China might be a dictatorship, but its next generation of leaders still need to win the backing of the party and the people alike, says Paul French
When an organisation as secretive, but as massive and all-encompassing as the Communist party of China – more than 80 million members and counting – starts “politicking” and when its senior members start jostling for power in a succession battle it’s generally a good idea to stand well clear and let them get on with it.
That’s usually how foreign business reacts to political shifts in China – stand back, try (if at all possible) to discern what’s going on and then cosy up to the winners. But what happens when foreign business gets sucked inadvertently into the shadowy horse-trading that is the internal politics of the Communist party? A mess, that’s what.
We are about to witness the single biggest shift in political power in China since 1949. Though a one-party dictatorship, China does have term limits on most official positions and a large number of these expire in 2012, including the big jobs at the top. So it’s goodbye to the president Hu Jintao (and the premier Wen Jiabao) – well, not quite goodbye, these guys tend to hang around in honorary positions desperately attempting to secure their legacy till they die – and hello someone new(ish).
The big question of course is who is likely to succeed Hu to the top job. Most of the smart money is on the, by party standards, smooth and technocratic Xi Jinping. He is a party loyalist thought to be a “problem solver”. But an outsider contender is the rough old bruiser Bo Xilai, the former boss of Dalian (and now Chongqing), so he knows how to run a tough town.
The question is how much each candidate is currying favour with his respective factions by beating up on foreign business.
Tough guy Bo enjoys a grand gesture or three. After punching his way through the sewage of Dalian he’s been up in Chongqing trying to sort out the problems there. These include dealing with a massive influx of new residents. Thanks to the forced displacements of the Three Gorges Dam project the population of greater Chongqing municipality is now more than 30 million. Also on his plate are also all the graft and quality issues that inevitably come with rapid construction in China, and an unprecedented crackdown on organised crime in the city.
Wal-Mart targeted
But it has been poor old Wal-Mart that has borne the brunt of bad publicity. Well, not that “poor old”, as Wal-Mart had been selling non-organic pork labelled as organic. A bad mistake, as Chinese consumers view organic products as some small protection against tainted food.
It was a PR mess and the response was amazing: more than 30 Wal-Mart staff arrested, the Chinese media ordered to cover the story, the local Chongqing government setting up a website to show public outrage and media coverage and Wal-Mart going hush-hush over the whole thing for days, leading to increased controversy.
Boss Bo sent a clear message to the people of Chongqing, and to the wider Communist party, that he would root out corruption and foul practices even if they occurred among the largest foreign investors in China. He is the people’s man.
Wal-Mart misjudged the game. Rather than improve its internal systems and sack the guilty, the company kept quiet too long and then responded with a series of senior sackings without revealing its reasoning. Bo needed to show his constituents that he was tough on foreigners, but he didn’t wish to scare off foreign investment. It would have all been fine if Wal-Mart hadn’t blinked.
Meanwhile, down in Xi Jinping’s neck of the woods, in eastern China, these sorts of games have arguably been going on for a lot longer. Last year Zhejiang province investigated clothing companies for infractions of the law. Guess who were named as the guilty in the land of the sweatshop: luxury brands. Gucci-bashing always goes down well with the poor.
There was use of a classic Xi tactic, some said, of employing “official” inspectors to make it all seem routine and the state guarding the people’s welfare against rapacious foreigners.
China may be miles away from anything like a democracy but that doesn’t mean there are not constituencies that have to be addressed, public sentiment that has to be massaged, grand gestures to be made and a media message to be put out. The candidates are campaigning – it’s just not always easy to tell when and how, from our inevitable position outside the Communist party tent. Next autumn we’ll know for sure.
Paul French has been based in China for more than 20 years and is a partner in the research publisher Access Asia-Mintel.