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Political and military leadership transition in China: core strategies for sustaining and strengthening a 21st century rules-based order: address to International Institute for Strategic Studies, London

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Address to International Institute for Strategic Studies


25 October 2012


By this time next month, China will have a new leadership.

The 18th Congress of the Chinese Communist Party will begin on 8 November.

By convention the Congress, held every five years, lasts up to two weeks.

By which time both China and the world will know who will be running the world’s most populous nation - and probably the world’s largest economy - through until 2022.

Assuming everything goes to plan, this will only be China’s second orderly leadership transition (the Bo Xilai case notwithstanding) since the founding of the People’s Republic nearly two-thirds of a century ago.

This very much reflects the Communist Party’s reaction to the tumultuous events of the Cultural Revolution, the purge of the gang of four and the Tiananmen crisis of 1989.

The Hon. Kevin Rudd MP


Since that time, the Chinese Communist Party has sought to build what it describes as “internal party democracy” and to regularise its internal election/selection procedures.

Notwithstanding the intensely factional nature of the Chinese Communist Party, earlier this year the 400 or so full members and alternate members of the Central Committee of the CCP participated in what might be described as a type of “straw ballot” in order to confirm the broad shape of the emerging hierarchy of both the Politburo and its Standing Committee.

Whereas once these archaic processes and procedures would have been the exclusive preserve of that hardy sub-species of sinologists called “internalists” (the sinologists’ equivalent to the craft of any of those crusty Kremlinologists remaining among you), these are now matters of deep relevance to us all, including the future shape of global politics, economics and the environment, not to mention strategic policy.

The Chinese Communist Party has never been a monolithic party with a perfectly synchronised position on the great challenges facing the Chinese nation at home and abroad.

They are a Party made up of real live human beings just like you and me. Internally, they reflect a diversity of views shaped by their family background, where they have lived and worked in China, their educational opportunities at home and abroad, the complex web of relationships they have formed over many decades both within the Party and beyond, as well as their own individual conclusions about the Party’s and the country’s future direction. Of course, the disciplines of collective leadership also apply. It would be fanciful to believe otherwise and in many respects this is where Bo Xilai simply went beyond the pale. Once the Politburo Standing Committee takes a decision or once the Central Military Committee takes a decision - that’s it.

But in the complex processes leading up to such decisions, there are often open, sharp and controversial debates that rage across the critical policy advisory bodies that service the centre - the Leading Group on Foreign Affairs, the Leading Group on Political and Legal Affairs, the Foreign Affairs Office of the Central Committee, the State Council and its relevant subsidiary bodies, the Ministry of State Security, the Foreign Ministry, the National Development and Reform Commission and the plethora of think tanks which officially and unofficially serve these core institutions.

To those of us who are foreign barbarians standing outside these processes, it can seem positively byzantine.


That is because it is. And truth is that it is often as equally byzantine for those within the system as well.

Whereas much progress has been made over the last 20 years in the regularisation of China’s political, policy and bureaucratic procedures, it is still often opaque for those both inside and outside the system.

For the international community the core points are these:

 First, in China, leadership at the top really does matter and therefore the composition of the Politburo Standing Committee (China’s nearest equivalent to an Executive Cabinet) matters most;

 Second, because China’s policy process has a vast array of inputs, the international community does have a capacity to influence China’s internal decision-making outcomes, either for good or for ill. (That is why, for example, our engagement with Chinese think tanks does matter, assuming of course that we have a reasoned, credible and consistent argument to put to our Chinese friends, and we do so in a manner which is sensitive to their own internal political and bureaucratic realities. And we in the West should not become too precious about these “realities” given that all of our public policy systems, Whitehall included, have their own deeply entrenched cultural forms and acceptable methods of doing business with those on the outside);

 Third, in the national security and foreign policy space, however, particular complications arise for the rest of us given the multiplicity of internal players in general and the separate silos within which the military and foreign policy establishments work in particular.

China’s Next Politburo Standing Committee

So what is the likely shape of the new Politburo Standing Committee that will take office within the next month - and here I draw extensively from remarks I have made recently elsewhere on this important matter.

At the apex of the Politburo Standing Committee will be Xi Jinping who will be elected General Secretary of China’s Communist Party, President of the country, as well as Chairman of the Central Military Commission (although there may be a two year delay in his transition to the latter at position, consistent with the transition that occurred between Jiang Zemin and Hu Jintao) a decade ago.


I believe Xi Jinping to be experienced, confident and self-assured and because of his family’s political pedigree, comfortable with the mantle of political leadership.

He is the son of a former Politburo member Xi Zhongxun who’s political career mirrored that of Deng Xiaoping - with all the rises and falls from political favour that his generation endured under the increasingly erratic leadership of Mao Zedong.

