China: Too Big To Fail?

China's governing system—not just its leaders—need to change after the upcoming party congress.

The seventeenth National Congress of the Chinese Communist Party, 2007.The financial crisis that still plagues the world has taught that banks deemed too big to fail may also be too big and complex to manage efficiently. Consider the London office of JPMorgan Chase that ran up a $6 billion loss when no one at headquarters was watching closely or enforcing its own rules.

Something similar may apply to China. Its huge economy won’t fail even though it clearly is slowing down to an unknown pace. But as Chinese society becomes more modern, complicated and troubled, Beijing’s leaders are finding it increasingly difficult to govern effectively—at least by the ruling system they have in place. Despite insistent warnings from inside the country that failure to reform may lead to a national crisis, so far they resist making needed changes that might also put at risk their own great power and privileges.

A test will come next month when, two days after the U.S. election, the ruling Communist Party begins once-per-decade leadership changes at the party’s eighteenth national congress. (Similar government revisions will follow early next year.) The 2,270 carefully selected delegates—including twenty-six migrant workers, a twenty-one-year-old Olympic swimming champion and a ninety-seven-year-old former Beijing mayor—will follow the official script to name a new ruling-party politburo and, more importantly, the smaller standing committee that makes all crucial policy decisions for China’s opaque system. Fourteen of the twenty-five current politburo members are expected to retire; seven of them also belong to its nine-man standing committee. The outgoing members include president and party chairman Hu Jintao and Premier Wen Jiabao (there are no women at the top).

The standing committee holdovers are Xi Jinping, who will replace Hu as party chairman and eventually as China’s president, and Li Keqiang, expected to become the next premier. After that, who knows? There is great speculation about the other names, what duties they may have (each committee member oversees an important policy sector) and what quarreling party factions they represent. It’s not even certain how large the standing committee will be; there is no fixed rule and many analysts believe membership will be cut to seven, further narrowing decision-making authority. The entire politburo presumably will stay near the twenty-five-member mark.

In some ways, it doesn’t matter. China’s real problem isn’t who gets what job but the governing system itself—however much the final personnel choices may affect policies substantially, if not always predictably. For example, President Hu was touted as a reformer when he took office a decade ago, and those who have met him in private insist he displays a realistic grasp of China’s serious problems. But he has almost never said anything interesting in public, and his tenure seems marked more by intellectual stagnation than policy innovation. It has also brought more corruption, nepotism and other cronyism, with repression on the rise. These days some claim incoming President Xi will bring a new approach to the job, but no one really knows for sure. Pressure to prolong the self-serving status quo that the ruling elite finds so comfortable remains strong and perhaps overpowering, no matter how unsuited to addressing the key challenges.

Yet change is needed. The nation faces increasingly grave problems, and so far there are no clear signs of what party leaders plan to do about them to prevent more serious trouble from erupting. And, increasingly, the calls for reform are coming from within, not only from foreign analysts who distrust China’s Leninist political structure and its authoritarian ways. Citing “a potential crisis,” a paper aimed at the leadership by Strategy and Reform, a Beijing think tank, issued this warning: “The next decade might be the last opportunity for actively pursuing reform, and we should treasure this last chance.” Deng Yuwen, editor of a newspaper published by the influential Central Party School, has lamented the failure of Hu and Wen to initiate reforms, writing that “the next two or three years, and at most the next [ten-year] political cycle, will be a crucial period for China’s development.” (That such criticism can be published proves China already is changing significantly; it would have been impossible when Mao Zedong was in charge.)

Reform can have many meanings, and the party’s many critics are not united behind any single plan. Serious efforts to organize, in fact, would almost certainly land them in jail. And only the most naive dissidents believe some kind of instant democracy is either possible or desirable. Chinese society is only now developing the stabilizing civic structures needed to make a truly representative political system credible. Beyond that, however much the ruling party might modify its governance, its first priority is to retain power. In any case, most domestic critics don’t want it to self-destruct anytime soon for fear chaos would follow—a point the party emphasizes to justify its own continued rule.