Le connessioni con i gruppi statali minacciano le riforme della Cina/Stratfor: Gli inevitabili cambiamenti della Cina

Cina, economia, riforme

Asia Times      131031

+Strafor, 05.11.2013, Gli inevitabili cambiamenti della Cina

–       L’incarcerazione di alti dirigenti del gruppo statale del petrolio CNPC (China National Petroleum Corp) fa pensare che l’amministrazione di Xi Jinping e Li Keqiang abbia deciso di ristrutturare i circa 110 gruppi statali cinesi (yangqi o SOE in inglese), e anche altri gruppi controllati da amministrazioni regionali.

–       L’arresto a settembre dell’ex presidente CNPC, Jiang Jiemin potrebbe segnalare il rovesciamento della precedente politica del governo cinese. Jiang, che ha fatto carriera nel settore petrolifero, era anche il patron di 4 altri dirigenti del gruppo, arrestati durante l’estate; tra essi Wang Yongchun e Li Hualin.

–       Lo scorso marzo Jiang era stato nominato presidente del Commissione amministrazione e supervisione degli asset statali (CASAS), un dipartimento di controllo delle operazioni di tutti gli yangqi.

–       Secondo Li Keqiang sono 5 i gruppi statali che più necessitano di riforme radicali: CNPC, gruppo del petrolio e chimico (chiamato anche Sinopec), Chinese National Offshore Oil Corporation (CNOOC), i gruppi della telefonia China Telecom e China Mobile.

–       Imprenditori privati e consiglieri di Li (tra cui l’economista Li Yining, e il magnate immobiliare di Pechino, Ren Zhijiang) sollecitano un’accelerazione delle riforme dei gruppi statali. Ma si prevede che al plenum ci saranno numerosi sostenitori dello statalismo. Nel Comitato Centrale del PCC lo scorso novembre sono stati inclusi numerosi Amministratori Delegati in carica o ex di gruppi statali:

·         oltre all’allora presidente di CNPC, Jiang, un ex presidente di Bank of China, Xiao Gang; 3 ex AD, di recente nominati governatori provinciali:

·         il governatore del Fujian, Su Shulin, un ex presidente di Sinopec;

·         quello dello Shandong, Guo Shuqing, che dirigeva la China Construction Bank;

·         quello dello Hebei, Zhang Qingwei, ex dirigente di Commercial Aircraft Corporation of China Ltd (COMAC).

·         cooptati nel CC, anche i dirigenti di 4 giganti della Difesa e aerospaziali:  

·         Lin Zuoming di China Aviation Industry Corporation; Xu Dazhe di China Aerospace Science and Industry Corporation (CASIC); Ma Qingrui di China Aerospace Science and Technology Corp (CASC); e Zhang Guoqing di China North Industries Group Corporation (NORINCO), il maggior importatore ed esportatore di armi della Cina. 

·         Lo scorso aprile Zhang è statonominato vice-segretario del partito della municipalità autonoma di Chongqing (29 milioni nel 2010, si calcola che oggi abbia 34 milioni di abitanti, 3 milioni di immigrati da altre province, senza permesso di soggiorno).

·         Nel CC sono entrati anche numerosi quadri della “Sesta generazione” (G6), cioè nati negli anni Sessanta, che sono saliti ad alte posizioni nelle conglomerate di Stato, come membri supplenti o di secondo livello, che non hanno diritto di voto ma possono partecipare al dibattito nel prossimo plenum. Sono funzionari G6 60 dei 171 membri supplenti, pari al 35%; almeno 7 di essi sono molto legati a grandi gruppi di Stato o regionali.

·         Tra questi astri emergenti: il successore di Zhang Qingwei alla presidenza di COMAC, Jin Zhuanglong (49);

·         Jin Dongghan (52), e Ma Weiming (53), inventori di sismi di propulsione per navi e sottomarini da guerra, ingegneri del gigante China Shipbuilding Industry Corp (CSIC), collegato con 46 imprese di cantieristica navale e 28 istituti di ricerca.

 Il presidente e segretario generale del PCC, Xi Jinping, conservatore, sostiene che oltre ai militari anche il PCCdeve mantenere il controllo su settori chiavi dell’economia.