Xi Zhongxun has a significant PLA background prior to 1949, and a significant role in the economic management and reform tasks that China faced post 1949 when Deng Xiaoping was either Vice Premier or Premier.

Xi Jinping has also himself served in the People’s Liberation Army. Most critically, he served as Private Secretary to Geng Biao when the latter was China’s Defence Minister in the late 70s and early 80s and when Xi accompanied Geng on various travels abroad. More critically, at this time Geng Biao also served as Secretary General of the Central Military Commission of the Party. This places Xi in a more advantageous position than his predecessor because he has seen up close, albeit at a junior level, the internal operations of China’s military establishment.

The point of all this is that I believe Xi Jinping is confident of both his military and economic reformist credentials, and this therefore places him in a good position to negotiate the complex internal shoals of high-level party politics.

In addition to this, Xi brings to the table vast experience of both municipal and provincial level administration across both China’s richer and poorer regions.

As for Xi’s views of the world, in his domestic roles he has had extensive engagement with foreign corporations given that his own administrative career has coincided with a period of China’s most intense program of domestic economic reform and global economic engagement.

Over the last five years since he was first elected to the Standing Committee, he has travelled extensively around the world (including Australia) and has spent extended periods of time in the United States as the guest of Vice-President Biden, and earlier as Biden’s host during the latter’s extensive tour of China.

By instinct Xi has an inquiring mind and is deeply interested in the world.

He is confident in the knowledge that he has accumulated, but equally clear about what he


does not know - and that which he seeks to understand more completely.

I have long said that I believe Xi Jinping is a Chinese leader that the Americans can do business with - not just in shaping the long-term contours of Sino-US relations in a new, constructive strategic direction, but also in shaping the broad architecture of a new rules-based order for Asia.

Leadership matters in the PRC and it matters very much who sits at the apex of the Chinese political structure.

Because the Chinese political structure is intensely hierarchical, the ultimate calls are made by the Standing Committee of the Politburo, and in that context final calls are often made by the President himself.

History may well prove me wrong - but given the formidable strategic and economic challenges that lie ahead, both for China itself, and China’s place in the region and the world, on balance I believe Xi Jinping to be the man for the times.

And what of the rest of the Standing Committee of the Politburo?

The current nine member body is most likely to be reduced to seven to make it more manageable.

Xi Jinping will be joined by Li Keqiang (current Executive Vice Premier) as Premier.

Also by Wang Qishan, currently Vice Premier and an important figure in China’s overall international engagement, including with the United States.

Other members of the Standing Committee are likely to be drawn from the likes of Zhang Dejiang (current Vice Premier and temporarily Chongqing Party Secretary replacing Bo Xilai), Li Yuanchao (Head of the Party Organisation Department), Zhang Gaoli (current Tianjin Party Secretary), Liu Yunshan (Head of the Propaganda Department).

The bottom line is this. If the Standing Committee is drawn from individuals such as these, its centre of policy gravity is likely to be significantly reformist in terms of the future direction of Chinese economic management.

These individuals are sufficiently experienced to know what must now be done with the Chinese economy in order to sustain high levels of economic growth, continued increases in living standards, the lifting of the remaining hundreds of millions of Chinese people still in poverty into a better life;, and providing sufficient jobs for the tens of millions of young,


educated Chinese bursting onto the labour market each year.

I believe the new Chinese leadership may well embrace the following policy directions.

We are likely to see further market reforms of the Chinese economy.

I believe we’ll see reforms to China’s state-owned enterprises and the possible privatisation of some.

I believe we’ll see reforms to the Chinese financial services industry and a greater ability for Chinese private enterprises to have easier and more competitive access to finance, sustain and expand their operations.

I believe we’ll also see further reforms to Chinese currency markets which over time is likely to make Chinese imports more competitive in their domestic market.

None of this is to underestimate the formidable domestic policy challenges that the new Chinese leadership will confront as they seek to implement this next phase of economic reform.

These include:  Long-term energy and resource security;

 The imposition of carbon controls to limit environmental and economic damage to China itself;

 Water scarcity;

 Land management decisions giving rise to massive local protest activity;

 Inequality (between cities and the countryside and between coastal, inland and western provinces);

 An increasingly open social media debate; the assault of materialism on traditional socialist values; and the rise of new religious forces and alternative belief structures;

 And, from Beijing’s perspective, an increasingly non-benign foreign policy environment in relation to many of China’s neighbours. 
The challenge therefore for the new leadership will be to implement a further large-scale transformation of the Chinese economy and to manage the range of other policy and political pressures that will also dominate the domestic landscape over the next five years. 


Central Military Commission

Changes to the Politburo Standing Committee are one thing.

But of particular significance to China’s future strategic posture, both within the Asian hemisphere and beyond, is the likely composition of the new Central Military Commission.

As I have stated before, any analysis of the future shape of Chinese domestic politics is always complicated by the opaque nature of the Chinese People’s Liberation Army and its political role.

