The 19th National Congress of the Communist Party of China will begin on October 18, 2017, at the Great Hall of the People in Beijing. Held every five years, this key gathering will bring together about 2,300 delegates who have been selected in local provincial party congresses as well as from the central government in Beijing and the military.
Although the Congress is held behind closed doors and the process remains opaque, we know that the delegates will confirm Xi Jinping as President and Li Keqiang as Premier. It will also elect the Central Committee which will then approve the leadership’s plan for the years ahead.
This year’s Congress marks the halfway point of China’s President’s usual 10-year term. The previous National Congress, held in 2012, was a major turning point for China. As the 19th National Congress approaches, we ask China Research Partnership experts to weigh in on the following three questions:
1. Why is this year’s Congress such an important milestone for China’s road ahead?
2. What do you anticipate will be the main issues on the agenda, and what outcomes can we expect?
3. The Congress will be of great interest to China watchers, but why should Canada also pay attention?
Discussion hosts: Iris Jin, senior program manager, trade, investment, innovation, and Canada-China relations, Asia Pacific Foundation of Canada, and Charles Labrecque, project specialist, China Research Partnership, Asia Pacific Foundation of Canada.
This year’s Congress is critical because it reveals who will become China’s next generation of top leaders and what they will prioritize. The “who” question has come under intense scrutiny, not in the least because President Xi Jinping is expected to break with long-established party norms. It is conjectured that he will reappoint his anti-corruption right-hand man Wang Qishan, thus breaking the “seven up, eight down” norm that Politburo Standing Committee members should retire at age 68. Many have speculated that norm-breaking may pave the way for Xi to overstay his two terms.
Top leaders are of course important. But other elements of the “who” question also deserve attention. For instance, will any women be promoted to a coveted spot on the Politburo Standing Committee? This would be a historic appointment, as no woman has ever held this post since the founding of the People’s Republic of China in 1949. Will Xi’s “Chinese Dream” include women at the helm? Probably not. There are currently only two women out of 25 members in the Politburo, and neither is poised to be promoted. The leadership changes in the currently 376-member Central Committee (4.9 percent of formal members are women) will mostly be a shuffling of men over 60 replaced by men over 50, all sporting the uniform jet-black hairstyle. Yet, the party-state is paying attention to foreign criticism of the lack of gender diversity in its leadership. The state-run newspaper recently ran an article heralding the increase in the number of female, minority, and working-class delegates to the 19th Congress. But delegates are just attendees with the symbolic power to elect leaders. Everyone knows that the appointment decisions are made at the top of the pyramid, not by the approximately 2,300 delegates chosen to symbolize an empty vote.
This gets to the “what” question – what will the new crop of leaders do? Will they announce any ground-breaking political, economic, or social policies at the Congress? Likely not. The Congress is a highly ritualistic show of power transition and an affirmation of the Communist Party of China’s continued rule. Even the most astute China watchers will be reading the tea leaves of speeches given at the Congress.
However, the tone and keywords in Xi’s speech will warrant close study. First, he may reiterate and even redefine the slogan of “the Chinese Dream.” In his first term, this dream has included creating a moderately prosperous society while reigning in corrupt officials and clearing out political dissidents. What will the second stage of the Chinese Dream entail? Certainly, a continued emphasis on enhancing national security and social stability. This has been the agenda of the past few administrations since the 1989 Tiananmen democracy movement and will continue to be a top priority for Xi’s second term. We might also expect Xi and his men to keep dreaming beyond China’s borders, with the continued expansion of the ambitious Belt-Road initiative launched in 2013. Finally, no dream would be complete without some wealth for the common people. China is already a global leader in poverty alleviation. But Xi dreams of more: ending poverty altogether by lifting 50 million people out of destitution by 2020. And his team of party stalwarts may do just that, giving the masses all the more reason to fondly pronounce his moniker, “Xi Dada” or “Daddy Xi.”
Canada should be an opportunist when it comes to China, especially in light of the Trump-led American withdrawal from the Asia Pacific. China is Canada’s second-largest trading partner behind the United States. That alone is reason enough to pay attention. The Trudeau government has paved the way to a closer partnership by launching the China-Canada Economic and Financial Strategic Dialogue. As talk of a free trade deal between the two countries is ongoing, Canadians should be hawk-eyed about any mentions of continued economic reforms during the 19th Party Congress.