–       I quadri PCC favorevoli al mantenimento dei previlegi dei gruppi statali hanno ampiamento usato i media ufficiali (CCTV, Economic Daily) a sostegno delle loro posizioni:” indebolire i gruppi statali equivale a scuotere le fondamenta dello stato socialista”

–       I media stranieri e quelli cinesi all’estero si sono concentrati sulle strette relazioni tra Jiang, Li Hualin e l’ex membro della commissione permanente del Politburo Zhou Yongkang, ex general manager di CNPC, considerato un alleato di Bo Xilai, ex del Politburo, condannato al carcere a vita lo scorso ottobre.

–       Dato che Zhou è ricomparso in pubblico, si pensa che gli ex membri del comitato permanente del Politburo non verranno incriminati.

–       Secondo Stratfor, la Cina è ad un punto cruciale, è costretta a attuare queste riforme, perché il super-ciclo economico messo in moto da Deng è alla fine – come avvenuto prima dell’amministrazione di Deng Xiaoping, che attuò una serie di riforme e aperture economiche.

–       La situazione attuale: forti critiche dell’opinione pubblica ai funzionari e al partito stesso; gli Stati Uniti tornano a occuparsi della Cina, come potenza da contenere; i paesi vicini della Cina chiedono l’appoggio degli Usa per controbilanciare l’influenza cinese, il Giappone si sta risvegliando. (l’art. di Strafor riassume le precedenti fasi di riforme dal 1978 agli anni Novanta – Deng Xiaoping, Jang Zemin, Hu Jintao). (Deng, preoccupato per la concentrazione del potere introdotta da Mao – il segretario generale del PCC e presidente cinese è anche presidente delle due commissioni militari centrali -, cercò di avviare un sistema di leadership di gruppo per evitare l’ascesa di un altro uomo forte).

–       Riforme per la Cina oggi vuol dire ridefinire le relazioni tra Partito, economia e popolazione, in modo da mantenere la centralità del partito,

–       magari migliorando l’efficienza del partito e delle strutture di governo, cambiando regole e organizzazione per l’economia, trasferendo diritti e responsabilità ai cittadini;

–       ciò potrebbe richiedere ridurre il potere del partito in certe aree, ma non ridurne in assoluto il potere.

–       Il sistema di “leadership con consenso” è divenuto insufficiente quando l’economia cinese ha iniziato a vacillare dopo il 2008, quando sono aumentati salari e prezzi quando i maggiori consumatori dovettero affrontare seri problemi economici.

–       Per superare le limitazioni del sistema di “leadership con consenso”, che non consente trasformazioni radicali, sembra che Xi cerchi di rafforzare la presidenza, in modo che non sia solo un titolo aggiuntivo a quello di segretario del PCC, ma abbia un ruolo reale, simile alla presidenza delle altre grandi potenze.

–       Xi spera di poter usare la sua posizione di presidente per influire maggiormente sul tipo di ristrutturazione del Partito, ma è un difficile gioco di equilibrio.

–       Le riforme chiave:

–       1. una burocrazia gigantesca, ci sono segnali di riforme per ridurla, per accrescerne l’efficienza, ma anche per aver maggiore controllo centralizzato e ridurre le reti di interessi che si sono create in molte delle più potenti istituzioni della Cina.

–       2. in campo economico: l’introduzione di maggiori meccanismi di mercato conferirà maggiore controllo centrale sul suo insieme; consolidamento, efficienza, trasparenza, riforme e ristrutturazione hanno come risultati da una parte sistemi più efficienti e flessibili, dall’altra maggiore facilità di direzione centrale.

–       I tre decenni di forte crescita economica hanno anche visto crescere una rete più densa di relazioni e interessi concatenati,

–       districarli senza far franare l’intero edificio è possibile solo dopo averli sostituiti con maggiore centralizzazione.

SOE links threaten China reform drive

By Willy Lam

–       The recent detention of senior executives of the China National Petroleum Corp (CNPC) has highlighted a major question about China’s economic plans: Whether the Xi Jinping-Li Keqiang administration has finally decided to restructure the 110 or so yangqi, or state-owned enterprise (SOE) groupings.

–       Premier Li has also raised expectations that the economic-reform blueprint that is due to be endorsed by the Third Plenum of the Chinese Communist Party (CCP) Central Committee next month will address the issue of allowing privately owned firms to enter into sectors that have been monopolized by these national champions. After all, one of the key reform initiatives associated with so-called “Likonomics” is the provision of a level playing field for both SOEs and non-state-sector enterprises.

