How Will the Rise of China’s New Regional Economic Centers Affect the 2012 Political Transition?

In October 2012, Hu Jintao and Wen Jiabao will step down from the top posts in the Chinese Communist Party and the fifth generation of leadership will take over China for the next decade. Under the first, second, and third generation of leadership, top posts in the party and China were selected by those in the top leadership posts. By the fourth generation of leadership, top posts were strongly influenced by different factions within the party allowing for a core leadership formed from compromises and consensus. In the upcoming fifth generation, the importance of factions and interest groups will as more political actors have influence over the future of policy formation. In RGE’s latest China Monthly, we break down the chances that different political actors in China will be chosen to the fifth generation of leadership while looking at what factors influence their probabilities.

As ideological and institutional factions strengthen, regionalism is also beginning to play a growing role in the formation of China’s top leadership. Historically, the regions of Beijing and Shanghai have been the seats of political power within the country, and in more recent times, Guangdong has held the seat of economic power. For aspiring leaders, support from party members in Beijing and Shanghai has facilitated passage to the top posts, while an assignment in Guangdong could provide the knowledge and networks for managing a changing economic structure and landscape.

However, growing income disparities and evolving global economics have given rise to new regions of focus within China. Regional politics and interests have always existed in China but have been concentrated in the national capitol and core economic hub. Xi Jinping, who is expected to take over the top CCP position and become China’s president, might take greater account of regional affiliations and interests beyond the traditional powerhouses of Beijing, Shanghai and Guangdong when it comes to development policies. For example, he might be more supportive of making Zhang Gaoli’s (an elitist) dream of turning Tianjin into China’s energy hub. Fujian might also receive more support to become the biotechnological and biomedical hub of China since Xi Jinping worked in the province for a long period. Likewise, Xi’s association with Bo Xilai could mean more central government support to subsidize the relocation of industrial production inland because development in Chongqing facilitates both social stability and factional support. Alternatively, China’s prospective premier, Li Keqiang, is thought to be a reformist, and might support fellow reformist, Li Yuanchao, in his political liberalization experiments in Jiangsu province. Likewise, Wang Yang, another reformist, has been testing the limits of government political reforms in the Guangdong province through more transparency and less intervention in local activities.

The rise of Bo Xilai has highlighted the growing importance of developing regions like Chongqing, which is both a prospective economic hub and political stronghold. Bo Xilai’s well publicized “Red Songs” campaign has raised eyebrows in Beijing over the strong reception it had from the public in less developed provinces, prompting many leading politicians including Xi Jinping to visit the region. At the same time, as manufacturing and labor costs in the Guangdong and eastern regions rise, companies are relocating some of their facilities and factories inland near Chongqing. The best example is Foxconn’s, the manufacturer of Apple products, move near Chongqing.

As the prominence of regionalism or regional interests grow, the importance of cities like Shanghai as a core political hub will diminish because, for example, elitists traditionally based in Shanghai and Beijing are now being found in Chongqing, Fujian, and other less developed provinces. Another way to understand the situation is an analogical approach to developments in the United States. The Beijing-Shanghai-Guangdong political and economic nexus of China can be likened to the Washington DC-New York-Boston nexus of political and economic power. While the rise of a formerly crime ridden city, Chongqing, can be compared to the rise of Chicago since both cities strive to be political upstarts to the traditional eastern seaboard powerhouses.

The rise of regional interests is only a part of the development story of China as new interest groups and factors will undoubtedly rise and pull on China’s leadership. However regional interest groups would not weaken ideological politics, rather it might strengthen these divisions as different regions become more aligned with different ideological leading factions. Anecdotally, it might become similar to how U.S. states are split between blue and red states with different interest groups working in each state. Likewise, China might become split between “elitist” and “reformist” provinces with regional interests amongst other factors influencing the strength of each faction within a region.

Then, one wonders if such factional divisions would also be institutionalized, similar to the United States, into multiparties or even official lobbying mechanisms? The answer is a resounding no because regionalism is only a glimpse into the rise of “interest group politics,” which is historically associated with rising negative sentiments in China because of increased corruption and bribery. Any institutionalization of these factions and interest groups would become a sort of legalization of corruption, which will bring associated negative sentiments into the public limelight. Furthermore, the party is unlikely to make major political reforms and concessions that might legitimately weaken their hold on power because non-institutionalized political divisions will prevent any CCP decision making process from direct international or domestic interference. Yet, the changing power dynamics within China can make complex political decision-making more predictable and transparent, or that much more uncertain.