As the first western country to establish diplomatic relations with China, Canada continues to embrace Chinese people and their capital. Our universities have over 120,000 Chinese students paying international tuition, injecting talent and revenue into our higher education system. Some of these students may stay in Canada while others will return to China to become future business, political, and cultural leaders. Influencing them early on with Canadian values of tolerance, equality, and respect for rights is one way to offset the awkward tension between free trade and clashing political values. In turn, the 19th Party Congress has much to teach Canadians about China and its political values – that feeding the masses and keeping social stability should trump all.
Held only twice every decade, the Chinese Communist Party’s National Congress is one of China’s most important political events to watch. It marks a key moment of leadership transition and charts major policy directions for the years to come. Five out of seven members of the powerful Politburo Standing Committee – China’s top decision-making body – will likely retire after the 19th Party Congress this October.
President Xi Jinping will almost certainly commence a second five-year term as the party general secretary, and Premier Li Keqiang is also expected to be re-elected. Having consolidated power during his first tenure at the helm of the Communist Party of China and the country, Xi has emerged as perhaps the most powerful Chinese leader since Deng Xiaoping. It is widely speculated that Xi is now in a stronger position to push for further economic liberation and structural reforms, which may include reforms of the financial market and state-owned enterprises. Strong party discipline and control as well as an assertive approach to international affairs are also likely to continue under the renewed leadership.
How the leadership reshuffle plays out will be a key outcome to watch for at the Party Congress. China’s next president and premier in waiting (terms to start in 2022) might be named among the youngest of the newcomers to the party’s Central Standing Committee. There is, however, speculation that Xi may look to stay on beyond his second term, which would spell the end of unwritten party rules of collective leadership upheld for nearly two decades. This could be in a third term as president or in some new position such as party chairman.
Xi’s governing philosophy is expected to be officially adopted by the party’s constitution as guiding ideological principles. If Xi’s name is attached, his pedestal status on par with Mao Zedong and Deng Xiaoping will be proclaimed, although it is not yet clear whether Xi’s historic role would approach that of the earlier party titans.
A carefully drafted political report will be released at the Party Congress that will highlight key accomplishments of the past five years under Xi’s reign, identify major challenges ahead, and lay out economic, social, and political policy priorities for the next five years and beyond.
Already the second-largest economy in the world and Canada’s second-biggest trading partner, China plays an increasingly vital role in shaping the world we all live in. The paths forward set by the 19th Party Congress for China will have profound implications for the global economic and political order, which Canada cannot be insulated from.
Will China make substantive progress in liberalizing its economy and marketplace? Will China maintain its growth rates, which are gradually decreasing? What are the priorities of the country’s foreign policies? How does China plan to manage great power relations with the United States? The Party Congress will address or at least offer clues to many of these important questions. With Canada likely to open free trade negotiations with China later this year, peering into China’s future is both prudent and necessary.
The 19th National Congress of the Communist Party of China is an important milestone because of the long-term implications it has for the leadership of the party. If one assumes that the current retirement norms will persist, it would be expected that many key party members will retire from their positions and be replaced with new members.
Thus, the 19th Congress heralds an important opportunity for Xi to have his allies appointed to important positions, thereby consolidating his political power. Xi could then draw upon this vitally important bank of political currency to secure the support needed for any forthcoming reform initiatives. Xi and the current top members of the party generally consist of the fifth generation of party leadership. A key point is whether any sixth-generation leaders will be appointed to important positions – particularly the Politburo Standing Committee. Such an occurrence would indicate that potential successors to Xi are being put into place for Xi’s presumed retirement in the future. Alternatively, if some members anticipated to retire continue to stay in their current positions (particularly on the Politburo Standing Committee), this would signal that the retirement norm is not necessarily written in stone. Interestingly, this could also signal increased long-term political power for Xi. It might indicate that he intends to stay in power past the assumed age of retirement, thus further affecting the power structure in China.
The main issues on the agenda are likely to be consistent with Xi’s past plans for China. Commencing with Deng Xiaoping’s post-1979 reforms up to the present, China’s reform path has been characterized by incremental, gradual reforms (particularly with experimental reforms in local regions) that have emphasized political stability. However, the word “incremental” should not confused with the word “insignificant.” China’s series of incremental reforms have resulted in remarkable economic growth since 1979 (although such growth has, unsurprisingly, also come with associated problems such as pollution and income inequality). Although Xi is expected to consolidate his political power at the 19th Congress, his vision for China is expected to maintain the course that he has previously mapped out – thus continuing the traditional stability-oriented approach of his predecessors.
