Dameisha Forum/Forum Opinions/The Ruling Logic of the Communist Party of China

The Ruling Logic of the Communist Party of China

Author: Source: Date:2017-09-01
Editor’s notes: As the Communist Party of China will hold its 19th National Congress in 2017, Mr. Zheng examined the ruling logic of the CPC and its social and economic implications. He also offered his views on how the CPC can move forward following the 19th National Congress.

I am very delighted to attend this event. This is my first time here, and the place is very beautiful. The organizer asked me to choose a topic, and so I chose this one. This is a research topic that I am interested in recently, because looking over the entire world, no regions is free from political crises and they are all troubled. Almost all regimes in the Middle East are disintegrating, and democracies in the West are no better amid the rise of Trumpism and populism, from Brexit, to the rise of National Front in France and right-wing political party in Germany, to name just a few. Latin America and Africa are also plagued by other problems.

The CPC serves the people.
The subjects of ruling and governance have been brought up in recent years, and I have been pondering over the ruling logic of the Communist Party of China. Last month, the International Department of Central Committee of CPC organized an event called “The CPC in Dialogue with the World”. The dialogue was held in Chongqing, during which a visit  to the office of the CPC Chongqing Municipal Committee was arranged. The office of Chongqing Municipal Party Committee is a place with history. The 1945 negotiation between the Communist Party of China (CPC) and the Kuomintang (KMT) respectively headed by Mao Zedong and Chiang Kai-shek took place there. I also visited Deng Xiaoping’s former residence where he oversaw the Southwestern Bureau of the CPC in the 1950s, a historical period that I’ve been particularly interested in., During the visit there, I was deeply impressed with the remark of the guide, who said: How can we define politics of the Communist Party in China? Deng Xiaoping said that politics is of the people and for the people; the Communist Party of China is to emancipate the force of production. Upon hearing this, I recalled the “of the people, by the people, for the people” principle proclaimed by the former US President Abraham Lincoln. If “of the people, by the people, for the people” is the ruling logic of western democracies, then I believe the ruling logic of the CPC is perhaps, as Deng Xiaoping said, “politics is of the people and for the people; the Communist Party of China is to emancipate the force of production. Deng Xiaoping was young when he said this, he remained to be committed to his proposition in the 1950s during the Reform era, and his assessment has been accurate. I also recalled that the Chongqing Negotiation between CPC and the KMT in the 1950s, which soon fell apart. I believe the Communists of that generation must have had a belief that the Communist Party is for the people.

Since the founding of the PRC in 1949, Mao Zedong has also been acting in the interests of the people, and China made great achievements in the 1950s. The Communists believed that the Kuomintang served not the people but the elites, therefore the Kuomintang should be overthrown. After the Communist Party held the regime, the party focused on economic development, and made remarkable achievements in the 1950s. Even the Great Leap Forward was mainly aimed at advancing the economy, although engaging in radicalism and reckless development caused great damage to the development of forces of production instead. By the time of the Cultural Revolution, the Party had shifted to far-left. So what is “far-left” and what is the “far-right” in the Chinese discource? Drawing from Deng Xiaoping’s remarks: the so-called “far-left” overemphsizes political struggle over economic development; While the so-called “far-right” focuses on economic development and pays no attention to politics. Both “far-left” and “”far-right” are detrimental to China’s development. That’s why after the launch of the Opening-up policy in 1978, under the leadership of Deng, the Communist Party of China has shifted its focus to economic development. Former senior leaders present here today, as I reckon, must have been involved in this critical transition.

In particular, after the Tiananmen Square Incident in 1989 and the dissolution of the Soviet Union and the Eastern European Communism in the 1990s, Deng Xiaoping gave yet another accurate verdict that the Soviet Union and the Communist regimes in Eastern Europe collapsed because they failed to boost the economy and to deliver sound social welfare. I believe his judgment is accurate. In consequence, after Deng’s 1992 Southern Tour, China’s economy enjoyed dramatic development, thanks to Deng Xiaoping’s idea of a “socialist market economy”. The idea was formulated during the 14th National Congress of the Communist Party of China in 1992, and it was a great achievement. At the beginning of 1990, our GDP per capita was less than US $ 300, and it has reached US $ 8,000 now. China is the second largest economy today and the largest trading nation in the world. These achievements are remarkable.