–       The arrest of former China National Petroleum Corporation (CNPC) president Jiang Jiemin on September 1 could become a watershed reversal of the Chinese government’s policy of nurturing “aircraft carrier-type” SOE giants, many of which have made it into the Fortune 500 List.

–       Jiang, who spent the bulk of his career in the oil industry, was the patron of four other CNPC executives detained in the summer, including deputy general managers Wang Yongchun and Li Hualin. Last March, Jiang was appointed chairman of the State Assets Supervision and Administration Commission (SASAC), a ministry-level department charged with overseeing the operations of all yangqi.

–       After Jiang’s ouster, SASAC party secretary and vice-chairman Zhang Yi indicated that units under the commission should “forcefully implement structuring adjustments and transformation” as well as “further strengthen the supervision of state assets”.

–       Given that Zhang is a former senior cadre in the CCP Central Commission for Disciplinary Inspection (CCDI) – which is China’s highest-level anti-graft watchdog – his role seems to be to clean up not only the mess in CNPC, but other SOE behemoths as well.

–       Much of the foreign and overseas-Chinese media reporting on the CNPC scandal has focused on the close relationship between Jiang, Li Hualin and former Politburo Standing Committee (PBSC) member Zhou Yongkang, who is a former general manager of the oil giant. Zhou is also seen to be an ally of the fallen former Politburo member Bo Xilai, who was sentenced to life imprisonment for alleged corruption and embezzlement last month.

–       Zhou’s public “reappearance” – he was seen inspecting his alma mater, the China University of Petroleum, in early October – seems to lend credence to reports that the former PBSC member would not face criminal prosecutions. Yet Jiang’s removal – and the large-scale purge of CNPC cadres – also coincided with a series of talks by Premier Li, deemed the most reform-oriented member of the current PBSC, on the need to overhaul a host of unwieldy yangqi, which CNPC perhaps best exemplifies.

–       Premier Li underscored the imperative of reforming yangqi as well as other large SOEs controlled by regional administrations in a series of meetings of the State Council, or cabinet, in the past few months. Li indicated at a regular State Council conference last month that private firms should be gradually allowed into several sectors dominated by yangqi, which include finance, oil and gas, electricity, railways, telecommunications and the exploitation of mineral and other resources.

At an earlier meeting, Li urged yangqi “to use reform-oriented methods and restructuring measures to solve existing problems”. “They should raise their management levels [and] make more efforts in strengthening innovative ability,” he added. “We should build up ‘sunshine yangqi’ so that they can boost the values of state assets and acquit themselves well of their social responsibilities.”

–       In an internal talk earlier this year, Li reportedly cited CNPC, the China Petroleum & Chemical Corporation (or Sinopec), the Chinese National Offshore Oil Corporation, China Telecom and China Mobile as the five yangqi that required the most thorough reforms. “If we do not restructure [these enterprises] and bring about major changes, there might be serious consequences for which nobody would want to bear the responsibility,” Li said.

–       Private entrepreneurs and advisers to Premier Li have been pushing for a speedier pace in reforming SOE groupings. At a Forum on Non-state Enterprises held in Beijing earlier this month, Peking University economist Li Yining argued that “SOEs should become real enterprises” and not adjuncts of the state. Li argued that SASAC should stop exercising direct control over the yangqi.

–       “Everything should be done according to laws and regulations,” said Professor Li, who supervised Li Keqiang’s doctoral thesis when the latter was a part-time Peking University student in the 1980s. “Private enterprises should compete with SOEs in an environment of equality.” Beijing-based real estate mogul Ren Zhijiang, a vocal advocate of the rights of private enterprises, also accused SASAC cadres of “failing to supervise [SOE] enterprises [due to] their lack of knowledge about running businesses”.

–       Yet it is apparent that there is a divergence of views within the CCP’s highest echelons as to the extent to which the SOE conglomerates should be reformed or even privatized. This is evidenced by a plethora of articles in the official media that reflect the views of top-level cadres who support the continuation of the yangqi’s privileged status.

–       The day after news broke about Jiang’s detention, CCTV came out with a commentary defending the yangqi system. The article claimed that the CNPC scandal “has nothing to do with its monopoly status” and that there are many industries that could only be handled by state-controlled conglomerates. “It’s not as though anyone can get into the oil business,” the commentary said.

