive size of Chinese government bureaucracy, and tackling the growing gap between China’s rich and poor.

China

Happy Chinese New Year!

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It is now, of course, the Year of the Snake, as people of Chinese descent across the world today mark the Lunar New Year. China Flag Icon

But, for world politics, the Chinese new year will bring the formal inauguration in March of Xi Jinping (习近平) as the next president of the People’s Republic of China, completing the transition from Hu Jintao (胡锦涛) to Xi as China’s ‘paramount leader’ — Xi already became the general secretary of the Chinese Communist Party (中国共产党) last November with the election of seven members (including five new members) of the Politburo Standing Committee of the CCP.

Furthermore, Li Keqiang (李克强) is set to succeed the popular, but now scandal-plagued Wen Jiabao (温家宝) as the premier of the PRC government at the opening of the 12th People’s National Congress in March.

Just last week, Xi drew a bright line against corruption in the wake of accusations that several of Wen’s family members had amassed fortunes largely due to Wen’s powerful position and in the aftermath of the most spectacular Chinese political scandal in two decades surrounding now-disgraced former Chongqing party secretary Bo Xilai (薄熙来).

In a widely covered speech, Xi pledged to go after ‘tigers and flies’ in his fight against corruption — meaning that his leadership would stand for corruption neither among the highest-ranking officials nor among rank-and-file bureaucrats.

It remains to be seen whether Xi has the will to carry through that fight, but he’s already drawing quite a stylistic contrast from the buttoned-down ‘China, Inc.’ image of his predecessor Hu.

Photo credit to Kevin Lees — Bellagio, Las Vegas, January 2013.

China

Fifth Generation: Who is Xi Jinping?

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This is the seventh and final post in a series examining the Chinese leaders named to the Politburo Standing Committee during the 18th National Congress of the Chinese Communist Party (中国共产党) that concluded November 14.  Prior installments on Zhang Gaoli here, Zhang Dejiang here, Liu Yunshan here, Yu Zhengsheng here, Wang Qishan here and likely future premier Li Keqiang here. 

In many ways, there’s not much I can add to what the world’s press has already written about Xi Jinping (习近平) in the past 24 hours, who’s been the newest figure on the world scene since becoming the general secretary of the Party yesterday and, in a bit of a surprise, also the chairman of the Party’s Central Military Commission.  He is expected to take over before March 2013 as China’s president, thereby fully succeeding Hu Jintao (胡锦涛).

There’s much we already know about Xi — starting with the fact that much of the world’s press and other policymakers find Xi leagues more expressive and relatable than Hu.

Xi is a ‘princeling’ — the son of Xi Zhongxun, a revolutionary hero, former vice premier and Politburo member, who was purged during the Cultural Revolution, but returned to help Deng Xiaoping in the 1980s to develop parts of Guangdong provide as special economic zones.  When Xi Zhongxun was purged from the leadership in the 1960s, however, and Xi Jinping was just 15 years old, he was sent off to a remote village in Shaanxi province in the center of China.

As Robert Lawrence Kuhn writes in How China’s Leaders Think, Xi Jinping’s time in the ‘wilderness,’ so to speak, has now become part of his mythology:

Xi Jinping spent the next six years in this harsh, poor rural area — chopping hay, reaping wheat and herding sheep as a member of a local work unit.  He lived in a cave house, as was the local custom.  But he adjusted well to his new life, impressing older colleagues with his enthusiasm to labor long and hard, and with his personal modesty.  He built a reputation for endurance by winning wrestling matches with farmers, and by carrying ‘a shoulder pole of twin 110-pound buckets of wheat for several miles across mountain paths without showing fatigue.’

Xi did not lose his love of studying, however: by night, he would read thick books in the dim light of kerosene lamps.  The locals liked to go to his cave to listen to his stories about history and the world beyond the mountains.  Everyone, old and young, enjoyed chatting with him.