The Adjustment of the Party’s Top Priority
The shift of the Party’s top priority to economic development and the neglect of political situation resulted in problems as well. Let’s review what happened prior to the 18thNational Congress of the Communist Party—widespread corruption and the emergence of oligarchy within the Party. The cases of Zhou Yongkang, Ling Jihua and GuoBoxiong are all typical of oligarchy. Oligarchy is harmful to the Communist Party, and therefore I strongly support the anti-corruption campaign. China will be reduced to Russia during the Yeltsin era or today’s Ukraine in no time unless actions are taken to address the problem of oligarchy and corruption. This is of critical importance. That’s why the Party’s top priority after the 18thNational Congress of the Communist Party has gradually moved from economic to political development.

From a foreign perspective, I believe adjustments should also be made in the next term. China needs to work hard on political development. Just as Party Secretary-General Mr. Xi Jinping said, it is pointless if the economy is developed but the Communist Party of China ends up collapsing. I couldn’t agree more on this. Since the Communist Party of China is the core of Chinese politics, many parts of our country would go wrong if this core goes wrong,. So we must consolidate the core.

Since the 18thNational Congress of the Communist Party, China has taken a few measures and one of them is the centralization of state power. China must overcome impediments cast by the vested interest groups to the reform, while areas like top-level designs and anti-corruption campaigns require centralization of state power. But under such circumstances, while various areas have undergone tremendous changes, we are facing an economic downturn. I have recently conducted surveys in a few provinces, where people have shown their concerns. Our current GDP per capita is US $ 8,000, and that is expected to reach a GDP per capita of US $ 12,000 under the 13th Five-Year Plan’s proposal of a moderately well-off society. This is not the end but a new beginning. There would be a lot of difficulties for China to achieve a GDP per capita similar to that of Taiwan now, i.e. US $ 24,000 through one decade or two, particularly in light of what is taking place today. Our economic focuses today–to which I described as “balloons blowing-up” economic policies -such as finance, Internet, real estate, and quantitative easing, are insufficient to turn China’s GDP per capita from US $ 8,000 to that of a high-income country. The balloons will certainly burst when it is blown up to a certain degree. Thus, China would still have to develop a substantial degree of real economy.

The economic problems now are essentially political ones
Why is there a slowdown of economic growth? This morning, the professors were analyzing the difficulties that Chinese economy faces today. As a political scientist, I think that China’s economic problems today boil down to a political one, rather than economic problems themselves. The fundamentals of Chinese economy are good. China has gone through large-scale industrialization and mass amount of infrastructure construction. Every year there are millions of new engineers and university graduates. China’s population problem will not be as serious as what some of the economists have been expecting.

The current problem is that relevant parties are not functioning to support economic growth. Since the Reform era, the CPC Central Committee has been the top-level designer. Progresses were made thanks to four actors: local governments, state-owned enterprises, private enterprises, and foreign-funded enterprises. Yet now, the local governments and state-owned enterprises are effectively not functioning, or doing less than before. In my home Zhejiang, the economy is not functioning well, which is now characterized by a high degree of internalization and financialization. A massive amount of investment was relocated from real economy to virtual economy. The economic situation in the Northeast China has been terrible this year. While the central government intends to give their support, I believe things will hardly get better unless the economic structure is changed, regardless of the amount of money spent. I read that the central government plans to give 1.6 trillion CNY to the Northeast Region, and I think even 16 trillion CNY would not matter if the structure of the economy in the Northeast Region remains unchanged. While some  inland provinces such as Chongqing and Guizhou are performing well, the economic aggregates of these provinces are too small to support such a large economy.

So when it comes to evaluating China’s economic development, the development of the prosperous coastal region ranging from Shandong to Guangdong assumes great importance. Of course, it is necessary to develop the economy of inland provinces, but the national economy would be in jeopardy if coastal cities struggle in economy.

In fact, there is room for economic development. Now we are advocating supply-side reform and cutting over-capacity, as well as the outward-looking One Belt One Road Initiative, they all matter. Domestically, we have a lot of areas where capacity can be cut. I live in Singapore where each community has a parking lot, a physical fitness center, a kindergarten and a hospital, all of which can massively soak up the excess capacity. Such practices are particularly true in China. There is no physical fitness facilities in China today, nor are there sewerage and urban amenities, a heavy rain can turn roads into rivers. Such problems happen in rural areas as well, where the environmental degradation have been very serious. Now that a lot of rural population lives in urban areas, they stick to urban lifestyle even if they return to rural areas. For instance, every household in the Western region has their own sanitation facilities and boilers, causing massive pollution. Why hasn’t the country addressed it? So the country only builds roads but not fixing these problems? In China, there is a huge room for domestic investment. China needs to develop the Internet industry and the financial sector, but above all, the Internet and financial sectors must be leveraged to support the development of the real economy. We are deviating from the real economy to the virtual economy.