–       Equally significant was a series of five commentaries carried by the conservative Economic Daily. The articles warned advocates of privatization that weakening SOEs was tantamount to shaking up the foundation of the socialist state. “The purpose of SOE reforms is not to abolish them but to make them better,” it said. The paper praised President Vladimir Putin for re-nationalizing Russia’s oil and gas operations “so that petroleum has once again become the pillar and foundation of the revival of Russia”.

–       A closer look at the backgrounds of Central Committee members endorsed at the 18th CCP Congress suggests that there will be no lack of yangqi supporters at the plenum.

–       A record number of serving or former CEOs of SOE conglomerates were picked as Central Committee members last November. In addition to then-president of CNPC Jiang, a former president of Bank of China, Xiao Gang, made it to the party’s ruling council. So did three former yangqi CEOs who were recently appointed as provincial governors: Fujian governor Su Shulin, who is a former Sinopec president; Shandong governor Guo Shuqing, who used to run China Construction Bank; and Hebei governor Zhang Qingwei, who headed the Commercial Aircraft Corporation of China Ltd (COMAC).

–       Also inducted into the Central Committee were the chief executives of four defense-industry and aerospace giants: Lin Zuoming of China Aviation Industry Corporation; Xu Dazhe of China Aerospace Science and Industry Corporation (CASIC); Ma Qingrui of China Aerospace Science and Technology Corp (CASC); and Zhang Guoqing of China North Industries Group Corporation (NORINCO). Last April, Norinco’s Zhang, whose company is China’s largest importer and exporter of weapons and firearms, was appointed deputy party secretary of the directly administered city of Chongqing.

–       Equally significant is the fact that a number of sixth-generation (6G) cadres (meaning those born in the 1960s) who have risen to top positions in SOE conglomerates also joined the Central Committee as alternate or second-tier members. While alternates members cannot vote, they will be allowed to join the debate on economic reform at the upcoming plenum. Sixty, or 35%, of the 171 alternate Central Committee members are 6G officials – and at least seven of them have close affinities with yangqi or regional SOE giants.

–       These 6G rising stars include Zhang Qingwei’s successor as COMAC president Jin Zhuanglong, aged 49. A much-decorated aerospace engineer, Jin became deputy general manager of CASAC, a major contractor for China’s space programs, in 2001, when he was barely 37 years old. The mammoth China Shipbuilding Industry Corp (CSIC), a yangqi with 46 shipbuilding-related enterprises and 28 research institutes, is represented by naval engineers Jin Donghan, 52, and Ma Weiming, 53. Jin, who is chief engineer at CSIC’s 711th Research Institute, and Ma, a top professor at the Naval Engineering University, are credited with having invented state-of-the-art propelling systems for a range of warships and submarines.

In his now-famous internal speech last December, General Secretary Xi attributed the demise of the Communist Party of the Soviet Union[e] (CPSU) to the fact that the military “stood idly by” as “traitors” such as Mikhail Gorbachev and Boris Yeltsin plotted to overthrow the party. Conservative cadres such as Xi seem also convinced that in addition to the military, the CCP needs to maintain control over key sectors of the economy so as to ensure its status as China’s “perennial ruling party”.

Since early this year, a number of official media have run commentaries on the imperative of “the CCP running the economy” or “the party imposing tighter control on cadres” working in enterprises. At another forum on private enterprises held in August, tycoon Ren laid into the concept of the CCP controlling the economy. “If the party is managing the economy, it will not be possible for Likonomics to exist,” he said. Chinese and foreign observers interested in the future of China’s economic reform will no doubt scrutinize next month’s Third Plenum communique for clues about the degree to which the party-state apparatus is ready to retool some of the biggest companies in the world.

–       The Central Committee of the Communist Party of China will convene its Third Plenum meeting Nov. 9. During the three-day session, President Xi Jinping’s administration will outline core reforms to guide its policymaking for the next decade. The Chinese government would have the world believe that Xi’s will be the most momentous Third Plenary Session since December 1978, when former supreme leader Deng Xiaoping first put China on the path of economic reform and opening.

–       Whether or not Xi’s policies will be as decisive as Deng’s – or as disappointing as those of former President Hu Jintao – the president has little choice but to implement them. China’s current economic model, and by extension its political and social model, is reaching its limits just as it had prior to Deng’s administration. The importance of the upcoming meeting is that it comes at an inflection point for China, one that its leaders can hardly afford to ignore.