Therefore, one perspective in approaching the anticipated agenda of the 19th Congress is not to focus so much on what the Chinese government intends to do but rather to pay attention to how it intends to accomplish the plan that has already been laid out. In his first 5-year term, Xi has already elaborately laid out his vision for China’s future – a vision that he has summarized in the phrase the “Chinese Dream”. The Chinese Dream aspires to the creation of a moderately prosperous society – a slogan that signals that the Chinese leadership is aiming for sustainable, balanced growth rather than the blistering GDP growth that China accomplished in the past. Consistent with the Chinese Dream is Xi’s strategy encapsulated in the term “Four Comprehensives” which focus on creating a moderately prosperous society, further reform, governance of China according to law and strictly governing the CCP.
Several of China’s initiatives can be viewed through the lens of the Four Comprehensives. Xi’s much-publicized campaign against political corruption has resulted in the conviction of even high-level officials (consistent with the aims to govern China according to law while also governing the party). Important initiatives that may contribute to China’s prosperity include the One Belt One Road initiative, which aspires to promote China’s trading network while simultaneously elevating China’s role in global trade. This is complemented by the recent establishment of the Asian Infrastructure Investment Bank initiated by China. As to deepening reform, under Xi’s tenure, there has been a gradual experimentation with reform of state-owned enterprises (allowing greater private ownership). While the above issues represent important steps forward, there remains much to be accomplished and critiqued – a key point will be to observe whether statements from the 19th Congress directly or indirectly elaborate on the continuance of the above initiatives and whether there will be additional complementary reforms.
China is one of Canada’s most important trading partners. Therefore, it is natural that an event that can have a significant impact on China’s economy and trade, such as the 19th Congress, will merit Canada’s attention. The prominent ascendancy of protectionist sentiments among some of Canada’s trading partners has recently underscored the importance of Canada securing stable trading relationships internationally. In the latest discussions between Canada and China, increasing bilateral trade between the two countries has been a common topic.
It will be important for Canada to evaluate statements made at the 19th Congress that may allude to China’s future trade-related policies, including matters such as the One Belt One Road initiative. In addition, China’s new relaxed foreign investment policies (from 2016 and 2017) are aimed at encouraging foreign investment in China. Yet, it may be prudent to wait until after the 19th Congress to assess what further initiatives or assurances the Chinese government may provide potential foreign investors. In addition, it is not only China’s foreign trade policies that may impact Canada. Policies that impact Chinese entrepreneurs will be important because there are Canadian businesses that transact directly with Chinese businesses. The Chinese government has recently assured Chinese entrepreneurs that it will strive to provide a friendly legal environment for them. Yet, such relatively new statements could benefit from further reinforcement at the 19th Congress. This is an important point for Canada to search for in the statements made at the 19th Congress – even if the statements may be vague or indirect hints.
Canada should carefully monitor China’s progress with state-owned enterprise (SOE) reform for two reasons. First, it is an important indicator of how well China is managing its overall economic reform process. This provides Canada a way of assessing the economic stability of an important trade partner. SOE reform has been a formidable problem for the Chinese government. SOEs have been inefficient and drain important Chinese government resources (including vast amounts of money). On the other hand, SOEs allow the Chinese government greater direct control over the economy – including stability issues such as employment and management of vital industries. The ability of the Chinese government to walk the thin line between state control and market freedom throughout its latest attempt at SOE reform (allowing for “mixed ownership” – i.e., more private ownership of SOEs) can be viewed as one potential litmus test of China’s reform plans. Second, the Canadian government has been concerned about permitting Chinese SOEs to make substantial investments in Canada. The fear is that SOEs are overly politicized, which may not be to the net benefit of Canada and might even raise national security concerns. Therefore, the extent to which SOEs are reformed (or even eventually substantially privatized) may affect Canada’s receptiveness to Chinese foreign investment. In turn, this may come back full circle to affect China’s receptiveness to Canadian investors. Thus, it will be important to assess the 19th Congress for indications of how China intends to continue its SOE reform.
This 19th Party Congress should provide crucial signals for political transition – or lack thereof – in China. Usually, the next political leaders are installed some 5 to 10 years before they come to occupy key leadership positions. We should be watching closely the personnel who will occupy positions in the 25-member Politburo, as they are effectively the shortlisted candidates for the next round of political leadership. The factions to which these Politburo members are loyal will provide important information on the next paramount leader in China. Will President Xi Jinping put in place party followers who are loyal to him? Or will the previous president, Jiang Zemin, install candidates who are rivals to Xi’s faction?
The other key development is who will occupy the seven- to nine-member Politburo Standing Committee, the pinnacle of power in the one-party state. More than half of the current members have reached the informal retirement age of 69. Of most interest is Wang Qishan, supposedly Xi’s trusted ally and the commander-in-charge of the anti-corruption campaign. He has been the target and subject of intense rumours. There are speculations that Xi may change the long-standing informal retirement age rule to allow him to stay on. The change in retirement age, if indeed implemented, will almost be an unprecedented amendment of the informal rule that has been in place since Deng Xiaoping’s era.