One of the core emerging debates within China is whether the military should be subject both to the formal apparatus of the Chinese state and not just the Chinese Communist Party.

For a revolutionary party, but a country with an increasingly liberalised economy, this is a question of profound ideological and political significance.

On the positive side, if we were to look across the span of the last 35 years since the end of the Cultural Revolution, there has been a demonstrable withdrawal by the army from the formal institutions of the state.

30 years ago when we foreign diplomats would attend the opening session of the National People’s Congress, one of the first things which caught your eye was the large number of military uniforms seated in the Great Hall of the People as a public manifestation of the historic role of the army in building the modern Chinese state.

The military was also well represented in the Chinese Politburo of the times.

That is no longer the case.

This reflects the comprehensive demilitarisation of Chinese society - in stark contrast to those heady revolutionary days when every political event was couched in terms of the fundamental political bedrock that was the all-pervasive alliance between workers, soldiers and peasants.

Now it seems we may have the reverse problem where many analysts are concerned that the military has so comprehensively withdrawn from the formal institutions of the State and the Government that it now represents its own separate locus of power influencing national decision making from behind the screen.


For the international community, the core of this problem lies in whether foreign and national security policy is actually speaking with two voices; the public voice - what the Chinese Foreign Ministry says on a day-to-day basis; in contrast to what the Chinese People’s Liberation Army (and perhaps other elements of the Chinese security apparatus) actually does on a day-to-day basis.

There have been some examples in recent times where the Chinese military and the Foreign Ministry seem to have been working in different directions, perhaps not deliberately, but perhaps as a product of the absence of a mechanism such as the National Security Council of the United States.

The international media has contained a number of reports of policy dissonance between the military and foreign policy establishments including the handling of the EP3 incident in 2001; the unveiling of China’s stealth bomber prototype in 2011 during a visit by U.S Defence Secretary Robert Gates; and more recently on various incidents associated with the South China Sea.

Within the Chinese structure, formal coordination ultimately lies with the Central Military Commission itself but by its very nature this tends to exclude non-Party and non-military agencies and key personnel.

Therefore the open question is whether the Party’s Leading Group on Foreign Affairs which does have other personnel represented (including for example the Premier) is sufficient for these purposes.

My own view is probably not, because for those familiar with the operation of the U.S. National Security Council and the National Security Adviser, not only is there a clear Presidential mandate for the incumbent to speak and act with authority across the military, diplomatic and national economic security apparatus, it is also supported by a critical secretariat function which systematically engages all the relevant agencies.

My argument is that given that China’s foreign and security policy footprint is becoming larger as a direct consequence of its national, regional and global economic power, the sooner China establishes an NSC-type institution, the better.

This is critically important in the next phase of U.S-China relations once both the American and Chinese electoral and leadership processes are concluded over the next month.

As I’ve said elsewhere, not only does the next U.S administration need a new Henry Kissinger to act as a reliable and authoritative point-man for the totality of the relationship;


China also needs its own Henry Kissinger who can do the same. At present, given the constraints of the collective leadership system and the current structure of national security coordination processes between the Party and the military and state apparatus, that is not possible.

For the immediate period ahead, the international community will monitor closely the emergence of new personnel on the CMC itself.

The CMC is made up of the PLA’s ten leading generals as well as President Hu Jintao as Chairman of the Military Commission and Xi Jinping currently as Vice-Chair.

Because of the retirement age limits, seven of the country’s top ten generals who serve on the CMC are likely to be replaced in the period ahead.

Only two days ago, the Chinese central news agency has reported the first of these personnel changes. General Zhang Yang from the Guangzhou military region has been appointed head of the general political department of the PLA.

A second more controversial appointment announced just recently has been General Ma Xiaotian who has been appointed the new head of China’s air force.

Unlike General Zhang, General Ma has something of a public profile already having accused the Americans of having a “cold war mentality” and warning the Americans that the South China Sea is none of their business.

But what happens with other replacements on the CMC is an open question and will probably await the more core resolution of wherther Xi Jinping immediately becomes Chairman of the CMC, having been elected General Secretary of the Party in November, or whether there will be a Hu Jintao two year interregnum as has previously been the case

The current strategic direction, doctrine and structure of the PLA was laid out by Hu Jintao in a formal statement to the CMC published in 2004.

Hu Jintao described these as the PLA’s “new historic missions”:  First to guarantee the ruling position of the Chinese Communist Party;

 Second, to safeguard China’s national development;

 Third, to protect China’s national interests (the latter invariably further defined as

maintaining the unity of the motherland in relation to Xinjiang, Tibet and Taiwan; but more controversially the recent addition of the South China Sea to this longstanding


list of “core interests”); and

 Fourth, and most opaquely, “the preservation of world peace”.