–       It is worth recalling just how extraordinary Deng’s 1978 meeting was. Mao Zedong had died only two years earlier, taking with him what little remained of the old pillars of Communist Party legitimacy. China was a mess, ravaged by years of economic mismanagement and uncontrolled population growth and only beginning to recover from the trauma of the Cultural Revolution. Had the People’s Republic fallen in 1978 or shortly thereafter, few would have been truly surprised. Of course, in those tense early post-Mao years hardly anyone could foresee just how rapid China’s transformation would be. Nonetheless, battling enormous institutional constraints, Deng and his colleagues quickly set up new pillars of social, political and economic stability that guided China through the fall of the Soviet Union[e] and into the 21st century.

Although Xi presides over China during a time of economic prosperity, not disrepair, perhaps not since Deng has a Chinese leader faced such formidable challenges at the outset of his tenure. Former Party general secretaries Jiang Zemin, and to a greater extent Hu, could largely follow the lead of their predecessors.

–       Jiang, emerging as a post-Tiananmen Square leader, was faced with a situation where the Party was rapidly losing its legitimacy and where state-owned enterprises were encumbering China’s economic opening and reform. But internationally, China’s position was relatively secure at the beginning of Jiang’s term in office, and by the time he took on the additional role of president in 1993, the decline of the Japanese economy and the boom in the United States and the rest of Asia left an opening for China’s economy to resurge.

–       These conditions enabled Jiang’s administration to enact sweeping bureaucratic and state sector reforms in the late 1990s, laying much of the groundwork of China’s post-2000 economic boom.

–       When Hu succeeded Jiang in 2002-2003, China’s economic growth was seemingly unstoppable, perhaps even gaining steam from the Asian economic crisis. The United States, which had seemed ready to counter China’s rise, was instead fully focused on Iraq and Afghanistan, and though the Communist Party of China was not exactly seen as the guiding moral compass of the state, the role of print and social media in raising criticism of Party officials had not yet exploded.

–       As Xi prepares his 10-year plan, China has reached the end of the economic supercycle set in motion by Deng. Public criticism of officials and thus of the Party is rampant, and China’s military appears much more capable than it actually is, putting China is a potentially dangerous situation. Once again the United States is looking at China as a power perhaps to contain or at least constrain.

–       China’s neighbors seem eager for Washington’s assistance to counterbalance Beijing’s influence, and long-dormant Japan is awakening once again. Xi may not have to rebuild a fractured Party or state as Deng did, but in some ways he faces the same fundamental challenge: redirecting and redefining China.

–       China can no longer follow the path it has in previous decades. Deng emerged as China’s paramount leader out of the struggles and chaos of the Gang of Four era and the Cultural Revolution. He redefined what China was and where China was going, not out of a desire to try something different or an infatuation with "Western" economic models but out of a fundamental need to change course.

–       Whether Xi wants it to be or not, China is at another crossroads. He has little choice but to make consequential decisions, lest he leave China scrambling from one quick fix to another at the expense of long-term opportunities.

The Perils of Rapid Reform

–       Reform, with "Chinese characteristics," is not about Westernizing the Chinese model. Rather, it is about reshaping the relationship between the Party, the economy and the people in a way that will maintain the centrality of the Party.

–       This may require improving the efficiency of the Party and governing structures, changing the organization and rules of business, and deferring to the rights and responsibilities of the citizenry. But while this will likely entail selectively scaling back the Party’s power in certain areas, it does not mean the overall reduction of Party power.

–       Since the founding of the People’s Republic in 1949, the Party has been constitutionally at the center of Chinese leadership. Mao’s authority stemmed from his role as chairman of the Central Committee of the Communist Party of China, a position he held from 1945 until his death in 1976. Concerned by Mao’s concentration of power, Deng never adopted the same titles, though he still managed China through the Party, drawing strength and authority through his careful balancing of retired and serving Party officials. In 1993, the Party general secretary took on the parallel role of the president. Jiang served in both roles, as did Hu and Xi.

–       The consolidation of Party and political leadership was made clear in the formula. It is matched by the general secretary and president also holding the dual roles of chairman on the two parallel Central Military Commissions, one under the Party and the other under the state. Under Mao, the Party and the state were united in the figure of Mao himself. In the 20-year transition from Mao to Jiang, the Party remained synonymous with the state, but the consolidation of power in a single individual was replaced as Deng sought to initiate a system of group leadership to avoid the rise of another strongman. Jiang’s accession to the presidency formalized Party-government leadership, but consensus leadership constrained his power. Jiang may have technically held all the key posts of power, but other power brokers in the Politburo could counterbalance him. The system ensured that the paramount leader remained constrained.

