August 11, 2015
   Posted in News From Other Sites
Chinese President Xi Jinping

Chinese President Xi Jinping

The Economist, 8 August 2015

SUMMER holidays are always the same for China’s leaders. Every year they decamp from the hot and humid capital and gather in villas by an exclusive stretch of beach in Beidaihe, a resort town of little appeal except to those Chinese who cannot afford glitzier getaways, and to Russians from Siberia who are relieved to be anywhere with sun and sand. Mao Zedong established the Beidaihe-going tradition. He is the only Chinese leader who is known to have felt sufficiently inspired by the place to write a poem about it. It was an anxiety-tinged one, finishing with the words: “The bleak autumn wind whispers and sighs; Nothing has changed, except in the world of man.”

President Xi Jinping and his colleagues are now thought to be in Beidaihe, where they have continued Mao’s practice of combining a little relaxation with weighty affairs of state—thrashing out strategy for the year ahead at seaside meetings held in utmost secrecy (see article). How much indeed has changed in China, Mr Xi might reflect, since he came to power nearly three years ago? The economy is on course for its slowest year of growth in a quarter of a century. The stockmarket, having risen to its highest level since the global financial crisis seven years ago, crashed last month. Once hailed as an economic miracle, China is now a source of foreboding: witness the latest falls in global commodity prices.

Mr Xi likes to describe slower growth as the “new normal”—a welcome sign that the country is becoming less dependent on credit-fuelled investment. But debates rage within the party elite over how to keep the economy growing fast enough to prevent financial strains from erupting into a fully fledged crisis. A year after he took over as China’s leader, Mr Xi promised to let market forces play a “decisive” role in shaping the economy. His government’s heavy-handed (and counterproductive) efforts to boost the price of shares have created doubts about his commitment to that aim.

Stormy waters

During discussions in Beidaihe, some officials will doubtless point to the stockmarket as evidence of what can go wrong when markets are given free rein. Others will suggest that, on the contrary, economic reform is still badly needed to help China avoid falling into the Japanese trap of long-term stagnation. Much depends on which camp Mr Xi heeds. During meetings in Beidaihe in 1988, China’s then leader, Deng Xiaoping, vacillated in the face of a backlash against his economic reforms. By pandering to conservatives, he fuelled political divisions that erupted the following year into nationwide pro-democracy protests. The unrest, centred on Tiananmen Square, came close to toppling the party. It was not until 1992 that Deng was able to set his reforms back on track.

China’s leadership does not appear anything like as divided as it did in the build-up to the Tiananmen upheaval. But appearances may be more deceptive now. Mr Xi is a leader of a very different hue from his predecessors. He has rewritten the rules of Chinese politics, in effect scrapping Deng’s system of “collective leadership” by taking on almost every portfolio himself, while waging a war on corruption of unprecedented scale and intensity. The latest high-ranking official to be targeted, Guo Boxiong, was once the most senior general in the armed forces; he was expelled from the party on July 30th and now faces trial for graft. A dozen other generals, more than 50 ministerial-level officials and hundreds of thousands of lesser functionaries have met similar fates. That suggests Mr Xi is strong, but also that he has many enemies or is busy creating them. His rounding up of more than 200 civil-rights lawyers and other activists since early last month—the biggest such clampdown in years—hints at his insecurity.

There will be no announcement of what Mr Xi and his colleagues discuss at the beach; no hints from officials of their differences. The forces wrenching at the party will remain as dimly perceived by outsiders as the fishing boats off Beidaihe in Mao’s poem: “Screened by the vast expanse of ocean from view; Who can tell where they are?” China’s recent economic data may not be entirely comforting—nor always reliable—but at least they suggest that growth is holding up. By contrast, the murkiness of Mr Xi’s rule is of no comfort at all to a world trying to make sense of China’s rise. Those who worry about China’s development should focus less on its febrile stockmarket (the least accurate guide to the state of the economy), and more on the dangers that lurk in its politics.

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