China Leadership Monitor
Friday, July 30, 2004

Summer 2004: Issue 11

Foreign Policy
Foreign Policy

Leadership Policy toward Taiwan and the United States in the Wake of Chen Shui-bian's Reelection

by Robert L. Suettingervia China Leadership Monitor
Friday, July 30, 2004

It is hardly surprising that the People's Republic of China (PRC) reacted negatively to the reelection of Chen Shui-bian as president of the Republic of China (ROC) on Taiwan. Leading up to the March 20, 2004, election, Beijing adopted a careful, low-key approach, in contrast to its missile launches in 1996 and its shrill threats in 2000. But there was little doubt that it hoped Chen would be defeated by the pan-blue coalition of the Kuomintang (KMT) and People First Party (PFP). In the run-up to Chen's victory, Beijing had once again failed to influence events in Taiwan. Still, the narrow margin of victory, the recount, the court challenge, and hopes that Chen might adopt an accommodating stance on cross-Strait relations in his May 20 inauguration speech all apparently combined to stay Beijing's hand. Now that Chen's speech has been delivered, assessed, and found wanting, however, high-level officials, media commentators, and "track two" scholars are pressing a harsher, more confrontational line. The revised approach will have consequences both for China's relations with the United States and perhaps on the domestic front as well.

Military Affairs
Military Affairs

Your Guess Is As Good As Mine: PLA Budgets, Proposals, and Discussions at the Second Session of the 10th National People's Congress

by James Mulvenonvia China Leadership Monitor
Friday, July 30, 2004

For observers of People's Liberation Army (PLA) politics and civilian-military relations, annual sessions of China's parliament—the National People's Congress (NPC)—are interesting for three main reasons. First, the session reviews the government's annual budget, which includes official figures for defense spending. These figures, with significant caveats, indicate the pace and scope of military modernization—as well as the relative political weight of the PLA. Second, roughly one-tenth of all delegates to the NPC are active-duty military officers, and their discussions (often complaints) in plenary sessions are useful markers of intramilitary concerns. Third, the NPC often passes military-related regulations, which sometimes reveal institutional or doctrinal trends in the armed forces. From that perspective, the second session of the 10th NPC in March 2004 is notable for restoring double-digit increases in the defense budget and for giving new guidance on military modernization and management of the army. Also notable was the absence of any visible civil-military split like the "two centers" debate from the NPC in March 2003.

Political Reform
Political Reform

Promoting the Scientific Development Concept

by Joseph Fewsmithvia China Leadership Monitor
Friday, July 30, 2004

For the past nine months, party General Secretary Hu Jintao and other leaders have been promoting a new economic approach that they call the "scientific development concept." This approach aims to correct what they describe as an overemphasis in recent years on increasing gross domestic product (GDP), which encourages the generation of false figures and dubious construction projects while neglecting the social welfare of those left behind in the hinterland. Advertised as a "people-centered" approach to development, the scientific development concept has been extended to leadership practices in general, including the recruitment of talent and the administration of the Chinese Communist Party (CCP). Leaders associated with former party General Secretary Jiang Zemin, such as Secretariat head Zeng Qinghong, have endorsed the scientific development concept, but Zeng in particular has appeared to demur at some of its central notions. At a minimum, this divergence underscores the difficulty of defining "social development" as opposed to "mere" economic development; at a maximum, it suggests continuing tensions within the leadership.

Economic Policy
Economic Policy

Hunkering Down: The Wen Jiabao Administration and Macroeconomic Recontrol

by Barry Naughtonvia China Leadership Monitor
Friday, July 30, 2004

On April 26, 2004, the Standing Committee of the Politburo agreed to strengthen contractionary macroeconomic policies dramatically and to apply administrative controls over investment and land use. Within days, the State Development and Reform Commission (SDRC)—the former State Planning Commission—issued an urgent directive ordering the suspension and reinspection of thousands of investment projects. These steps represent a dramatic reorientation of Chinese macroeconomic policy. They have a significant political impact, bringing new leaders into the core of the economic decision-making process and shifting economic policy in a conservative direction. If not an outright step backward, these measures also indicate that economic policy approaches in place through the first year of the administration of Premier Wen Jiabao have failed to achieve their objectives. This piece describes the most important policy measures instituted; traces these measures' political implications, and assesses their economic implications.

Party Affairs
Party Affairs

Party Politburo Processes under Hu Jintao

by Alice L. Millervia China Leadership Monitor
Friday, July 30, 2004

Attention in PRC media to the activities of the Chinese Communist Party (CCP) Politburo in the 18 months since the 16th Party Congress has illuminated aspects of that body's operating procedures and its members' roles. In particular, recent media reporting has further clarified the Politburo's meeting schedule and agenda, as well as the division of responsibilities for policy supervision among its membership. There have also been rare glimpses of the "leadership small groups"—the informal task forces that coordinate implementation of Politburo decisions throughout the party, state, and other hierarchies in China's political order. A previous article in China Leadership Monitor (issue 9, winter 2004) assessed aspects of the Politburo's schedule in the context of broader party procedural reforms inaugurated under Hu Jintao's leadership. This article complements and extends that analysis.

The Provinces
The Provinces

Bringing China's Best and Brightest Back Home:

by Cheng Livia China Leadership Monitor
Friday, July 30, 2004

The Chinese leadership recently adopted a "strategy of strengthening China through human capital" with the goal of enhancing the country's international competitiveness in higher education. Largely because of new policy incentives implemented by the government, China has witnessed a tidal wave of foreign-educated Chinese returning to their native country since 2000. A quarter-century-long effort to train China's best and brightest overseas now seems to have come to fruition. These new developments, however, may also intensify political tensions between coastal and inland regions within the country and between foreign-educated and locally educated elites. China's well-funded universities, where foreign-educated returnees already predominate, are disproportionately located in a few coastal cities. This increasingly uneven distribution of human capital presents a major challenge for the Chinese leadership as it strives to achieve more-balanced regional development.