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Pekingology G

The most important division in Chinese

politics today is not among top leaders but between them and the country’s other

entrenched interests

one are the days when the international community didn’t know Hu from Wen. Western media coverage of China has

increased exponentially in the past decade. Now, as China enters into a once-in-a-decade leadership transition, the world is paying attention. Time magazine’s October 22 cover featured

the face of Xi Jinping, China’s probable next para- mount leader, plastered over with the words “Te Next Leader of the Unfree World.” Many in the West have heard of the disgraced politician Bo Xilai, even if they don’t know how to pronounce his name. Te world has woken up to Chinese politics. Unfortunately, as this coverage shows, the significance of that politics is still far from clear. Te Chinese government and media have shed

little light on Xi’s governing philosophy and policy preferences. Does Xi’s experience in rural Shaanxi province during the Cultural Revolution mean he will be a champion of the poor? Does his work as party secretary in Zhejiang province demonstrate his support for a more vibrant private economy? It’s difficult to say. Both Xi and the party have gone to great

lengths to conceal any points on which his views might depart from the consensus of the current top leaders. Tis is understandable: Since the sin- gle-party system has no mechanism to deal with dissent, exposing these fault lines publicly could easily weaken his authority. Xi still lacks the politi- cal capital necessary to unite all of the diffuse view points within the government. Much of the current analysis of China’s lead-

ership transition is based on the work of Cheng Li, a senior fellow at the Brookings Institution. Li’s careful research breaks China’s current crop of

SEATS OF POWER: Delegates gather in the Great Hall of the People in Beijing in March

leaders into three primary factions: those who rose to power through the Communist Youth League, such as current paramount leader Hu Jintao and probable future premier Li Keqiang; those who had the patronage of the Shanghai Gang and for- mer paramount leader Jiang Zemin; and “prince- lings” who gained power through prominent polit- ical families, such as Xi Jinping and Bo Xilai. Li’s research is now widely cited; even the Time

magazine article on Xi relied on his analysis. But as groundbreaking as this work is, it is of little use in determining China’s probable course. While factional ties are vital in determining which poli- ticians rise to the highest levels, they reveal little about policy positions. Historian Zhang Lifan describes the factional division as one between the managers of a company (the CYL) and the sons and daughters of company shareholders (the

Credible threat: Te US must distinguish between security risks like Huawei and economic opportunities

Imagine an attack on the US that poisoned water supplies, derailed trains and caused power outages across large swathes of the country. Such an offensive would likely require a large strike force networked across the US, a difficult feat given vigilant post-9/11 efforts to combat terrorism. Unless, of course, the US has already

gone to the trouble of creating a network ready to be exploited – such as its telecom- munications infrastructure. In a speech in early October, US Defense Secretary Leon Panetta warned of the threat of a “cyber- Pearl Harbor” if hackers affiliated with

6 China Economic Review • November 2012

extremist groups or aggressor nations attacked transportation, energy or other vital infrastructure systems in unison. Panetta did not explicitly state which

nations might be aggressors, but China is undoubtedly on the list. Only days before the secretary’s speech, the US House of Representatives Intelligence Committee released a report arguing that Chinese telecom equipment maker Huawei could contribute to this cyber-threat if allowed to operate in the US. The report recom- mended that the Committee on Foreign Investment in the US (CFIUS) and other

government agencies do what they could to halt Huawei’s US expansion. Critics of the report have labeled it an

unfair attempt by US politicians to rally voters around anti-China sentiment. But while US politics is rife with such exam- ples of political point-scoring against China, Huawei’s entry into the US could present a legitimate threat. The potential risks of Huawei’s tech-

nology outweigh the potential benefit of its US investments. The closely-held com- pany lacks transparency, has close ties to the People’s Liberation Army and deals in


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