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    China Business
     Jan 4, 2008
Jitters for Hu before China's big party
By Wu Zhong, China Editor

HONG KONG - China, already a growing voice on the global stage due to its thriving economy, will hold the world's attention for a quite different reason later this year when it plays host to the Summer Olympic Games. As visitors throng the capital Beijing and no doubt marvel at the ''Bird's Nest'' stadium that will house most of the big events, they will be less aware of other events in 2008 that will be arguably more important for the country's future.

After March, new faces will be running the country's institutions, themselves set for a thorough shake-up, while 2008 will culminate

in the 30th anniversary of the economic reforms that have created divisions in the country while also transforming it.

According to Chinese numerology "8" means "fortune", and the country's leadership will be hoping good luck flows their way over the next 12 months, starting in March with the first session of the latest five-year-term of the National People's Congress (NPC), whose agenda includes endorsement of a restructuring of the State Council, China’s cabinet.

After the Olympics in August - the first time a Chinese city has hosted the games - the third big event of the year will be celebrations of the economic reforms initiated in late 1978 by late paramount leader Deng Xiaoping, whose policy of opening up China has fundamentally changed the country, leading to its present high economic growth and hugely increased prosperity.

A new five-year-term meanwhile will start for the ceremonial State Central Military Commission. Its composition is identical with the Communist Party’s Central Military Commission, but according to the constitution, only the party commission has the real power to command the armed forces. The present party Central Military Commission was endorsed by the 17th Party Congress last October.

The formation of the new State Council must be endorsed or rubber-stamped by the NPC, which will begin its session on March 5. Attention is being paid to the upcoming reshuffle, though no big suprises are expected, as Wen Jiabao will remain premier and Hui Liangyu will start his second term as vice premier. Li Keqiang, who was elected as one the nine members of the Politburo Standing Committee at the 17th Party Congress, is widely tipped to be executive vice premier, replacing the late Huang Ju. Two Politburo members, Zhang Dejiang and Wang Qishan, who were recently relieved as Guangdong party chief and Beijing mayor, are likely to become vice premiers, replacing Wu Yi and Zeng Peiyan, both of whom are set to retire due to their age.

What is "extraordinary" this year is that the State Council will undertake a major restructuring to cope with the changed situation in the country, with some ministries to be wound down and some new mega-ministries established. It is reported that Li Keqiang is working on the restructuring.

According to what has been revealed so far, plans under consideration include setting up an energy ministry to take over all or the relevant functions at present exercised by the National Development and Reform Commission, the State-owned Assets Supervision and Administration Commission (SASAC), the Ministry of Land and Resources, the Ministry of Water Resources, the State Electricity Regulatory Commission. The Ministry of Energy will thus become China's top regular on energy industries.

A transport ministry will also be set up, taking over and merging the functions of the current Ministry of Communications, Ministry of Railway and General Administration of Civil Aviation of China (CAAC). The new ministry will also take over some functions from other departments such as China Post.

The present Ministry of Agriculture, State Grain Administration and State Forestry Administration will be merged into a ministry of agriculture. The current State Environment Protection Administration (SEPA) and Ministry of Construction are likely to be merged into a ministry of environment and construction, which will also take over some of the functions currently exercised by other departments such as the Ministry of Land and Resources and the National Development and Reform Commission.

Changes in the regulation of the financial industry are also underway, with the government easing restrictions that prohibit China's banking, securities and insurance companies from doing business in each other's sectors. The proposed changes will allow so-called "cross-sector" businesses. To facilitate supervision under the new circumstances, China is considering merging the separate regulators - China Banking Regulatory Commission, China Securities Regulatory Commission and China Insurance Regulatory Commission - into a super financial regulatory body. Another alternative is to set up an ad hoc group to co-ordinate cross-sector supervision. Former central bank governor Dai Xianglong, who has just been relieved as Tianjin mayor, is tipped to lead the super watchdog.

A major reshuffle of officials is inevitable under the various ministry chantes, as central government departments are closed or streamlined.

Pleasing believers in numerology if no one else, Beijing is set to kick off the 2008 Olympic Games on August 8 (08-08-08). Success of the games will be a matter of more than national pride. The 17th Party Congress last October marked the final stage of President Hu Jintao's emergence from the shadow of his predecessor, Jiang Zemin, and a successful Olympics will serve a proof of the capabilites of the fourth-generation Communist Party under Hu's leadership.

If something goes wrong, the Chinese leadership would not only lose face but be seen by the general public as responsible. Officials at all levels are now being mobilized to ensure the success of the Beijing Olympics, with no resources spared.

The games come as the country's place on the global economic stage is no longer in doubt, clear proof of the progress made after 30 years of economic reforms and opening up to the wider world. The Cultural Revolution launched by Mao Zedong in 1966, which brought the Chinese economy to the edge of bankruptcy, came to an end with the death of the Great Helmsman and one year later, Deng Xiaoping was rehabilitated to make the third political comeback in his lifetime.

The 11th Central Committee of the Communist Party held its third plenary session on December 18-22, 1978 and Deng, though nominally not the No 1 leader, dominated the meeting. Steered by him, the party's policy-making body decided to discard Mao's "class struggle" doctrine and shift its focus onto developing the country's economy. To do this, the then command economy had to be reformed. To facilitate reform, it was also decided to open doors to foreign investors. The subsequent transformation of the country continues to astound the world.

In 1978, the country's gross domestic product (GDP) or its equivalent (because it had not then adopted the term) was 568.9 billion yuan (US$78 billion). In 2007, GDP is estimated to have grown 40 times to 23.25 trillion yuan. China's foreign reserves, basically zero in 1978, now total more than $1.4 trillion. The country's people in general have never felt so prosperous. As a Chinese saying today puts it: "Mao Zedong led us to stand up while Deng Xiaoping led us to become rich."

Numerous activities are therefore expected to mark the anniversary of Deng's opening up of the country. At the same time, amid the justified celebrations, the government will be seeking to address problems the economic reforms have brought in their wake, notably a widening wealth gap, the deteriorating environment and rampant official corruption. Failure to address these problems will lead to heightened questioning by neo-leftists, a small group of young intellectuals mainly based in Beijing and who claim themselves true Marxist believers,

They argue that the reforms have betrayed socialism and changed China into a capitalist country, resulting in its increasingly widening wealth gap. They have made their case through various media, with their views echoed by some retired officials. Their influence so far remains minimal. However, if discontent grows among those left behind or hurt by the country's prosperity, the voice of criticism could become louder and be more clearly heard once the Olympic applause has faded and the foreign crowds gone home. Host Hu has a long year ahead.

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