It is the third and the fourth of these functions that captures the interests and sometimes the concern of the international community.

Though it’s not just in relation to the South China Sea but more broadly what power projection capability China envisages for itself for the future beyond its own immediate strategic environment.

The international community must recognise that China has its own legitimate national security interests.

Like those of any other nation state.

Let alone the interests of a great power.

The international community will watch with considerable interest as to when and whether Xi Jinping as the new chair of the Central Military Commission further defines the details of this fourth “historic mission” of the PLA.

Global and Regional Implications

So what does this mean for Sino-US relations, the stability and prosperity of the Asian hemisphere and the future of China’s role in the global order?

The truth is we are living through a period of profound global transition as China, during Xi Jinping’s leadership, begins to emerge as the world’s largest economy.

This will be the first time since George III that a non-English speaking, non-Western, non-democratic state will occupy this position.

It is therefore a critical question for us all whether the values, institutions and policies that have underpinned the current global and regional rules-based order will simply self-perpetuate into the future.

We know that the current order was constructed on the basis of English speaking, Western democracies who eventually triumphed in World War II and it was these power realities which underpinned much of the shape of what we currently call the global order.


The open question for us all is when these underpinning power realities change, will the order itself also be subject to change when various of these values are challenged.

Two classical examples of where different approaches to the responsibilities of the order have been in evidence have been China’s and India’s role in the UN’s attempts to conclude a Climate Change Convention in 2009; together with China’s continuing support for a Russian veto on any UN Security Council action on Syria.

The critical question therefore is: how should the international community engage with China on these profound questions concerning the future of the global and regional rules-based order?

I have written much on these subjects in recent times, including most recently in a lecture I delivered yesterday at the Oxford China Centre here in the United Kingdom.

In summary, however, I would make the following recommendations for the future:

 First, whoever wins the US Presidential election must, as a matter of priority, develop a Strategic Roadmap for US-China relations for the next five years. This should deal with the regularity of summitry, the content of summitry, a forward looking agenda for strategic cooperation both globally and regionally in areas where that can be achieved. Furthermore it is critical that this be done now while global economic transition is in prospect rather than in retrospect;

 Second, we should continue to engage China on its global contributions to upholding global peace and security including in formal peacekeeping operations, counter-terrorism and counter-piracy, continuing to reinforce with our Chinese friends that they themselves have a significant and continuing national interest in sustaining and enhancing the current global rules-based security order;

 Third, within the Asian hemisphere, we should work with Beijing on the long term project of turning the East Asia Summit into something approaching an Asia-Pacific community. We now have the desirable membership for such a community with the ten South-East Asians; the three North-East Asians; India, Australia and New Zealand and now, lastly, the United States. And given this institution has an open economic, political and security mandate,


our challenge now is to make it work rather than languish as a paper exercise;

 Fourth, under the auspices of the East Asia Summit, the ASEAN Defence Ministers+8 (which has an identical membership to that of the EAS) should be commissioned to develop and implement a full raft of confidence and security building measures among all 18 member states. This should involve military to military hotlines, regular mil-mil meetings across all 18; as well as combined military exercises in non-controversial areas such as common disaster management; protocols for managing incidents at sea; and, over time, the freezing of territorial claims; and a commitment to the joint extraction of resources; as well as the wider application of the principles of the peaceful resolution of disputes of the type already outlined in ASEAN’s Treaty of Amity and Cooperation. At present in Asia we virtually have none of these CBSMs so that when incidents do occur, it happens in a tinder box with a strong predilection for the magnification of disputes rather than managing those disputes down. In Asia, surely we have the wit and wisdom not to repeat the carnage of Europe across centuries and instead construct a new Pax-Pacifica based on the principles of common security - which is neither a simple Pax-Americana nor a Pax-Sinica;

 Fifth, Europe also has a central role in all of the above. What Europe says and does about the fundamental importance of maintaining and building the stability of the global and regional rules-based orders actually matters. For Europe, the building of such an order in Asia actually matters. If stability and therefore prosperity collapses in Asia then the consequences for the economies and employment of Europe would be both immediate and major. A consistent, coherent European voice in the principal capitals of Asia is therefore important. When the order is threatened, silence will be interrupted as either indifference or tacit compliance; and

 Finally, on the military front, it is in all of our interests for our respective militaries to bilaterally engage the PLA. The more the PLA can be bought out of its shell, the better for us all. So whatever foreign policy problems may emerge in the future, it is critical that military channels are kept open and developed to the greatest extent they can.



On balance, I am an optimist for Asia’s future.

But the challenges we face will command the energies of a formidable, intelligent, state-craft and diplomacy in the critical decade that lies ahead.

And my abiding concern is in the absence of a positive vision for Asia’s strategic future, and a policy road map which helps us realise that vision, there is a growing risk of strategic drift and conflict by default.