2014 will be a critical year for China’s ruling Communist Party. The new administration, led by President Xi Jinping, ends its first year in power on a high note, buoyed by enthusiasm at home and abroad over its agenda for political and economic reform. At their core, these reforms aim to streamline bureaucracy, bridge the gap between central and local interests and allow market forces to play a “decisive” role in the economy.
The stage for reform is set. Now it's time to act. This will be the key challenge of 2014 — one that will shape the rest of Xi Jinping’s decadelong tenure, for good or bad. As China’s new leaders surely understand, failure to make tangible progress in the reform areas they’ve outlined within the next year could irreparably damage Party legitimacy. And maintaining legitimacy will be crucial as China attempts the painful transition toward genuine global power status — not only economically, but diplomatically and militarily.
In the coming months, Stratfor will watch closely for evidence of moves by Chinese President Xi Jinping to consolidate his position vis-a-vis other powerful forces within the Party. For Xi, sidelining potential rival powerbases is a first critical step on the path to realizing the reforms outlined at November’s Third Plenary session. This is because in China, as elsewhere, enacting change requires power, and power is not simply making bold pronouncements. It means getting every level of influence below you to do what you want — something that is not easy in a political system characterized by deeply entrenched, overlapping and often mutually competitive networks of patronage.
In this sense, we can think of China’s leaders in 2014 as entering the second of a three-stage process of reform. In this stage, Xi and his colleagues will strive to ensure that China’s bureaucratic machinery is aligned with their interests. Success here will be key to the final stage: actually implementing their broader reform goals in the years to come — goals such as moving toward a more sustainable model of economic growth, clamping down on major sources of environmental pollution and curbing the worst of state-owned enterprise corruption and excess.
Against this backdrop, the case of former Politburo Standing Committee member Zhou Yongkang stands out as one to watch. Zhou, who served as China’s chief of internal security under Hu Jintao, is the epicenter of what could be the country’s largest ever individual anti-corruption campaign — one that has already extended to the three pillars of Zhou’s influence: the internal security ministry, the Sichuan Basin region and the powerful state-owned China National Petroleum Company, which he chaired from 1996 to 1998. Already, representatives of each power base have come under investigation by central authorities, and there are widespread reports that Zhou himself is under house arrest, awaiting a formal investigation.
At this point, it’s difficult to say what exactly the impact of a crackdown on Zhou would be, or how sidelining Zhou and key former associates like Bo Xilai and Jiang Jiemin will affect Chinese economic policy. For example, despite investigations underway into former CNPC executives like Jiang Jiemin, there have been no major discernible shifts in the company’s activities, though there has been much talk about restructuring parts of the oil sector. Nonetheless, though the exact implications may be unclear, the crackdown on Zhou’s faction is almost certainly tied to President Xi Jinping’s effort to clear the way for enacting his own agenda in the coming months and years.