I’m not sure whether this is just so much hagiography for the next ‘paramount leader’ of the world’s largest country, but there’s no doubt that the young Xi certainly made an impression, and Xi was soon off to Beijing’s prestigious Tsinghua University, where he studied engineering.  Xi also holds a doctorate in law.

He spent much of his early career in Fujian, a province of nearly 37 million people on the Chinese coast just north of Guangdong province.

In 2002, Xi became the Party secretary of Zhejiang province, the province that lies immediately south of Shanghai, is home to 54 million people and is generally one of China’s most prosperous provinces, with double-digit growth rates during much of Xi’s tenure.  Kuhn reports that Xi was untainted by allegations of corruption and, indeed, had ‘zero tolerance’ for corruption and dishonesty — a fact that bodes well at a time when the Party’s been struck with corruption scandals that touch everyone from outgoing premier Wen Jiabao to the disgraced former Party secretary of Chongqing municipality, Bo Xilai.

Although Xi was appointed Party secretary of Shanghai municipality in 2007, he was appointed in the same year to the Politburo Standing Committee, and he quickly left the Shanghai position to assume the PRC vice presidency where, among other duties, he was responsible for overseeing the 2008 Summer Olympics in Beijing.

Notably, his wife is Peng Liyuan, who until very recently was more well-known in China than Xi.  Peng is a popular singer and entertainer with the People’s Liberation Army (she’s technically a major general).  Perhaps even more interesting, however, is that Xi’s first wife, Ke Lingling is the daughter of a former Chinese ambassador to the United Kingdom, and Ke still lives there today (and not in China).

But there’s also much we don’t know about Xi, notably in the way he hopes to lead the People’s Republic of China over the next decade.   Continue reading Fifth Generation: Who is Xi Jinping? →

China

Fifth Generation: Who is Li Keqiang?

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This is the sixth in a series of posts examining the Chinese leaders named to the Politburo Standing Committee during the 18th National Congress of the Chinese Communist Party (中国共产党) that concluded November 14.  Prior installments on Zhang Gaoli here, Zhang Dejiang here, Liu Yunshan here, Yu Zhengsheng here and Wang Qishan here.

Unless something incredibly drastic happens in the coming months, Li Keqiang (李克强) seems likely to succeed Wen Jiabao (温家宝) as the premier of the government of the People’s Republic of China at the opening of the 12th People’s National Congress in March 2013. 

Along with China’s presumptive new ‘paramount leader,’ Xi Jinping (习近平), Li is one of just two of the previous nine members of the Politburo Standing Committee who remain on the committee after this week’s Congress, which concluded Wednesday.  In addition to Xi and Li, five new members joined the committee (although all are over age 64, hardly making them ‘new’).

After today, however, Li is essentially the second-most important government official in all of China, and he is expected to be a cautious reformer who’s keen on narrowing economic inequality in China and widening the social safety net.

Li, as noted, has been a member of the Politburo Standing Committee since 2007 and he’s been the PRC’s executive vice premier since 2007 as well.  He is also the youngest member, at age 57, on the committee.

He was a Party secretary in Liaoning, a province of 43 million people, that borders North Korea, from 2004 to 2007, spearheading a campaign to revitalize China’s northeast.

Previously, he served as the governor and the Party’s vice secretary of Henan province, China’s third most-populous province in the east-central heartland of the country with 94 million people, and one of the largest provincial economies in the country.  Although Henan province’s economy grew during Li’s tenure (indeed, with an emphasis on agricultural modernization that saw rural growth exceed already-high levels of province-wide growth), he also presided over a mini-scandal involving the contamination of blood that may have infected up to one million people with HIV.

A BBC profile notes that Li has attacked corruption that has plagued the Chinese government:

A US diplomatic cable released by whistle-blowing website Wikileaks described Mr Li as “engaging and well-informed”.

In a private conversation with the US ambassador in 2007, he called China’s economic figures “unreliable” and warned that official corruption was the biggest cause of public resentment, according to the leaked cables.

