China Leadership Monitor
Friday, July 7, 2006

Spring 2006: Issue 18

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

The Taiwan Tangle

by Alan D. Rombergvia China Leadership Monitor
Friday, July 7, 2006

On 27 February 2006, Taiwan’s president, Chen Shui-bian, announced that the National Unification Council created by Lee Teng-hui’s Kuomintang (KMT) administration in 1991 would “cease to function” and that the National Unification Guidelines that the Council created would “cease to apply.” At the end of May, in response to the political crisis arising from insider trading allegations against his son-in-law and rumors of corruption on the part of his wife and close political associates, Chen “transferred power” to Premier Su Tseng-chang and said he would refrain from any activities apart from those specifically given to him by the constitution, which include foreign and national security policy and cross-Strait relations. This essay assesses the impact of these events on the complex triangular relationship between Beijing, Washington, and Taipei.

Military Affairs
Military Affairs

Sino-US Military Relations and the Admiral Fallon Visit

by James Mulvenonvia China Leadership Monitor
Friday, July 7, 2006

In May 2006, the Combatant Commander of U.S. Pacific Command, Admiral William “Fox” Fallon, visited the People’s Republic of China, traveling to four cities and meeting with a wide range of civilian and military officials. During his meetings, Fallon invited the Chinese military to attend the “Valiant Shield 2006” exercise in June, an invitation the Chinese side accepted during the Defense Consultative Talks in June. This article examines the press coverage of Fallon’s trip, analyzing the comments of his Chinese interlocutors and the symbolism of his various meetings and activities.

Political Reform
Political Reform

Institutional Innovation at the Grassroots: Two Case Studies

by Joseph Fewsmithvia China Leadership Monitor
Friday, July 7, 2006

The emergence of new institutions is critical if the Chinese Communist Party (CCP) is to transform itself from a traditional Leninist party, exercising highly concentrated authority and mobilizing populations, to a more modern, administrative party that follows procedures and adheres to rules. Whether such a transformation is successful in the long run, efforts in this direction are slowly reshaping power at the local level in China. To the extent such efforts are successful, they have the potential to reduce social conflict and make local governance more effective. Success is far from guaranteed. Nevertheless, in the interest of better understanding the transformation of local governance, this article looks at two instances of institutional innovation: the “one mechanism, three transformations” adopted in Handan, Hebei Province, and the “permanent representative system” as adopted in Ya’an, Sichuan Province.

Economic Policy
Economic Policy

Claiming Profit for the State: SASAC and the Capital Management Budget

by Barry Naughtonvia China Leadership Monitor
Friday, July 7, 2006

One of the most important economic issues playing out in China today is the control of state enterprise profits. State firms have become very profitable over the last several years, so there is a lot of money on the table. At the same time, control over profit is a central component in a network of interlocking issues, including corporate governance reform, fiscal reform and even social security reform. The State Asset Supervision and Administration Commission (SASAC) has taken major steps in 2006 toward establishing a claim on these profits and advancing its own agenda for reform of the state sector.

Party Affairs
Party Affairs

The Road to the 17th Party Congress

by Alice L. Millervia China Leadership Monitor
Friday, July 7, 2006

This summer the Chinese leadership will begin active preparations for the 17th national congress of the Chinese Communist Party (CCP), expected to convene in 2007. Party congresses are the most important public event in Chinese leadership politics, and their convocation involves long preparations that inevitably heat up the political atmosphere in Beijing more than a year ahead of time. This article projects the course of preparations ahead and suggests some of the issues that are likely to be debated on the way to the 17th Congress.

The Provinces
The Provinces

Reshuffling Four Tiers of Local Leaders: Goals and Implications

by Cheng Livia China Leadership Monitor
Friday, July 7, 2006

Of the multitude of tasks confronting the top Chinese leadership, controlling local governments and training the future generations of CCP elites have the most intriguing and far-reaching implications. The Chinese leadership’s recent plan for a large-scale reshuffling of four tiers of local officials, combined with its ambitious mid-career training programs, indicate that Hu Jintao is concerned about both the short-term need to consolidate his own power and the long-term future of CCP rule. The upcoming reshuffling will likely provide Hu and his protégés with increased control in both the national and local leaderships, thus making them more effective at carrying out their populist developmental policies. However, in the not-too-distant future, the ever-changing domestic and international environment will likely push the Chinese political system to be open enough to allow talented young people with diversified backgrounds to become part of the ruling elite.