First, the new leadership is not cohesive, and bureaucracies love leadership vacuums. The new Politburo and Standing Committee show many signs of continuing divisions over policy orientations and factional allegiances. While more potential reformers are discernible in the new group, they are likely to continue to be checked by an entrenched bloc of party conservatives and retired elders. Beijing’s political gridlock is similar to Washington’s, and Xi Jinping’s mandate for change is about as narrow as President Obama’s. In short, a “team of rivals” is not likely to produce forward movement in the Chinese Politburo.
The lack of consensus at the top has been the case for at least five years. All that the Chinese party-state has shown itself capable of is a combination of muddling through, hollow policy slogans (unfunded mandates) and money thrown at problem-plagued sectors (hoping that investment will produce return). But China’s key challenges — social inequity, environmental damage, rigidities of the educational system, lack of innovation, depressed consumer consumption, the demographics of aging and unbalanced sex ratios, labor mobility, lack of transparency and accountability, ineffective rule of law, poor provision of public goods, and weak “soft power” abroad — are all qualitative issues that do not lend themselves to state investment such as building high-speed rail or harbors.
Another obstacle is institutional. While leaders matter in the Chinese system, institutional interests count for far more. China may not be a democracy, but it has strong bureaucratic and interest-group politics. For the past five years real reform has been blunted by the “Iron Quadrangle”: mammoth state-owned enterprises, the internal security apparatus, the military and the conservative wing of the Communist Party. The coalition of these four power interest groups “captured” Hu, who was too weak and disinclined to stand up to them, and they stalled reforms.
This is the political landscape that Xi and the new Chinese leadership inherit. For his part, Xi, like Hu, remains a cipher: We do not know whether he is a closet reformer, a real reformer or another apparatchik-technocrat. His background suggests the last. At least he smiles and has a warmer public persona than the wooden Hu. Nonetheless, Xi & Co. will be trapped by these and other powerful vested interests that strangled the would-be reforms of Hu’s more progressive advisers and the acolytes of his predecessor, Jiang Zemin.
To break the Iron Quadrangle and launch the much-needed new reforms will require enormous vision and willpower on Xi’s part, an investment of huge institutional resources to buy them off, and time. It will be at least two years before Xi can consolidate his power and be in a position to tackle the powerful vested interests that run China today. And it is not clear that he is even so inclined.