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The Outlook

by George P. Shultzvia Hoover Digest
Friday, January 30, 2004

Former secretary of state George P. Shultz surveys the current Asian political and economic landscape.

Political Reform

The Third Plenary Session of the 16th Central Committee

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

The recent Third Plenary Session of the 16th Central Committee suggests that despite obvious signs of tension within the leadership over the past year, Chinese Communist Party (CCP) General Secretary Hu Jintao has begun to put his distinct stamp on policy. A long "Decision" on the goals of further economic reform—the only document emerging the plenum to be made public—indicates a greater concern with balanced growth and the social dimensions of economic development than did the political report adopted at the 16th Party Congress in fall 2002. Although the plenum did not take up the issue of political reform explicitly, it adopted a new party procedure that called for the Politburo to report on its work to the whole Central Committee, a step advertised as a step toward "inner-party democracy." Recent articles in party journals indicate that discussions continue on political reform, albeit of a limited sort, and that there are likely to be significant developments in this area in the future.

Economic Policy

An Economic Bubble? Chinese Policy Adapts to Rapidly Changing Conditions

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

During the first half of 2003, rapid growth in China led many to proclaim the emergence of an economic "bubble." Extremely rapid growth of money and credit was accompanied by rapid growth in investment, especially in the housing market. Chinese policymakers have taken steps to restrain the bubble, and these measures are now having an impact. During this first phase, the emergence of the bubble and the way that it was handled seem to have strengthened the positions of both Premier Wen Jiabao and Central Bank Governor Zhou Xiaochuan. However, the rapid emergence of the bubble economy reveals some unsettling realities about the Chinese economy. Moreover, the bubble portends important shifts in the economic payoffs and challenges that lie ahead for the political leadership.

LAND OF THE SETTING SUN? The Future of Japan

with Toshio Nishi, Steven Vogelvia Uncommon Knowledge
Tuesday, January 6, 2004

From the 1950s through the 1980s, Japan experienced dramatic economic growth as it transformed itself from a defeated militaristic empire into a democratic, high-technology powerhouse. The Japanese economy became so dynamic that, by the late 1980s, some American experts were arguing that Japan would overtake the United States as the world's dominant economic power. And then the Japanese economy collapsed. And for nearly fifteen years, the economic malaise has continued. Why? What does Japan need to do to snap out of its doldrums? And what are the risks and benefits to American interests of a reinvigorated Japan?

Economic Policy

The State Asset Commission: A Powerful New Government Body

by Barry Naughtonvia China Leadership Monitor
Thursday, October 30, 2003

A powerful new government body, the State-Owned Assets Supervision and Administration Commission (State Asset Commission, or SAC, for short), was authorized at the 10th National People's Congress in March 2003 and set up operations in June. The SAC represents an important step forward toward clarifying and modernizing the administration of government property rights and improving the oversight of government managers. But at the same time, because the SAC is intended to gather the reins of many types of authority, there is a risk that it will become an overly powerful and interventionist body. The establishment of the SAC reveals much about the sources and exercise of political power in contemporary China. The commission's head, Li Rongrong, exemplifies the newly emerging technocratic leadership. But, the manner in which the SAC falls in the middle of contention over personnel authority also shows how old-style political considerations remain central.

Party Affairs

The Hu-Wen Leadership at Six Months

by Alice L. Millervia China Leadership Monitor
Thursday, October 30, 2003

Party General Secretary Hu Jintao and People's Republic of China (PRC) Premier Wen Jiabao have governed China for nearly six months since their installation at the 16th Party Congress in November 2002 and the 10th National People's Congress (NPC) in March 2003. Since taking power, they have faced unexpected crises and new dilemmas. They have also had an opportunity to put in place policy departures that give concrete expression to the abstruse ideological prescriptions of the party congress. And, they have imparted their own style of governance. Judged from the record so far, Hu and Wen have built on themes of the Jiang Zemin era to pursue an activist agenda of liberalizing economic and political reform and have projected a liberal approach to leadership.

