China: 19th Party Congress

China: 19th Party Congress

China: 19th Party Congress

China will convene its 19th Party Congress on October 18 – a key meeting held every five years where President Xi Jinping is expected to receive a second term as the ruling Communist Party’s top leader.

More than 2,300 delegates will discuss the country’s accomplishments since the previous gathering and elect the new members of the party’s top leadership, according to the party’s official mouthpiece the People’s Daily.

The congress will decide a new line- up for the all-powerful Politburo Standing Committee, the group of seven politicians who run the world’s second largest economy. At the meeting, Xi is widely expected to consolidate his grip on power, solidifying his position as China’s most powerful ruler in a generation.

“The spirit of President Xi Jinping’s important speeches will be carried out at the Congress,” the People’s Daily said.

There has been speculation that Xi’s name will be immortalized in the party’s constitution, alongside the country’s two most powerful former leaders, Mao Zedong and Deng Xiaoping.

The People’s Daily article added that the meeting would discuss a strategy for building a “moderately prosperous society,” the goal of Xi’s banner campaign to eliminate poverty nationwide by the 100th anniversary of the Chinese Communist Party in 2021.

The new slate of committee members is traditionally seen as indicating Xi’s most likely successor after he steps down, expected in 2022.

But the president has thus far delayed anointing an heir, spurring speculation that he will try to stay in office beyond that year.

There is very little doubt that Xi Jinping, who will be 64 at the time of the congress, will continue for another term as General Secretary, the party’s top leadership position and de facto leader in the one-party state. There is uncertainty, however, around whether the other personnel changes at the congress will signal that Xi would stay on for more than two terms per convention. The strongest indication of would be whether officials born after 1960 such as Sun Zhengcai, Hu Chunhua or Chen Min’er are promoted to the Politburo Standing Committee, in much the same way Xi and Li were promoted to the body in 2007. While Xi is constitutionally limited to two terms as President, the offices where real power reside – the General Secretary, and the Chairman of the Central Military Commission – are not term limited.

Since Xi Jinping ascended to General Secretary, the highest office of the party, he has surprised many observers with the pace at which he consolidated power. Since Deng Xiaoping, retired leaders have held significant influence in the selection of incoming leaders. Hu Jintao was “anointed” by Deng in the 1990s, nearly ten years before the former took the helm; Xi Jinping similarly was endorsed by senior leadership figures, including former General secretary Jiang Zemin and former Vice President Zeng Qinghong, prior to his being catapulted into prominence in 2007. This selection process in which a core figure (Deng and Jiang) selects future leaders while also paying heed to factional balance and the views of other senior leaders has led to peaceful transitions of power in 2002 and 2012.

While the Chinese political system has institutionalized to a significant degree since economic reforms began in 1978, political patronage continues to play an important role in the promotion of future leaders. These two often contradictory forces has led to a quasi-meritocratic system where the most suitable candidates generally must have the backing of important incumbent senior leadership figures, in addition to a strong track record free of major scandal at the regional level. Jiang and Hu each cultivated their own factional bases with those they were most familiar, giving rise to Jiang’s Shanghai clique and Hu’s tuanpai, or Youth League faction.

Xi’s regional experience has exhibited a preference to promoting low-key leaders driven by a strong work ethic rather than careerists motivated by personal interest or the economic returns that often comes with holding high office. While some foreign observers have characterized Xi’s selection of subordinates as cultivating a political clique for the purpose of amassing power, Chinese-language publications offered a far more nuanced view: that Xi promoted people with whom he was familiar in order to dissect the vast network of interlocking vested interests that have proliferated the Chinese political system since the time of Jiang.

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Shayne Heffernan Funds Manager at HEFFX holds a Ph.D. in Economics and brings with him over 25 years of trading experience in Asia and hands on experience in Venture Capital, he has been involved in several start ups that have seen market capitalization over $500m and 1 that reach a peak market cap of $15b. He has managed and overseen start ups in Mining, Shipping, Technology and Financial Services.

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