So Hu opted to bide his time, looking for the right opportunity to pounce. He first launched an anticorruption drive in Beijing, Tianjin and within the ranks of the Chinese Navy. Then in August, news emerged of a $1.25 billion social-security-fund scandal in Shanghai. Soon after, Hu flattered Jiang with an effusive launch for the former president’s new book. But more
than 100 Beijing investigators poured into Shanghai, arresting one of Chen’s close aides. Unusually damning details surfaced in the country’s leading financial magazine, Caijing, about how unnamed senior city leaders had illegally pumped citizens’ pension money into bum real-estate projects. Two weeks ago, Hu installed a new paramilitary police chief in Shanghai, where the head of public security happens to be Jiang’s nephew (who is now also being questioned). “They had to stop officials from fleeing,” says one Communist Party newspaper editor, who requested anonymity because he’s not authorized to speak to foreign media. “And they definitely couldn’t depend on just the police.” Chen, because of his suspected involvement in the pension-fund scandal, has been sacked from all his party posts in what is the highest-level purge in China in more than a decade.
The power play couldn’t have come at a better time for Hu. Next week leaders will hold a key meeting to discuss changes in the Communist Party hierarchy and policy prescriptions for Hu’s second term, and, most important, begin deliberating the post-Hu succession. (Hu is expected to be installed for a second five-year term in 2007.) Having broken the hold of the Shanghai faction over China’s financial capital, Hu heads into the party conference looking stronger than ever before. “This is truly a milestone for Hu Jintao,” says University of Chicago political scientist Yang Dali. “His position is unassailable. The issue now is how he will use his power and his influence.”
Aside from the corruption issue, Hu and Prime Minister Wen Jiabao have long clashed with the Shanghai faction over economic policy. They’ve championed policies aimed at closing the country’s alarming rich-poor gap and providing more assistance to the impoverished hinterland. This was not the priority of the Shanghai faction, which represents the interests of China’s booming coast. Chen–described by some as loutish and abrasive–laid bare both factional and regional tensions at a June 2004 Politburo meeting. There, he blamed the central government’s use of macroeconomic controls to curb development for hurting the economies of coastal provinces. He rattled off statistics on how they were hobbling Shanghai’s growth in particular.
At that meeting Chen confronted Wen, and warned that the prime minister and his cabinet would have to “bear the political responsibility’’ should the restrictions trigger a crisis of unemployment and bankruptcies. Hu interrupted to reiterate the central government’s position. Still, Shanghai’s economic growth rates continued to soar, hitting 13 percent last year.
The political effects of last week’s drama could be profound. They mark the opening salvo of China’s closed-door equivalent of a midterm election. Hu’s first order of business may be to settle on a successor–or successors, as some leadership watchers posit. His knockout of Chen notwithstanding, Hu is a much more deliberate operator than Jiang–perhaps out of necessity. The era of strongman politics and epic ideological clashes–under Mao Zedong, Deng Xiaoping and, to some extent, even Jiang–is over, replaced by something more like high-stakes risk management. The main threat to the Communist Party’s hold on power has shifted increasingly from party power tussles to government policy. Intraparty squabbling can easily undermine policy imperatives, as the dispute with Chen showed. Hu, who has appointed younger allies to top slots in many provinces, is trying to pre-empt any challenges. In particular, he aims to quell rising rural and urban unrest by eliminating pork-barrel state projects and reviving socialist-style benefits. “Even during Tiananmen, [tension] was still mainly within the party,” says the party editor. “Now it’s external.” Cheng Li, an authority on the party leadership at the Brookings Institution in Washington, D.C., says Hu has sent a message to those who might challenge his personnel decisions: don’t try. Now, says Li, “Hu has more leverage to appoint his own people to the Politburo.”
Only Hu, his ally Wen, and possibly media czar Li Changchun appear certain to stay on the Politburo’s nine-man Standing Committee after 2007. That means two to six posts on the Standing Committee could be up for grabs–a significant turnover. Standing Committee members linked to the Shanghai faction–such as former Shanghai party secretary Huang Ju (whose wife has been linked to the Chen case) and former Beijing boss Jia Qinglin–could be vulnerable. Both may retire with no say in appointing their successors.
At the same time, a major generational shift has begun at the top levels of the regime. China’s so-called fourth generation of leaders, led by Hu and Wen, will soon make way for the fifth generation–meaning party leaders in their mid-40s to mid-50s. None of the fifth generation is in the Politburo at the moment, which means Hu could elevate his chosen successor straight from a provincial post into the Standing Committee (as Deng Xiaoping did with him in 1992).