The Provinces

Educational and Professional Backgrounds of Current Provincial Leaders

by Cheng Livia China Leadership Monitor
Thursday, October 30, 2003

This article focuses on the educational and professional characteristics of the current provincial leaders. A quantitative analysis of the data on 325 provincial party secretaries, governors, and their deputies shows three important trends. First, educational credentials continue to be an important criterion in the selection of provincial leaders. Not only has the percentage of provincial leaders with college educations reached a zenith in the history of the People's Republic of China (PRC), but many of these leaders also hold advanced postgraduate degrees. Second, the professional distribution of provincial leaders has become increasingly diversified. Although leaders trained in engineering and the natural sciences continue to dominate provincial-level leadership, economists and those who majored in business management now form the largest professional group among provincial leaders in the younger cohort (age 54 and below). And third, leaders with educational experience overseas have emerged in almost every province-level administration in the country. Most of them studied in the West, especially in the United States. All these recent changes in the profiles of China's provincial leadership will have profound implications for the country's socioeconomic development in the years to come.

Political Reform

Studying the Three Represents

by Joseph Fewsmithvia China Leadership Monitor
Thursday, October 30, 2003

Starting in June, Chinese media have been promoting a new campaign to study the "three represents," Jiang Zemin's ideological formulation that was enshrined in the Chinese Communist Party (CCP) constitution at the 16th Party Congress in fall 2002. Following Hu Jintao's efforts to emphasize a more populist approach to governance, including his "people's war" against severe acute respiratory syndrome (SARS) in April and May, the new campaign has raised new questions about the relationship between Hu and Jiang. Review of the evidence reveals that this campaign has long been in the works and thus should not—in and of itself—be taken as evidence of a reassertion of Jiang's political clout, but there are nevertheless significant differences between the two leaders and their approaches to governance and ideology. Although the evidence suggests that Hu Jintao has been trying to inject new themes and approaches to governance, he remains willing to acknowledge the role of Jiang as elder statesman and refrains from challenging him directly. Thus, political differences are more likely to be played out in personnel decisions and policy priorities over the coming months than in the sort of political competition that is likely to lead to instability.

Military Affairs

The Crucible of Tragedy: SARS, the Ming 361 Accident, and Chinese Party-Army Relations

by James Mulvenonvia China Leadership Monitor
Thursday, October 30, 2003

The recent loss of Ming-class submarine Number 361 with all hands aboard and the role of the People's Liberation Army (PLA) medical system in the severe acute respiratory syndrome (SARS) cover-up threaten to further strain a Chinese party-army dynamic that was already undermined by the incomplete leadership transition of the 16th Party Congress. Yet, the evidence also suggests that Hu Jintao, despite the potential opening offered by the governance crisis over SARS, appears unwilling or unable to directly challenge Jiang Zemin's leadership at this point in time, portending more months of jockeying and ambiguity in the political arena and an unclear chain of command in the military realm.

Foreign Policy

PRC Security Relations with the United States: Why Things Are Going So Well

by Thomas Christensenvia China Leadership Monitor
Thursday, October 30, 2003

My first contribution to China Leadership Monitor was completed 10 days before the terrorist attacks in New York, Washington, D.C., and Pennsylvania. In that essay, I laid out reasons for optimism and pessimism about trends in People's Republic of China (PRC) security relations with Taiwan, the United States, and U.S. allies in the region. If we apply the template laid out in that essay to the contemporary setting, it is quite clear that U.S.-PRC relations are more stable and constructive than they have been at any other time since the period prior to the Tiananmen massacre of June 4, 1989. In fact, on issues such as North Korea, Washington and Beijing are closer to the long-term goal of a security partnership, articulated by the Clinton administration, than anyone could have expected when the Bush administration first assumed office. The early months of 2001 saw tough rhetoric on China out of Washington and a brief crisis in bilateral relations following the collision of a People's Liberation Army (PLA) jet fighter and a U.S. Navy EP-3 surveillance plane. Since fall 2001, however, relations have improved dramatically. There are still problems, of course. For example, there is still much improvement to be made on issues such as PRC weapons proliferation. That having been said, cooperation in the war on terrorism has been real, as I have outlined in previous editions of CLM. Beijing was also not very vocal in its opposition to the war in Iraq. Moreover, in the past several weeks Beijing has been extremely helpful to Washington in addressing the North Korean nuclear crisis and pressuring Pyongyang to accept a multilateral forum for negotiations. This cooperation has led to the assessment by Secretary of State Colin Powell that U.S.-PRC relations are at their most constructive "in decades." In this essay, I lay out the reasons for this basic turnaround in U.S.-PRC bilateral relations.

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