The most important development is whether Xi will stay on as the general secretary of the party, who automatically assumes the position of president. Xi has removed a number of potential challengers to his power in the anti-corruption campaign – most recently being Sun Zhengcai, the former party secretary of Chongqing municipality. A number of signals suggest that Xi may indeed stay on as the paramount leader beyond the usual 10-year term.
A whole host of issues will be put on the agenda, such as the pace and substance of economic reforms – specifically reform of state-owned enterprises and the grand economic plan for home-grown giant corporations to replace foreign firms in the next decade. Under Xi’s leadership, economic and financial reforms have taken a backseat to strengthening the state’s role in the economy. We are likely to see liberal economic reform to continue to give way to Xi’s desire to consolidate the state’s control over state-owned enterprises, and to see slowing or even reversals of some of the reform programs that were implemented in the last decade.
Xi is expected to further consolidate his power by installing his trusted allies in the Politburo Standing Committee. Further, he may also change some of the informal rules to allow his allies and himself to stay beyond the usual two-term period. This will set a significant precedent for changing a major rule of the game of elite politics. These rules have been put in place to help provide the predictability and certainty that is so crucial to the political stability of the authoritarian regime. Amending it unilaterally could mean China is returning to Mao Zedong’s era of concentrated decision-making and experiencing an erosion of the institutionalization efforts that have been implemented since Deng. This does not bode well for political stability of the world’s second-largest economy.
There are many reasons why Canada should pay close attention to this event. In general, Canada should have awareness and knowledge of the major political transition in a major economic and political power in the world. A more proximate reason is Canada’s exploration of a free trade agreement with China. As well, the intention of Trudeau’s administration to establish closer ties with China in general means Canada should have broad, if not intimate, knowledge of elite politics in China.
China is presently facing several interlocking crises. The economy is slowing, which creates challenges around employment and stability. Relations with the United States remain complicated by trade and security matters, and by uncertainty about U.S. political leadership and its China policy. Regional issues relating to North Korea, Taiwan, and the South China Sea, for example, continue to raise challenges. Domestic security remains a challenge, as indicated by crackdowns against human rights lawyers and minority nationality groups. The Congress will offer an important opportunity to respond to these issues. As well, the Congress will set the context for the remainder of Xi Jinping’s term as president and general secretary of the Communist Party of China, and lay the groundwork for what is to follow. Indeed, the question looms as to who will succeed Xi (Guangdong’s Hu Chunhua and Beijing’s Cai Qi come to mind), and even whether Xi will continue in office beyond his second term.
Whether the 19th Party Congress will respond meaningfully to the myriad of policy challenges facing China today remains very uncertain. Whatever the policy outcomes that do emerge, I should think the economy will figure prominently. This may include attempting to restore domestic economic growth through debt financing and infrastructure development, and renewing calls for greater openness in international trade and investment (exemplified by the One Belt One Road initiative along with bilateral and regional trade and investment agreements), in juxtaposition to the apparent U.S. withdrawal from international economic affairs. The Congress will very likely adopt “Xi Jinping’s political thought” as a set of governing principles intended to set a consistent course in response to the challenges currently facing China. The Congress will also likely address personnel issues, such as Politburo membership, military staffing, and provincial party leadership, aiming generally to cement Xi’s leadership and legacy. Alternative views are likely to be muted, as the recent dismissal of Chongqing Party Secretary Sun Zhengcai seemed to confirm that failure to express unreserved loyalty to Xi remains a serious liability for other members of the leadership group.
For all its problems, China remains critically important to Canada. Discussions of a free trade agreement continue in the midst of criticisms of China’s human rights record. Co-operation with China on global governance matters such as climate change, and bilateral co-operation on such issues as financial fraud and money laundering remain important. While often muted in comparison with U.S. voices, Canada also has interests in Asian regional security matters such as the South China Sea and the challenge of North Korea. At the end of the day, China’s importance to Canada and the world mandates that we pay attention to leadership and policy debates that are likely to surround the 19th Party Congress.
The Party Congress is the time for China to set its ideological and policy priorities and to select its leadership across the board (party, government, military) for the following five years. This is the moment when core arbitrages among high-level priorities are set and the balance of power among leaders is adjusted. By construction, it is a momentous event, and the jockeying among would-be new leaders is particularly intense throughout the year leading up to the Party Congress. This particular Party Congress is especially important both for external and internal reasons.
