China’s Changeover

 |  January 28, 2013

In November 2012, the Chinese Communist Party, the ruling power in the People’s Republic, held the 18th Party Congress. It was at this weeklong meeting that China’s new leaders were announced.

In true Chinese bureaucratic fashion, the expected frustrations for the average person began to build in the days and weeks leading up to the bi-decade event as the Party flexed, or tried to flex, its control over information flowing out of the country.

Skype calls with friends currently in Beijing were exercises in frustration, with the connection cutting out every few minutes.

“Sorry,” they would say. “The Party has been strangling the internet again.”

Clients would email me from alternate accounts, asking if I knew of a workaround for exchanging materials we were working on.

“I can’t even get into my Gmail,” they would write. “Hoping things are back to normal soon.”

Normal in China is something entirely different from normal in the rest of the world, but their complaints got me thinking. What, if anything, would the leadership changes mean for the country, and the region, both on the large scale economic policies, issuance of visas and in people’s day to day lives?

China saw a number of embarrassing incidents this year, perhaps the most famous of which was the unravelling of the career of Bo Xilai. A once-powerful politician who served as the Secretary of the Chongqing Committee of the Chinese Communist Party from 2009-2012, and who seemed poised to rise to the top of the political system, was disgraced when his police chief sought asylum from the American consulate in Chengdu. Bo’s fortunes further unravelled when his wife, Gu Kailai, was charged and convicted for the murder of Neil Heywood, a British businessman. Details of Bo’s brutish methods of keeping order in Chongqing have since surfaced, and suggest his downfall was well deserved. 

However, in a nation where keeping face and avoiding embarrassment is a defining element of the culture, the internationally reported Bo Xilai scandal was quite a blow.

Then came the Chen Guangcheng incident, in which the blind lawyer and activist escaped from house arrest and showed up on the doorstep of the American embassy in Beijing, begging for asylum. Another enormous embarrassment for the Chinese government. Not exactly an ideal time to have the critical eyes of the world on you.

So it was a turbulent year that led up to the 18th Congress and much speculation surrounded the changeover in power. During the Congress, which was held from Nov. 8-14, 2012 in Beijing, President Hu Jintao handed over the titles of Party General Secretary and Chairman of the Central Military Commission to Xi Jinping, who was named the nation’s next president. Second to Xi will be Li Keqiang, who is slated to become the nation’s next premier. Both men are expected to take on their new roles when the National People’s Congress meets in March.

Xi at least paid lip service to the need for reforming a notoriously corrupt government, though whether China will see any improvement on human rights issues under his leadership is uncertain. Xi has been quoted by the New York Times on the issue of Tibetan independence as saying he hopes the United States “honours its commitment to recognising Tibet as a part of China and opposes Tibetan independence and handles Tibetan issues in a prudent and proper manner.”

Of course, as one of the world’s largest and most significant economies, a major question is what the change in leadership will mean for the economic and financial sectors.

Tim Lamb, managing director of JLJ Group, which specialises in helping international companies expand into China, said he anticipates that the Chinese economy will transition from one that is investment-led to one that is “led by consumption”.

“Stability is the paramount concern of the CCP and its government so I would expect the hardliners and the old guard having to compromise with reformists in the party,” Lamb said in an email.

Lamb also echoed a concern that has been voiced in international media since the Congress began. Because China’s government is such a guarded one, it is difficult to say what reforms, policies and changes are likely to lie ahead.

“Prognostications of how China’s leadership will continue with the status quo or affect change do not carry with them the same level of authority as more transparent governments,” Lamb said.

Mark Smit, marketing director at sourcing company China Performance Group, said that given the difficulties of establishing a base in China as a foreign company, it is conceivable that international organisations will turn to Southeast Asia for business solutions.

“Bigger companies that need a low sourcing price might go to Pakistan, India, and Vietnam, but China is still better at sourcing,” he said.

Smit also said he could see how Thailand might be a suitable option for foreign business owners.

“Many Thai people speak English, which can make it attractive,” he said. “Thailand is really open for opportunities.”

Lamb also commented on how China’s economic future might influence other parts of Asia.

“As wages and standards of living rise, expect to see more firms looking for low-cost alternatives to China, which may include ‘on-shoring’ (bringing manufacturing back to its original home country) as well as expansion into Southeast Asian countries-Vietnam, Cambodia, Indonesia and possibly even Myanmar in the future,” he said.

Within China, Smit said he expects to see a push for companies to open factories in the central and Western parts of the country, as opposed to the already crowded east.

But again, the future of Chinese policy remains shrouded in uncertainty.

“They make it harder and harder to obtain long-term visas,” which could affect the decisions of businesses to move to China, according to Smit. Of course, that could be a benefit to sourcing companies like China Performance Group, which handle all research, quality control and other essential functions for foreign companies.

“I kind of expect China to open up the borders now, but every time, China does the exact opposite of what I’m expecting,” he added.

While businesses and major companies could be affected by the decisions of China’s leadership, whether or not the government changes will mean much to the average person remains to be seen.

Tang Tang, a 23-year-old Chinese woman who teaches Chinese in Chiang Mai, said she paid little attention to the Congress while it was in progress, and suspected that her friends back in China had done the same.

“I’m a normal person and they have power,” Tang Tang said. “What they do doesn’t really change my life every day.” She did, however, receive updates on the Congress through her Weibo account, a micro blogging site in China.

Tang Tang left China to experience something different and live in a place she says is safer and friendlier than her native country. Besides, she said, she didn’t want to condemn herself to the fate of her friends in China, who work in jobs they hate, often working overtime without pay.

Tang Tang said she and her friends are less concerned with who is running the country because they don’t believe it will make much difference when it comes to dealing with their own problems.

“Maybe they will say, ‘this is a little better now’ or ‘that was a little better before,'” she said, “but I don’t think it will really change our daily life.”