That puts him at odds with Wen, whose family allegedly holds over $2.7 million assets, as reported in the past weeks by The New York Times.  Hu’s speech kicking off the congress, too, emphasized the need to stem corruption in China’s official ranks.

Unlike many of the newly appointed members of the Politburo Standing Committee who are protégés of former president Jiang Zemin (江泽民), however, Li is more a protégé of outgoing current president Hu Jintao (胡锦涛), whom he encountered in the leadership of the Party’s youth league in the 1980s.  With Hu stepping back from active government, however, Li may have few natural allies with a relatively older and conservative group now comprising the Politburo Standing Committee.

Cheng Li, director of research and a senior fellow at the John L. Thornton China Center, surmises that although Li lacks Wen’s political charisma, he may well be central to many key policy issues over the next decade:

Based on his previous work and the populist policy agenda he shares with his mentor Hu Jintao, Li’s hot-button policy issues will include increasing employment, offering more affordable housing, providing basic health care, balancing regional development, and promoting innovation in clean energy technology.

Interestingly, Li’s wife, Cheng Hong, is a professor of English language and literature in Beijing, and Li himself is fluent in English, just as fellow Politburo Standing Committee member Wang Qishan.

Like Xi, he spent time during the Cultural Revolution working in rural China, on a farm, and like Xi, Li also has a doctorate — in Li’s case, in economics.

China

It’s official: China’s new Politburo Standing Committee

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As predicted last week: the new Politburo Standing Committee of the Chinese Communist Party is as follows: 

  • Xi Jinping (习近平), who is expected to become the president of the People’s Republic of China, the general secretary of the Party and ‘paramount leader’, and a ‘princeling’ whose father was a Party dignitary;
  • Li Keqiang (李克强), who is expected to become premier;
  • Zhang Dejiang (张德江), a longtime hand who has served as Party secretary in Guangdong province and most recently, replaced disgraced Party figure Bo Xilai as Party secretary in Chongqing municipality — and also a ‘princeling’;
  • Yu Zhengsheng (俞正声), Party secretary in Shanghai municipality and a princeling as well;
  • Liu Yunshan (刘云山), director of the Party’s propaganda department (i.e., in charge of censorship and Internet restriction as well);
  • Wang Qishan (王岐山), a vice premier for economic, energy and financial affairs, and expected to play a major, reformist role in economic policy in Xi’s government; and
  • Zhang Gaoli (张高丽), currently the Party secretary of Tianjin municipality, and a former official in Shenzhen’s special economic zone.
 Suffragio‘s profiles of Xi and Li will come shortly, but in the meanwhile, you can read all about the five new members by clicking the links above.

The Politburo Standing Committee has been reduced from nine members to just seven.  Interestingly, the five new members (Xi and Li were already members) are relatively old — and so old that they will not be eligible for re-appointment in 2017 at the next National Congress because each will be older than the 67-year age limit for members of the committee.

Both Zhang Gaoli and Zhang Dejiang, as well as Yu Zhengsheng are firmly protégés of former president Jiang Zemin (江泽民), who preceded current president Hu Jintao (胡锦涛), who is stepping down to make way for Xi.

Left out are two key Hu allies: Li Yuanchao, currently director of the Party’s organization department, and Wang Yang, Party secretary in Guangdong province and perhaps the most notable advocate for political reform.

Liu Yandong, the only woman serving on the Politburo, also failed to make the cut.

As has been predicted in recent days, Xi will become the general secretary of the Party and will also immediately assume the chairmanship of the CPC Central Military Commission.

Xi is currently speaking to the press now, and his speaking style surely seems much more relaxed and expressive than Hu’s.

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The role of women in the CCP: just so much ‘beautiful scenery’?

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The 18th National Congress of the Chinese Communist Party (中国共产党) concluded today, but the photo above comes from a plucky photo essay at China People’s Daily, entitled ‘Beautiful Scenery,’ and depicts 14 photos of women delighting at various moments during the Congress.

