Don’t Expect Reform from China’s New Leaders

With the unveiling of China’s new leadership, observers and journalists the world over are all contemplating the same question: Will the new group at the top of the Communist Party be able to engineer the reforms needed to tackle the plethora of challenges afflicting virtually every realm of policy and governance — domestic and international — in China?

The answer, unfortunately, is no. Those inside and outside of China anticipating a return to an ambitious reformist agenda that will further open and decentralize the economy; liberalize the polity; reduce social inequities and tackle pervasive corruption; and rectify strains in China’s relations with its neighbors in Asia, the European Union and the United States will be disappointed. China is in dire need of visionary and strong leadership — the complex challenges facing the nation have grown more acute during Hu Jintao’s presidency — but don’t expect it from the new team in Beijing.

First, the new leadership is not cohesive, and bureaucracies love leadership vacuums. The new Politburo and Standing Committee show many signs of continuing divisions over policy orientations and factional allegiances. While more potential reformers are discernible in the new group, they are likely to continue to be checked by an entrenched bloc of party conservatives and retired elders. Beijing’s political gridlock is similar to Washington’s, and Xi Jinping’s mandate for change is about as narrow as President Obama’s. In short, a “team of rivals” is not likely to produce forward movement in the Chinese Politburo.

The lack of consensus at the top has been the case for at least five years. All that the Chinese party-state has shown itself capable of is a combination of muddling through, hollow policy slogans (unfunded mandates) and money thrown at problem-plagued sectors (hoping that investment will produce return). But China’s key challenges — social inequity, environmental damage, rigidities of the educational system, lack of innovation, depressed consumer consumption, the demographics of aging and unbalanced sex ratios, labor mobility, lack of transparency and accountability, ineffective rule of law, poor provision of public goods, and weak “soft power” abroad — are all qualitative issues that do not lend themselves to state investment such as building high-speed rail or harbors.

Another obstacle is institutional. While leaders matter in the Chinese system, institutional interests count for far more. China may not be a democracy, but it has strong bureaucratic and interest-group politics. For the past five years real reform has been blunted by the “Iron Quadrangle”: mammoth state-owned enterprises, the internal security apparatus, the military and the conservative wing of the Communist Party. The coalition of these four power interest groups “captured” Hu, who was too weak and disinclined to stand up to them, and they stalled reforms.

This is the political landscape that Xi and the new Chinese leadership inherit. For his part, Xi, like Hu, remains a cipher: We do not know whether he is a closet reformer, a real reformer or another apparatchik-technocrat. His background suggests the last. At least he smiles and has a warmer public persona than the wooden Hu. Nonetheless, Xi & Co. will be trapped by these and other powerful vested interests that strangled the would-be reforms of Hu’s more progressive advisers and the acolytes of his predecessor, Jiang Zemin.

To break the Iron Quadrangle and launch the much-needed new reforms will require enormous vision and willpower on Xi’s part, an investment of huge institutional resources to buy them off, and time. It will be at least two years before Xi can consolidate his power and be in a position to tackle the powerful vested interests that run China today. And it is not clear that he is even so inclined.

Thus, when anticipating China’s future after the 18th Party Congress and the potential for reform under Xi Jinping, expect more of the same: authoritarian stagnation and gridlock at home, with increased abrasiveness abroad.