Zhejiang’s economy is known as the Jack Ma economy, which is important in some areas. But if it deviates from the real economy, the future of the Chinese economy will be at stake. Why are there no regulations to facilitate internet enterprises’ high-end technology development? I have compared what the Chinese and American Internet companies are working on. As far as Chinese Internet companies are concerned, Baidu is reaching for take-out and delivery business and Chinese internet tycoon Jack Ma bought KFC in China. Many of us applaud them. A country must issue relevant regulatory measures to guide the Internet companies to focus on developing cutting-edge technologies, rather than take over the economic activities of other traditional industries. This can neither promote economic growth nor sustain development.

Hope for a few transformations after the 19thCPC National Congress
So from a foreign perspective, I wish that China will make a few changes after the 19th CPC National Congress. The first one should be a transformation from saving the Party to saving the economy. We have done a lot to save the Party and make the CPC stronger after the 18thCPC National Congress, which was indeed of great importance. I think the next step is to save the economy. People are now realistic. As long as the economy is good, be it democratic or not, everyone would live a good life, and vice versa. So I think economic activities are very important, in light of the goals of building a moderately prosperous society in an all-round way and turning into a high-income society in the future. But this is not to say that Party building is not important. We should develop in the direction of institutionalization and rule of law. The Sixth Plenary Session of the 18th CPC National Congress adopted two documents in this regard. This marked a good beginning.

Another transformation, I think, should be from centralization to decentralization. Centralization is neither a goal nor a bad thing, but neutral. The centralization of power was meant to get things done, but as the administrative power became overly centralized, other enterprises and the society can hardly do anything as they have no power. Therefore, it is necessary to have a transformation from centralization to decentralization on a new level, delegating power to the local governments, the society and the enterprises. We have been proposing the delegation of administrative power of examination and approval to lower levels for years, but it is still in progress.

The approach of anti-corruption campaign should be transformed to a rule of law process. Now the anti-corruption movement in local areas has become severely disoriented. Many local governments report one another. I have been to many places where many director-level cadres or above were worried if they would be arrested or “shuangguied” the next day. But still, we hope for a regulated anti-corruption campaign, rather than what happened during the Cultural Revolution. Though many years have gone by ever since, I still believe the social foundation for the Cultural Revolution in China remains to be strong. China is essentially a proletarian-run society. The middle-class of “Four Asian Tigers” has made up 70% to 80% of the population in two to three decades after their economies took off. China now features a middle-class that made up at most 25% of the population. Therefore China basically remains a society where the poor are the majority. Disasters will strike if we are not cautious.

Equal emphasis should be placed on economic development and social transformation. Our social development, in the words of decision-makers, is one of our weaknesses. Our social security, healthcare and education are all our weaknesses. This morning, someone mentioned that there is no increase in consumption level despite the wealth of the Chinese government and Chinese people. People are reluctant to spend because of inadequate social policies. I have lived in the UK for many years, during which I have visited a lot of average households. They feel good about an income of three or four thousand pounds, because getting medical treatment is essentially free; buying a house is inexpensive; education was free of charge in the past, and now they would have to pay just a little. Therefore, only when such social policies are in place can China turn to a consumer society. These social policies function as a guarantee for the middle class. Although the central government of China has the money, it hasn’t spent them on social development. This mentality is yet to be developed.

As Party Secretary-General Mr. Xi Jinping reiterated for multiple times, China must avoid subversive mistakes. I think he is shouldering the responsibilities himself. The core defined at the Sixth Plenary Session is of critical importance. I believe the core is not about the senseof power, but the senseof responsibility, that is, to be responsible for what you do. In the history of China, it is critical to properly handle the relations between the core and intra-party democracy, and between the core and the collective leadership. If the relations are not handled well, then subversive mistakes may be made. Though many people are pessimistic about the development of China, I think as long as China does not commit subversive mistakes, it can still achieve what Deng Xiaoping proposed in the 1980s—making China a democratic and prosperous country by the mid-21st century.

Zheng Yongnian is the director of East Asian Institute, National University of Singapore, chairman of Academic Committee of the Institute of Public Policy, South China University of Technology.

Speech delivered at the Education Reform Forum of the 3rd Dameisha Forum. Opinions expressed here belong to the author and do not necessarily represent the position of SZIDI.