As stated in the slideshow: ‘beautiful ritual girls, female reporters and delegates to the Party congress become beautiful scenery during the 18th National Congress of the Communist Party of China.’

Hat tip goes to Kathleen McLaughin, who’s been keeping a daily diary of the Congress for Foreign Policy, and who argues that gender disparity in China is perhaps getting worse, not better:

While 521 women serve as delegates in this party congress — 23 percent of the total, up from 18 percent a decade ago and higher than the 20 percent that women make up in the U.S. Senate — the members of China’s ceremonial electorate have far less influence over the process than their U.S. counterparts.

Gender discrimination often seems to be getting worse in China: Although a large percentage of Chinese women are employed (70 percent, compared with 25 percent in India), urban Chinese women earn about 67 percent of what men make, according to a 2010 survey from the All-China Women’s Federation. This summer, women in Guangzhou shaved their heads in protest of growing discriminatory policies around the country that require girls to score higher than boys on college entrance exams.

The Party hasn’t historically been incredibly welcoming to women, and in its history, it has yet to elevate a single woman to the Politburo Standing Committee, the chief governing body of the Party (and, accordingly, the Chinese government).  The members of the Politburo Standing Committee are likely to be announced by the end of this week.

One woman with an outside chance of being named to the Politburo Standing Committee is Liu Yandong (刘延东), who’s been a member of the Politburo (the only woman currently serving on the Politburo) since 2007 and who has served as a state councilor since 2008.  Liu (pictured immediately above) is a ‘princeling,’ as her father is Liu Ruilong, a former vice minister of agriculture, and she’s been close to outgoing Chinese leader Hu Jintao (胡锦涛) for three decades — notably, they worked together with the Party’s youth league in the 1980s.     Continue reading The role of women in the CCP: just so much ‘beautiful scenery’? →

China

Fifth Generation: Who is Wang Qishan?

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This is the fifth in a series of posts examining the Chinese leaders expected to be named to the Politburo Standing Committee during the 18th National Congress of the Chinese Communist Party (中国共产党) that kicked off November 8.  Prior installments on Zhang Gaoli here, Zhang Dejiang here, Liu Yunshan here and Yu Zhengsheng here.

Of all the potential new members of the Politburo Standing Committee, no one has a more assured spot than Wang Qishan (王岐山), who is expected to be the economic policy supremo of the next generation of leadership of the People’s Republic of China.

The only question is whether he’ll be elevated to executive vice premier under the likely new PRC premier, Li Keqiang (李克强), which had seemed likelier earlier in the summer and autumn, but now seems more uncertain, according to party sources.

The Congress concluded on Wednesday, with the Politburo Standing Committee members to be named today or tomorrow.

Wang, age 64, has served as the vice premier for economic, energy and financial affairs since 2007, when he became a Politburo member as well.

Previously, from 1989 to 1997, he was vice governor, then governor of the China Construction Bank, one of the world’s largest banks and indeed one of the world’s largest corporations.  As vice governor of Guangdong province in 2007, he was instrumental in the liquidation of the Guangdong International Trust and Investment Company, which, according to Robert Lawrence Kuhn in How China’s Leaders Think, signaled to the world that China was serious about developing market mechanisms that could bring discipline to the financial sector.

As such, he developed keen ties with former leader Jiang Zemin (江泽民), but his real patron among the older leadership is Jiang’s former premier, Zhu Ronghi (朱镕基), who, before his elevation to the premiership in 1998, served as vice premier and as the governor of China’s central bank (Wang served a brief stint as vice governor there as well).

Wang served as the Party chairman of Hainan province — the tropical island at the south of the Chinese mainland that stylizes itself as China’s Hawaii — from 2002 to 2003.  Hainan is, itself, an interesting story of Chinese internal growth — formerly part of Guangdong province until 1988, China’s leaders separated Hainan as its own province and designated it a ‘special economic area.’  Despite being seen as something of an economic backwater for centuries, its economy has grown in leaps and bounds, even by Chinese standards, in the past decade, and China hopes to transform it into an international tourism destination within the next decade.

