Three Predictions for Xi Jinping in the New Year

Jan 1, 2014

Three Predictions for Xi Jinping in the New Year

By Russell Leigh Moses

Former political star Bo Xilai was publicly excoriated then thrown behind bars in 2013, while Chinese Communist Party chief Xi Jinping found new ways to reach out to the public. Both show a party working to get its message out about corruption and its common cause with the public, even as it works to keep power for itself. What that in mind, here are some developments to watch for in the new year.Xi continues to define himself as a very different sort of Chinese leader

It’s true that Xi has been styling himself as a bit of a Maoist. He has made it clear that the Communist Party ranks have to be shaken up, and he hasn’t been averse to using some of the discourse of the former dictator to do that: “mass line,” “rectification,” “going after both tigers and flies” to fight corruption, and the like. While Xi sees the Communist Party and socialist ideology as the solutions to whatever ails the nation, he has been unafraid to tear into the system for its own shortcomings.

But Xi isn’t a throwback. Many times in 2013, Xi took on tradition, especially how cadres conduct themselves, their meetings, and the sluggish and top-down ways they arrive at decisions. At those moments, Xi appeared to be someone who wants to modernize the Communist Party and depart from the old ways.

Some observers might see Xi as practicing smart politics, to stay in control by being a conservative looking over his shoulder one week, and a crusader for reform the next. That’s a path that some previous Chinese leaders walked on, and it largely worked to keep society underfoot and the economy humming along.

But while that might have been the Xi of 2013, he and his political allies clearly recognize that this is a different China. Social media is speedier than the party narrative. The national economy is decelerating. Xi needs to offer something new to a public that is more active and demanding and to sections of the party that are tired of the meandering and moribund. Xi knows that both are pressing for something more than just nostalgia, and that trying to be either Mao Zedong or Deng Xiaoping won’t work in the present day.

So while 2013 was the moment that Xi borrowed, 2014 is the year that shows he isn’t bound to old models—and becomes even bolder in pressing for a transformation in the party.

Xi finally finds out what the Chinese military really thinks of him

Xi and his allies have been equal opportunity critics of heretofore-sacred institutions in China, including the armed forces. While Xi has been quick to praise the ordinary conscript at times of regional tension, he hasn’t been reluctant to pull away various perks in the officer corps.

But as 2013 comes to a close, Xi’s attitude is showing signs of shifting somewhat. He has moved away from reminding the military of its obligations to protect the party and instead restating his support for the armed forces – or, as a front-page commentary in the People’s Daily this past weekend put it, “to gather together under the new situation, and to accelerate the modernization of national defense and the armed forces.”

The “new situation” that is being referred to here isn’t only the regional retort to China’s recently established Air Defense Identification Zone. It also appears to signal friction between some in the armed forces and the party leadership about how to proceed with military reform. The commentary also stated that it was “necessary to persist in modernizing the country and integrating a strong military in that effort”—code words for the need to get the upper echelons in the armed forces to buy into Xi’s own reform agenda.

Some in China’s military will be reluctant to support Beijing’s drive for austerity if that means denuding some of the political clout of the armed forces along the way. Xi has his enthusiasts within the military, to be sure, but a softer touch may be needed in the months ahead if he hopes to expand his support base there.

Expect more political skirmishes—and showdowns with social activists

Xi came to power with a reformist agenda: to make the Communist Party far better at leading the nation. That doesn’t mean loosening the restraints of one-party rule or granting political options to the masses.

In 2013, he and his like-minded comrades in the ranks found themselves facing conservatives within the party who didn’t like anticorruption campaigns being turned intocrusades, and their rice bowls being broken, as austerity and rollback became the new slogans.

Political opposition from within the party is nothing new, and Xi has been good at pressing on amid the pushback, as thepurging of almost an entire provincial legislature in recent days might show.

But 2014 will represent a different sort of challenge for Xi and his supporters. Along with conservatives hindering change—and they remain a formidable force–Xi will likely face reformers and social activists from outside the party seeking greater political change.

Xi’s crackdown on social media and the Internet in general was one way of gaining support among officials for shaking up the party. Xi was sending a clear signal to both Chinese society and the bureaucracy that his “end to politics as usual” didn’t mean an end to the party, or a greater role for those who believe in political pluralism or “Western values.”

Social media isn’t likely by itself to threaten stability if complaints about the slow pace of change rise. Likewise, discontented cadres who see little hope of meaningful progress in their work or their lives also aren’t likely to shake the system by themselves. For Xi, the danger is that the two unite — that a swelling of criticism outside the party finds an already dissatisfied faction inside the party.

Xi in 2013 was very good at starting the fires of reform. In 2014, he’ll get a good deal of practice in making sure they don’t spread faster and wider than he would like.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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