China Leadership Monitor
Tuesday, October 24, 2006

Fall 2006: Issue 19

PRC-Tawain-United States
PRC-Tawain-United States

Taiwan: All Politics, All the Time

by Alan D. Rombergvia China Leadership Monitor
Tuesday, October 24, 2006

Domestic politics in Taiwan overshadow all else in the U.S.-Taiwan-PRC triangular relationship and will likely do so for the foreseeable future. Beijing, like Washington, has studiously avoided taking sides in the island’s current domestic political maelstrom, and expanded cross-Strait charter flights are moving ahead while economic relations are burgeoning. At the same time, Beijing has expressed apprehension that desperation political moves by Chen Shui-bian could generate a cross-Strait crisis and has appealed to Washington to take timely action to forestall it. Despite Taipei’s efforts to quell any American concerns in this regard, Chen Shui-bian has yet again raised the prospect of constitutional changes that would—if enacted—precipitate a crisis. Although the prospect of success of such constitutional moves remains close to zero, U.S. impatience with such unnecessary distractions has led Washington once more to ratchet up warnings to the Taiwan leader.

Military Affairs
Military Affairs

So Crooked They Have To Screw Their Pants On: New Trends in Chinese Military Corruption

by James Mulvenonvia China Leadership Monitor
Tuesday, October 24, 2006

Corruption is the most dangerous cancer in the Chinese party-state today, and PRC media are replete with new revelations of official corruption at every level of the system. Not surprisingly, the military vanguard of the Party continues to be plagued by the same corrosive institutional corruption as the Party itself, despite divestiture from commercial operations in 1998 and eight intervening years of focus on rapid combat modernization. This article examines recent trends in Chinese military corruption, including the Wang Shouye scandal and the current PLA campaign against “commercial bribery.” It concludes that corruption in the PLA appears to have transitioned from a major, debilitating problem in the go-go days of PLA, Inc. in the 1980s and 1990s to a more manageable issue of military discipline in the new century. At the same time, the complicity of the military leadership in hiding Wang Shouye’s extraordinary extra-legal behavior until one of his mistresses forced its hand suggests that leadership has not institutionalized anti-corruption norms. Accordingly, military leadership analysis is a key element of understanding the depth and breadth of PLA corruption.

Political Reform
Political Reform

Exercising the Power of the Purse?

by Joseph Fewsmithvia China Leadership Monitor
Tuesday, October 24, 2006

Over the past 10 years, the city of Wenling, in the eastern coastal province of Zhejiang, has been developing a system of “consultative democracy” that has allowed citizens to ask about and express their opinions on subjects related to their interests, particularly capital construction, road building, and education. Over the past year, this experiment has been extended to include public discussion of the budget process—or at least part of it. In one township, this process merged the practice of consultative democratic meetings with the local people’s congress. These reforms, widely reported on in the Chinese press endorsed at high levels, are still quite limited, but they suggest an effort to make the budgetary process both more transparent and subject to legislative review by expanding the role of local legislative bodies.

Economic Policy
Economic Policy

Another Cycle of Macroeconomic Crackdown

by Barry Naughtonvia China Leadership Monitor
Tuesday, October 24, 2006

During the summer of 2006, Chinese leaders focused economic policy on the danger of overheating. As it did in the 2004 round of economic contraction, policy involved a potent combination of monetary and administrative measures. However, unlike 2004, policy instruments this time have been well coordinated across financial, macroeconomic, and administrative measures, even including a slight acceleration in the rate of appreciation of the RMB exchange rate. The result is an economic policy package that is stable and consistent, but that may not be bold and flexible enough to meet the needs of the extremely dynamic Chinese economy. The recent visit to China by U.S. Treasury Secretary Hank Paulson should be interpreted as an effort to nudge China out of this extreme policy stability. Paulson’s meeting with President Hu Jintao injected some flexibility into the balance of forces that determine Chinese economic policy, but probably not enough to result in a major change at this time.

Party Affairs
Party Affairs

The Problem of Hu Jintao’s Successor

by Alice L. Millervia China Leadership Monitor
Tuesday, October 24, 2006

One question that the Chinese Communist Party leadership is likely to address in preparation for the 17th Party Congress in 2007 is designation of the eventual successor to the party’s top leader, Hu Jintao. Resolution of this question will challenge existing arrangements and power balances in the leadership and so spark controversy and infighting. Not surprisingly, Beijing has tightly guarded whatever discussion of this question may have already occurred and has given no intimation of who Hu’s successor may be.

The Provinces
The Provinces

China’s Telecom Industry on the Move: Domestic Competition, Global Ambition, and Leadership Transition

by Cheng Livia China Leadership Monitor
Tuesday, October 24, 2006

China’s telecom sector has been one of the country’s fastest-growing industries during the past two decades. Recently, a number of large, rapidly expanding Chinese firms have emerged to compete successfully in the global market despite heavy competition from multinationals. As the business leaders of China’s flagship telecom companies become famous within China, their personal stories are beginning to influence the leadership styles and management practices of a new generation of Chinese entrepreneurs. This paper examines the rise of China’s leading telecom firms (such as Huawei and ZTE) and the characteristics of their CEOs. Although the senior managers of China’s telecom industry do not have significant international exposure, they have not been deterred from adopting a “Go Out” strategy for expanding their business operations overseas.