–       This group dynamic allowed the Party to avoid the rapid and far-reaching policy swings of Mao, but it created stagnation in the bureaucracy and state sector. Ensuring the right web of connections often became more important than fulfilling the responsibilities of the Party or the state.

–       Deng’s machinations helped eliminate strongman politics and degraded political factions like the Gang of Four, but these were replaced by more complex and widespread bureaucratic and industrial patronage networks. The result was more a web than a set of individual strings. No longer could any one interest press entirely against another without risking the entire structure. The intertwining threads were just too complex. Rapid policy swings were impossible and factional battles that threatened the fabric of the state were effectively eliminated, but the cost was a decision-making process that was increasingly cumbersome and timid. Radical reform would never make it through the process of consensus building, and any policy deemed harmful was met with resistance.

–       This worked well during China’s boom. Though China was corrupt, beset with a cumbersome regulatory environment and prone to violations of intellectual property rights, it was fairly predictable overall, unlike so many other developing economies. The consensus model was also more attuned to social stability, constantly making tiny adjustments to appease or contain the demands of public sentiment.

–       In times of slowed economic growth, China’s leaders would stimulate the economy. In times of apparent overheating, they could cut back on credit. If people were frustrated with local officials, the central government would alternately remove the accused leaders or crack down on the protesters.

–       But when the foundation of China’s economy began to shake after 2008, when China’s very success drove up wages and prices as its biggest consumers faced serious economic problems of their own, China’s consensus leadership proved unequal to the task.

–       During China’s rise, Beijing needed only minor adjustments to maintain stability and growth. But now that the country is in a far different set of circumstances, Beijing needs a major course correction. The problem is that consensus rarely allows for the often radical but necessary response. And for good reason: The success of radical change is not guaranteed. In fact, history suggests otherwise, as it did notably with the case of Mikhail Gorbachev and the Soviet Union.

–       To overcome the limitations of consensus leadership, Xi apparently is trying to strengthen the role of president. He wants to redefine the presidency so that it is not merely the concomitant title for the Party leader but also a post with a real leadership role, similar to the presidencies of other major countries.

–       This is a way to compromise somewhere between consensus and strongman. The presidency should not exceed the Party, but as the head of state, Xi is hoping to use his position to have a greater say in how the Party is restructured. The first target is the bloated bureaucracy. Already there are signs that several of the reforms are about removing layers from China’s bureaucratic structures. This should add efficiency to the system (its stated goal), but it may also confer greater central oversight and control by cutting through the webs of vested interests that have taken hold in many of China’s most powerful institutions.

–       The reforms slated for the economic sector are similar. They will introduce more market and competitive mechanisms while giving Beijing greater control over the overall structure. Consolidation, efficiency, transparency, reform and restructuring are all words that possess dual meanings — one regarding more efficient and more flexible systems, the other regarding systems that the center is better able to direct. At a time when China needs radical change, it first needs to change the mechanism through which policies are decided and enacted. The government hopes that by disengaging from constant, restrictive intervention into certain sectors, it will have greater capacity to intervene selectively, focusing on enforcement and compliance rather than dictating every move of state-owned enterprises. There is no guarantee that these reforms will work or that they can be implemented effectively or smoothly. China has seen three decades of economic growth, and in turn three decades of more tightly woven relationships and knitted interests. Unraveling any thread can rapidly degrade the entire structure, unless stronger central replacements are already in place.

China’s leaders are facing the difficult task of adjusting once again to changing circumstances. Political legitimacy and control remain closely linked. It is Xi’s position as head of the Party that ostensibly gives him legitimacy as head of the state. But to create a more nimble and adaptive government, Xi is seeking to harness the people in a slight reversal, using his role as president to rebuild the legitimacy of the Party, and in doing so take stronger control of the Party mechanisms. This is a difficult balance. But China is at a turning point, and without nimble leadership, a system as large and complex as China can move very rapidly down an unpredictable and uncontrollable path. The leadership can attempt to take control and hope for success, but the consensus system and entrenched and bloated bureaucracy are reaching the end of their effectiveness as China enters uncharted economic and social waters.