Who is Hu’s favorite? There isn’t just one. In fact, he appears to be grooming many protégés from the tuan pai –the Communist Youth League network loyal to Hu. The best bets to replace him are known as the “two Li’s”–Liaoning province party boss Li Keqiang and his counterpart in Jiangsu province, Li Yuanchao (they’re unrelated). In the early 1980s, both were Hu’s lieutenants in the Youth League. Both hold law and economics degrees. Both are said to be steady leaders and know each other quite well, having co-authored a book on economic reforms at Beijing University in the mid-1980s.
Li Yuanchao, 56 this year, is considered to be “much bolder, more imaginative,” says the Brookings Institution’s Cheng Li. He spent a half year studying at Harvard’s Kennedy School of Government in 2000. As party boss of the Jiangsu capital of Nanjing, he experimented with televised interviews for civil servants. But he moved laterally within the governmental hierarchy for nearly two decades until Hu lifted him to the top of his home province. His sympathies toward colleagues punished for their Tiananmen activism are well known, says Cheng; he raised eyebrows within cadre circles when he brought several of them to Jiangsu to work for him, according to the party editor.
The son of a former Shanghai vice mayor, Li has long been among those rumored to be in line for Chen’s job in Shanghai–though Hu may be reluctant to show such outright favoritism. According to a book published in Hong Kong in 2005, titled “The Chinese Communist Party’s Fifth Generation,” Hu spared Li from major embarrassment in Jiangsu following a 2004 tax-evasion scandal at an overproducing iron-ore plant. The light punishment meted out to local officials in that case angered some of Hu’s critics–especially in Shanghai.
But it’s the other Li–Li Keqiang, 51 this year–who is most often viewed as Hu’s heir apparent. He’s got experience in the three key areas–the party, industry and agriculture–and is often portrayed as cautious and well connected. In other words, he’s just like Hu. Says the party editor: “He memorizes his speeches and doesn’t make any mistakes.”
After leading the Youth League, Li Keqiang served as head of China’s most populated and socially maligned province, Henan. There he survived numerous calamities, such as deadly blasts at large state-owned mines. He did so by keeping tight clamps on information across Henan, infamous as a province where local authorities detained foreign correspondents with alarming frequency. He too sidestepped numerous scandals; following last week’s Shanghai shakedown, two top officials in Henan were censured for illegal government land requisitions dating back to 2003, but Li remains unscathed.
In general, fifth-generation Chinese leaders are seen as savvier and more open-minded than their elders, especially on the international stage. “These younger party leaders are modest, more practical and reluctant to argue with others,” says Mao Shoulong, a professor of public administration at Renmin University in Beijing. “They don’t try to put on airs.” Even though some, as students, were packed off to the countryside during the Cultural Revolution, they have served almost entirely in an age of economic reform. So they might not prove as instinctively hamstrung by ideological taboos. That’s certainly true of the candidates to become prime minister or vice prime minister. They include Beijing Mayor Wang Qishan, People’s Bank governor Zhou Xiaochuan and Trade Minister Bo Xilai–all mostly market-friendly and popular with the foreign business community.
The Shanghai corruption crackdown provides clues on what to expect from Hu’s second term–and from the leaders who follow him. Hu aims to put together a vast social-security fund–“lifesaving money,” as China’s state media call it–and use it to assist the urban unemployed and to subsidize education and health care for rural peasants. But Hu’s economic populism doesn’t mean that he’s a progressive. While the Chinese president pays lip service to the rule of law, he’s not likely to take any significant steps toward true political reform–meaning multiparty elections, an independent judiciary, a genuine Fourth Estate or other hallmarks of constitutional democracy. For now, Hu’s priority is the party’s political survival. Indeed, as part of the latest CCP rectification campaign, according to the party editor, cadres are being rounded up to watch a lengthy agitprop television series documenting how the Soviet Union collapsed.
Will Hu’s powerful patronage enable his successors to venture further? In an intimate and unusually candid lunch with two NEWSWEEK correspondents not long ago, a senior Chinese official of the fifth generation carped that the country desperately needs “political reform to go along with economic development. Otherwise, China will fall into social crisis.” He holds scant hope for genuine political reform from Hu’s generation of leaders. Instead, his sights are set on his peer group, who will be waiting on deck after next year’s Congress.
“I want to know: what do you think of the fifth generation?” he asked. Abruptly rattling off the names of five or six names of political comers (including himself and the two Li’s), he went on: “Does the American media know who we are? Does the U.S. government or the American people?” The truthful answer was, no. Few in America have given much thought to the next crop of Beijing leaders. But then, the same can be said of the Chinese. They too have been ignorant of the quiet ructions within the Politburo–until last week’s political drama reminded them that big personnel changes are looming. And with them may finally come changes in how China is governed.
