CHINESE LEADERSHIP GRIPS FUTURE

By Kerry Brown

The political calendar in China is something that most non-Chinese dont understand that well. Part of that is due to a lack of knowledge about the structure of governance in the country. They know there are ministries and they know there is the Communist Party of China （CPC）. They may well have followed the buildup and outcome of the 18th CPC National Congress late last year and assumed that this was when all leadership changes were made. But if you were to point out to many in Europe or North America that there are still important government changes to be made at the National Peoples Congress （NPC）， this would no doubt cause confusion. The quickest way to explain the function of the NPC is to refer to it acting like a parliament.

What helps even more is to explain that the NPC is in fact speaking directly to the government through the State Council， which collects the heads of ministries and executive government bodies. That means that when the NPC sits down each year it is primarily discussing government plans for the coming year. That supplies the parallel to a parliament in other systems. It is there to scrutinize and discuss proposals， and give some idea about what public opinion and government intentions might be about issues that need to be decided.

Government changes

The main issue for the NPC this year is to reveal a bit more about what the new leadership will look like in policy terms. The transition from the last CPC Central Committee with Hu Jintao as general secretary to the new one under Xi Jinping occurred during the CPC National Congress in November last year. But that was part of what we can call a longer transition. Now the main Party positions at the Standing Committee of the Political Bureau， the full Political Bureau and the Central Committee have been completed， it is time for government changes. They will occur in the NPC. A new premier will be announced， and some new ministers and vice ministers. We can say by the end of this that full Party and government changes， at least centrally， will have been made. From the day the NPC closes we will have a largely new team to get to know.

And getting to know them is important. The euro crisis might be receding， and the U.S. economy growing a bit， but globally development remains sluggish. The tough times since 2008 are continuing. Chinas role as an economic stabilizer during much of this is as necessary now as it was back in the days when Lehmann Brothers shocked the world by collapsing and heralding the start of a major financial implosion. China has continued to account for a large proportion of global GDP growth. The decisions that the new government team make on the economy， on the housing market and interest rates in China will be as much international as domestic in their significance.

During this NPC too we will want to see what sort of specific reforms the government will want to embrace socially as well as economically. We know that the 12th Five-Year Plan（2011-15） is the overarching macroeconomic blueprint， and that it contains the key promises the government has made up to 2015. But from this point， we will also start to look at clues for what might be formulated in the succeeding plan. The 12th one was called the greenest that China has ever produced. But Chinas water and air quality， its reliance on fossil fuels and its energy efficiency are going to remain huge issues. Investment in clean and renewable technology likely needs to go up sharply.

So is investment in education. The previous five years saw the proportion of GDP spent on education increase， with rural schooling in particular getting attention. At the tertiary level， a rising proportion of Chinese are now going to universities. But the challenges of providing education across society from primary up to tertiary level are going to persist， simply because without this investment in human capital， the desire to shift to a more service-oriented economy， and one where manufacturing is more specialized and in the higher value-added sectors， will not be possible. The need for an increasingly well-educated workforce is going to intensify in the coming years. It is likely therefore that this NPC will have to look at committing more resources to this critical area.

The 12th Five-Year Plan and the previous NPC session also looked at social management. Expenditure on public security like police is high， with the costs of arbitration between different contesting groups rising as their claims on land， or public goods， or other material assets increase. Investment in social infrastructure and ways of delivering social cohesion will need to continue. The creation of a stakeholder society where people are able to take responsibility increasingly for their affairs is part of the journey toward middle-income status for the country and a doubling of per-capita GDP by 2020.

But having systems in society that can mediate between different income groups and create harmony among them is something that takes time. In particular， the discussions this NPC has about increasing land rights， pensions or household registration reforms will be important. Each of these poses major policy challenges， which have been heavily discussed in the past. The main issue now is to get some sense of where the new leadership might wish to go with these reforms and how they build on the legacy of the last group of leaders.

Austerity politics

One of the moves made by the new leadership in the Standing Committee of the CPC Central Committee Political Bureau since last November is to cut down on official expendi- ture. Officials have been told to restrict how much they spend on entertainment and banquets. They have been told to economize on travel， domestically and overseas.

Austerity politics have been in existence in Europe and North America now for over five years. Here， governments， whatever their political complexion， have a common problem. In the United States， fights are looming over the deficit between the president and Congress， with the government due to spend over $3.5 trillion， and revenues from tax and other income sources only coming in at $1 trillion less than this. Funding this massive shortfall has become a political time bomb. In the UK， public spending continues to rise way beyond government predictions， with a $90-billion increase this year， at a time when tax revenues are going down.

The Chinese Governments finances are not in this position， but there is a sense in which a more frugal period is here and in which the government has to become more fiscally efficient and focused on economizing. What will be of most importance in the NPC for many observers therefore will be some idea of where resources and expenditure are likely to be committed in the coming year， in which areas there are likely to be increases， and in which（for instance capital investment） there are likely to be reductions， or at least a freeze. This is different this time because it will be seen as representative of what a new and still largely little understood leadership is aiming to do in the longer term.

Finally， there is the issue of how the new leadership in the NPC communicates both domestically and internationally. We are used to the ways in which those leaders now retiring spoke and the sorts of messages they conveyed in their public language. During the NPC we are likely to see， for the first time， the new leadership speaking at length about their ideas for the future and where China now needs to go， and see where these remain the same as the previous leadership and where there might be developments or differences of emphasis.

Presentation is often dismissed too easily， with people being keen to say how much they value substance. But at the end of the day， presentation does matter， in intellectually and， to some extent， cognitively persuading people to accept an argument or at least think about it. The ways in which the NPC shows us officials， leaders and influential figures prioritizing challenges， seeking new ways to approach issues and revealing something about their attitude toward policy innovation are important. After all， a lot has changed since last year， and this will be as good a chance as any to assess what has happened， where we all stand， and in which direction we， China and the world， are likely to go.