The Communist Party plays a delicate game of power politics: benefiting from strong supporters but always wary against any potential rivals.
- Absence of a strong socialist ideology has meant the Party's power is based on an implicit bargain of 'you can get rich if we stay in charge'
- Party has adapted over time, becoming more hidden but still just as pervasive. Rather than bare threats, now the Party seduces.
These major components of the Chinese government, society and economy need to be strong, but not too strong.
- Benefits - Capitalism and free markets under Deng Xiaoping brought much prosperity. Foreign listings provided impetus for efficiency gains e.g. firing lots of workers (1993 - 76 million, 2003 - 28 million). SEOs chiefs incentivised with Party roles combined profitability of SEOs went from roughly zero to $140bn.
- Threats - Post Tiananmen Party needed to take control of SEOs and make money. Rather than running the SEOs directly act like a board of governors hiring/firing executives. Less central planning at the provincial/city level offset by centralised financial system under Politburo members. Danger SEOs executives become too powerful, so they are rotated (e.g. in oil and aeroplanes) and made to compete for roles in the Party.
- Party jobs
- Benefits - All major political, government, regulatory, SEO, legal, news and university and think tank jobs centralized under the 'Central Organisation Department, keeping control within the Party. Fierce competition for roles, where party officials are stress-tested in multiple rural jobs against statistics including economic growth, investment & quality of air etc. SEO roles are similar with 'musical chairs' resulting in clear comparisons and fierce competition.
- Threats - Promotion is not a pure meritocracy with relations being crucial. Also strong incentives to be corrupt and extract money from local businesses. Party roles with all the attention/pressure are losing luster compared to company/provincial official roles where it's easy to get rich.
- Military (PLA)
- Benefits -Party's victory in China was built on the military. Army can be used for international relations and controlling dissent internally (e.g. Tiananmen). In line with China becoming a net importer of oil in 1993 the PLA budget has risen every year since.
- Threats - Soviet Union lost Cold War because of Arms race and because Westerners de-partied the Peoples' Liberation Army (PLA). Modern army has weaker ideological ties to the Party. No PLA man in Standing committee since 1992. Little trust of PLA with every military commander being monitored by a Party equivalent. Built Peoples' Armed Policy, 800,000 strong alternative to Army. Stale ideology and technical/professional career paths with no chance of political office has led to dissent over PLA's ties to the Party (rather than the nation).
- Provincial officials
- Benefits - Decentralized system and dictatorial local officials allows policies to fit local conditions. Also results in extreme competition, each district becoming like a company promoting investment, with officials getting a share in the profits. Also allows policies to be tested before being rolled out across the country. Move towards centralization under Hu Jintao has kept power balance in check.
- Threats - Competition has led to inefficient investing with China's 50% of GDP rate of investment yielding only a few more percentage points of growth than India's 25%. Also, move towards centralization and larger Beijing fiscal budgets has led to short-termist sale of land by local officials and corruption. Now 3,000 local party bosses are educated by politburo members in Beijing and kept in check by local journalists and bloggers (something that wouldn't be tolerated of senior Beijing officials). However as with Sanlu and the baby milk officials with both political and corporate roles can lead to skewed incentives.
- Benefits - Since 2002 entrepreneurs have been invited into the Party to keep them wedded to the Party system. Companies compete to recruit retired party officials to gain access and strengthen ties to the prevailing governmental system.
- Threats - Post Tiananmen private sector was reigned in, same with labour unions. Obviously entrepreneurs represents a dangerous, independent power base. Party has offset this with 'Party sleeper cells' which are usually ignored but in times of crisis can be called into action. Companies that actively defy and compete against the state like Tieban are crushed.
- Benefits - The Party investigates criminal activity first before being handed over to the legal system. Re: corruption 1. law is a method for removing political rivals 2. outrageous illegality that threatens system. Corruption actual helps provide the system with stability building relationships and incentives to maintain the status quo. No longer able to execute etc. Party still has the power's of detention/persuasion.
- Threats - The threat to party members is minimized by the fact that an official can only be investigated if an official of higher rank orders it (i.e. they supervise themselves). Separation of powers with law courts separate from the Party could be a threat to corrupt senior party members and even the system itself. Therefore major scandals like the Sanlu baby milk poisoning are quickly and severely dealt with to satisfy public dissatisfaction.
- Benefits - Rewriting history and controlling the media can strengthen the legitimacy of the Party but only as long as it doesn't go too far.
- Threats - The internet and globalisation, particularly foreign sources of news means its harder to dominate the conversation with Party propaganda.
- Despite western expectations of a gradual weakening of the Communist Party with globalisation/capitalism etc. the Party is actually becoming more assertive and powerful internationally. E.g. pre-Crisis Westerners were teaching the Chinese about governance, post-Crisis they were asking for money.
- The Party is simultaneously evolving and decaying. Unclear what the future holds.
- Previous predictions of decline e.g. WTO membership would lead to Western multinationals destroying inefficient SEOs or a rising middle class would call for democracy or inequality would lead to discontent or even corruption would break apart the Party have proven unfounded.