Externally, China has now emerged as a critical player along with the United States on all global issues that will define the future external environment for all nations, including Canada. As the United States goes through an intense nationalistic phase and seems to partly retreat from the global liberal order it has created since 1944, it is China that has stood up to speak about the importance of globalization, trade, and combating climate change (although not, of course, democracy, human rights, and free global finance). China has taken a lead role at the G20 and in the implementation of the Paris Agreement on climate change. With its Belt and Road initiative, China is setting in motion the most significant effort at global infrastructure development, market integration, and cross-regional cultural exchange of the 21st century so far. Will these efforts continue? Will the 19th Party Congress further formalize China’s views on global economic and environmental governance? And will China’s own new macro-economic direction contribute to a more stable and balanced global economy? Additionally, China is now the key country standing between U.S. President Donald Trump and North Korean leader Kim Jong Un – will the Party Congress set a new approach toward its unruly North Korean ally?
Internally, the 19th Party Congress represents a fork in the road for the future of Chinese governance. Will the norms of collective leadership and leadership turnover set by Deng Xiaoping be upheld at a time when power appears more concentrated and the anti-corruption campaign has hit hard within the ranks of top leaders? Will the decisions ratified this October usher in a further period of stability and good governance, or will it lead to a deeper cult of personality and cronyism? Conversely, if leadership decisions are settled in a stable and legitimate way, will that enable President Xi Jinping to accelerate economic reforms in sectors that appeared to stall recently, and to eventually relax the political controls that have tightened over the last few years? The stakes are extremely high for the future of China and of the world.
On the leadership front, significant turnover is expected. It is almost certain that five of the current seven top leaders on the Politburo Standing Committee will step down, leaving only President Xi Jinping and Prime Minister Li Keqiang as continuing leaders. Admittedly, there is also much speculation about the future of Wang Qishan, the all-powerful leader of the Central Commission for Discipline Inspection, who may step down and uphold norms about age and turnover on the Politburo Standing Committee or may become an exceptional case. In the larger Central Committee, a full 70 percent of the current 350 members are expected to step down and be replaced, including 83 percent of the 41 members from the People’s Liberation Army or police (Source: Cheng Li, Brookings Institution). This wholesale turnover will bring forward a new generation of emerging leaders, the so-called “sixth generation” leaders (born in the 1960s). And while Xi’s power will be consolidated by the rise of some of his younger protégés and by the affirmation of Xi Jinping Thought in the party charter, it remains striking that even he must still broadly follow the rules set by Deng Xiaoping and perform the balancing act among party factions. He has support within the party to keep combating the most egregious cases of corruption, but not to create a new Mao-like era of absolute control.
On the policy front, the Congress will slightly edit its charter, consolidating Xi’s contributions and initiating new policy directions. Its report will also set in motion new reform directions that observers will watch closely. Among the core issues, one should expect an acceleration of reforms of state-owned enterprises within some limits (seeking to avoid too-great unintended consequences), further banking and financial reforms (but again within some limits, especially regarding capital flows), and the opening toward some trade and investment regime reforms that will ease tensions with the United States and other partners. We are not likely to see significant advances in terms of political reforms or relaxation of political controls, as the Communist Party of China continues to see the current situation as a vulnerable period of intense social change.
Observing the pre-19th Party Congress period from within China, I am struck by the level of stability, prosperity, and national pride felt at least by the growing middle class in large cities of China. If anything, it is a reminder that the governance of the Xi regime so far is popular. It is also striking that the life of individual Chinese citizens has recently been more transformed by Alibaba (creator of the online shopping website Taobao) and Tencent (creator of social media application WeChat), as well as increased domestic and international travel, than by any action or control from the government.
For a trading nation like Canada, policy changes in the United States have always had tremendous effects on us, both because of our close physical proximity and because of the United States’ position as a leader in the global economic system. China has now joined the United States as a leading global economic and environmental power – one that has already surpassed the size of the U.S. economy in PPP terms. So, the impacts of the policy changes initiated within China at the time of the 19th Party Congress are similar to the ones following U.S. elections and they will have a global impact that will reverberate in Canada.
In a more direct way, Canada is on the verge of initiating formal negotiations on a free trade agreement with China, and the gains for Canada in that negotiation (in the context of great tensions with Trump’s “America first” strategy) will depend on the stability of the new Chinese leadership and on the strength of the reform mandate emerging from the 19th Party Congress on an issue-by-issue basis.
If anything, Canada is likely to deal with a more confident Xi administration after the 19th Party Congress – one with a mandate and timeframe to engage on economic and environmental issues, but also one that will not be easy to push around on issues that it does not agree with.