He thereupon served as the mayor of Beijing from 2003 to 2007 and handled much of the preparation for the city’s hosting of the 2008 Summer Olympics.

Kuhn reports that Wang is a humorous and sophisticated rising star:

When the Olympics was approaching, a distinguished American financier asked for [Wang’s] business card.  “You won’t need my card,” Wang, then Beijing mayor, said with a smile. “If the Olympics is successful,” he joked, “I’ll be too high to help you — and if it’s not successful, I won’t have a phone!”

Wang, perhaps more than Li, China’s current ‘paramount leader,’ president and Party general secretary Hu Jintao (胡锦涛) or the expected new Chinese leader, Xi Jinping (习近平), is at ease with the international media — check out his interview with U.S. secretary of state Tim Geithner and Charlie Rose.  So Wang will likely have a major role to play in U.S. foreign relations as well, especially given the key economic issues involved in the U.S.-China relationship.

Named to the Time 100 in 2009, Wang was greeted with glowing praise from former U.S. treasury secretary Henry Paulson: Continue reading Fifth Generation: Who is Wang Qishan? →

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Unveiling the PRC’s new Politburo Standing Committee members

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In advance of the 18th National Congress of the Chinese Communist Party (中国共产党), set to begin November 8, the South China Morning Post printed Friday what it believes will be the list of the seven members of the most elite body in Chinese policymaking: the Party’s Politburo Standing Committee. The list has been corroborated by other news sources, and while not final, seems very likely to be the seven set to be appointed at the Congress.

The Standing Committee, expected to be reduced from nine to just seven members, is drawn from the larger (~25 members) Politburo, which itself is drawn from the ~300-member Central Committee of the Party.

If the reports are accurate, the Standing Committee will include the following members:

  • Xi Jinping (习近平), a member of the Standing Committee since 2007 and the current vice president of the People’s Republic of China, is widely expected to replace Hu Jintao as China’s ‘paramount leader,’ general secretary of the Party and, later in March 2013, as PRC president.  Xi is a ‘princeling,’ one of a group of current Chinese political leaders whose fathers were also senior Party leader during the first decades of Communist rule in China.  His father, Xi Zhongxun, was purged during the Cultural Revolution of the 1960s.  Xi previously served as the Party secretary of Zhejiang province (essentially, Shanghai’s hinterland on the south-central coast of eastern China) and then of Shanghai municipality in 2007 until becoming vice president.
  • Li Keqiang (李克强), also a Standing Committee member since 2007 and the PRC’s executive vice premier, is widely expected to replace Wen Jiabao as China’s premier in March 2013.  He served as Party secretary in Liaoning  province from 2004 to 2007.  He’s seen as a Hu protege, but will have a hard time following Wen, who remains perhaps the most charismatic and genuinely popular Party leader within the PRC today.
  • Wang Qishan (王岐山), a vice premier for economic, energy and financial affairs and a Politburo member since 2007, is seen as one of the most capable up-and-coming Chinese leaders.  Notably, he’s also seen as a proponent of further liberalization of China’s economy, additional fiscal reforms, and further foreign development and investment.  He headed the China Construction Bank in the 1990s, took over as the Party chairman of Hainan province (the tropical island at the south of the Chinese mainland) from 2002 to 2003 and served as mayor of Beijing from 2003 to 2007 before his appointment as vice premier.
  • Zhang Dejiang (张德江), a vice premier for energy, telecommunications, and transportation and a Politburo member since 2002, like Wang, is a protege of former PRC president Jiang Zemin, Hu’s predecessor, and like Xi, is also a ‘princeling.’ Zhang has a long career in Chinese politics — he was Party secretary of Jilin province (in China’s northeast, bordering North Korea and Russia) from 1995 to 1998 under Jiang, Party secretary of Zhejiang province from 1998 to 2002, Party secretary of Guangdong province (the largest province in China, and the home of Guangzhou and the Pearl River valley, where much of China’s amazing export growth has taken place in the past two decades) from 2002 to 2007, during the worst of the SARS crisis, and most recently, since March 2012, the Party secretary of Chongqing municipality following the removal of disgraced Chinese leader Bo Xilai.
  • Yu Zhengsheng (俞正声), currently the Party secretary of Shanghai municipality and a Politburo member since 2002, is also a princeling, and was very close to former leader Deng Xiaoping as well as to Jiang.  He was the PRC’s minister of construction from 1998 to 2001, Party chair of Hubei province in central China from 2002 to 2007, and thereupon became Party secretary of Shanghai.
  • Liu Yunshan (刘云山), director of the Party’s propaganda department and a Politburo member since 2002, who will likely remain in charge of propaganda and censorship.  Certainly no princeling, Liu rose up through the Party’s youth league.  His elevation to the Standing Committee marks a victory for the more conservative elements of the Party.
  • Zhang Gaoli (张高丽), currently the Party secretary of Tianjin municipality and a Politburo member since 2007, and yet another Jiang protege.  Zhang rose to prominence as the Party secretary in Shenzhen from 1997 to 2002 — Shenzhen is the special economic zone adjacent to Hong Kong that emerged as one of the PRC’s few early free-market zones, and Zhang’s experiences there make it likely that he’ll be among the Standing Committee members most likely to support further economic reform.  He thereupon became Party secretary of Shandong province, just south of Beijing on east-central coast of China, from 2002 to 2007, and was thereafter appointed to his current post in Tianjin.

If the line-up is confirmed later this month, it will mark a significantly conservative leadership with respect to most reforms, although potentially much more open to further economic reforms.  These seven Standing Committee members would be seen as much closer to Jiang than to the ‘fourth generation’ leaders, Hu and Wen. Continue reading Unveiling the PRC’s new Politburo Standing Committee members →

China, United States

Two systems, two transitions: China, U.S. face leadership crossroads simultaneously

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Next week, arguably the two most important countries in the world will kick off two very different leadership transitions.

On Tuesday, November 6, the United States of America will hold a general election.  For the 57th time since 1790, Americans will vote for U.S. president, at once the country’s head of state and head of government.  The winner will most certainly be one of two men: the Democratic Party incumbent, former Illinois senator Barack Obama (pictured above, right) or the Republican Party challenger, former Massachusetts governor Willard ‘Mitt’ Romney.  Americans will also determine who will control the both the lower and upper houses of the U.S. legislature.‡  The new Congress will be sworn in early in January 2013 and the president will be inaugurated (or reinaugurated) on January 20.

On Thursday, November 8, the People’s Republic of China will watch as the 18th Congress of the Chinese Communist Party (中国共产党) gets underway in Beijing, where all but two of the members of the Politburo Standing Committee, China’s foremost governing body, will step down and new members will be appointed in a once-a-decade leadership transition.  China’s ‘paramount leader’ Hu Jintao (pictured above, left), the general secretary of the Chinese Communist Party and PRC president since 2002, is expected to be replaced by Xi Jinping as general secretary, with the other state offices to follow through early 2013.  China’s premier, Wen Jiabao, is expected to be replaced by Li Keqiang.  Otherwise, the Politburo Standing Committee is expected to be reduced from nine to seven members and will include Xi, Li and five new faces — generally known as the ‘fifth generation’ of China’s leadership.

Despite their vastly different political systems, it’s fitting that the two transitions will coincide so neatly for the two most powerful countries in the world, both so alien culturally and interlinked economically — and there are parallels for both the superpower of the 20th century and a rising superpower of the 21st.  For every ‘5,000 years of history,’ there’s a corresponding ‘shining city on a hill.’  The United States has George Washington, Thomas Jefferson and 1776; China has Mao Zedong, Zhou Enlai and 1949.

The United States is the world’s third-most populous country with 315 million people, the third-largest country by land area, and the world’s largest economy with a GDP last year of over $15 trillion.  China, meanwhile, is the world’s most populous country with 1.347 billion people, the second-largest country by land area, and the world’s second-largest economy with a GDP last year of $11.3 trillion.

In 2012, if we don’t quite live in a bipolar world, we certainly live in a multipolar world where the United States and China are first among equals, and the U.S.-Chinese relationship will, of course, be a major focus of both governments over the next four years and beyond.

Indeed, Chinese relations have been an issue throughout the U.S. presidential election.

China emerged, if not unscathed, certainly more economically powerful than ever before following the 2008-09 global financial crisis, and China may well have the world’s largest economy within the next decade.  But the juggernaut of its double-digit economic growth, which has been fairly consistent throughout the past 20 years, is showing signs of sputtering, and a Chinese slowdown (or even a recession) would have a major impact upon the global economy.

Romney has vociferously attacked China for manipulating its currency, the renminbi, to keep the cost of its exports low, and Obama’s treasury secretary Timothy Geithner has made similar, if more gentle, criticisms.  Notably, however, the renminbi has appreciated about 8.5% since Obama took office in January 2009, chiefly because the Chinese government has hoped to cool inflationary pressure.

The level of U.S. debt held by the Chinese government has also become an important issue, especially with the U.S. budget deficit at its highest level (as a percentage of GDP) since World War II.  China, however, holds only about $1.132 trillion out of a total of around $15 trillion in U.S. debt, which is down from its high of around $1.17 trillion in 2011 — meanwhile, Japan has accelerated its acquisition of U.S. debt and may soon hold more than China.  The outsourcing of jobs previously filled in the United States has long been an issue across the ideological spectrum of U.S. domestic politics, with respect to China and other Asian countries.

In reality, however, other issues are just as likely to dominate the next generation of Chinese and American leadership.  With both militaries looking to dominate the Pacific (note the growing U.S. naval presence in the Philippines and throughout the Pacific), geopolitical stability throughout the region will be more important than ever — not just the perennial issue of Taiwan, but growing concerns about North Korea’s autarkic regime, tensions between China and Japan over territorial claims or other future hotspots could all spur wider crises.

As China’s middle class grows in size and purchasing power, and as the United States continues to boost its exports, China will become an increasingly important market for U.S. technology, entertainment and energy in the next two decades.  China’s accession to the World Trade Organization in 2001 and its increasing role as a trading partner with the United States mean that trade-related issues — such as the case that the United States brought against China in the WTO last month on cars and auto parts — will only become more important.

But while the U.S. federalist constitutional structure — with its tripartite separation of powers — has been set in place since the adoption of its Constitution in 1787, the Chinese structure is a more recent creation.  The Chinese Communist Party holds a National Congress every five years, with a handover of power every ten years, vesting power in a collaborative Politburo Standing Committee that makes all key policy-making decisions, a process that came into being only really with the passing of Deng Xiaoping in the 1990s.

After Deng, Jiang Zemin and the so-called ‘third generation’ of China’s political leadership essentially regularized the current process, and the ‘fourth generation’ led by Hu and Wen that assumed leadership in 2002 and 2003 is now set to pass leadership on to the ‘fifth generation’ under Xi and Li.

China’s party-state essentially has a dual structure: the state institutions of government (the National People’s Congress and the State Council) and the structure of the Chinese Communist Party are essentially parallel — the same people control both.  So from a wide base of over 2,000 delegates to the National Party Congress, around 200 will form the Party’s Central Committee, just 25 the more important Politburo and, after next week’s transition, merely seven will form the Politburo Standing Committee.  Those seven will also hold the key offices of state — as noted, Li is expected to become China’s premier, the head of the PRC government and Xi, as general secretary of the  Party, will serve as the president of the PRC and the chair of the Central Military Commission, the entity that directs the People’s Liberation Army, China’s main armed forces. Continue reading Two systems, two transitions: China, U.S. face leadership crossroads simultaneously →