Scandal and speculation surrounding the demise of Politburo member Bo Xilai raised questions about the stability and cohesiveness of China's political elite. However as his trial comes to an end the main political challenge is not at the elite level, but in the Communist party's ability to gain legitimacy among the wider public. 

The trial of Bo Xilai for bribery, embezzlement and abuse of power has generated a number of surprises. To start with, there has been more transparency than most observers had expected, with the court issuing transcripts at regular intervals. Plus, the court used Chinese social media to post images of the proceedings.

This level of transparency is unusual in Chinese trials. However, we should be cautious about seeing this as a precedent for the future development of judicial practice. Bo's case is rather special, both because of the senior positions he held and because of the level of speculation around the case – and Bo's fate – ever since the drama began last February when Wang Lijun, Bo's former police chief in Chongqing, fled to the US Consulate-General in Chengdu. 

Wang, who is already serving a prison sentence after being convicted of abuse of power and other offences, gave testimony at Bo's trial. The exchanges between Bo and Wang will be picked over further, with their salacious details of the arguments that apparently ensued in January 2012 when Wang told Bo that Bo's wife was suspected of murdering British businessman Neil Heywood, in Chongqing the previous November. 

It is highly likely that Bo will be found guilty. Nonetheless, the trial gave Bo the opportunity to put across his views in court. He surprised observers on the first day by retracting confessions he made during the pre-trial investigation process. It is not clear whether this was expected by the prosecutors in advance of the trial, but it contributed to the trial lasting for five days – much longer than expected. 

Result already decided

Most media coverage and comment has focused on the details of the various events, which came out in court. However the political implications lie elsewhere. 

The trial should not be seen in isolation but as the culmination of a process which began in the days after Wang's attempted defection was brought to light. The party's subsequent handling of Bo Xilai proceeded in cautious stages: first the removal from his post as Party Secretary in Chongqing in March last year, then his 'suspension' from the Politburo and Party Central Committee a month later while an investigation was carried out by the party. Only in September 2012 was Bo expelled from the Communist Party and the file handed over to state authorities for prosecution.

This train of events serves as a reminder of the context in which China's judicial system operates. Whatever the transparency of proceedings in court, or the professionalism of judges and lawyers, the party's 'leadership' of judicial work means that politically important cases are often subject to direction from the party apparatus. 

Popular, not elite, politics is at stake

The Bo case has often been presented as a story of turbulence and factional infighting at the top of the party. But in November 2012 the party delivered a clear leadership transition at the top of both party and military from Hu Jintao to Xi Jinping, with the government handover in March this year. With the new team firmly in place, the transparency accorded to Bo's trial demonstrates confidence among the leadership, not division. 

Political challenges lie not at the top of the party, but in the ability of the party leadership to achieve legitimacy among the wider public. The revelations in the Bo case, from last spring and up to and including the trial, have increased levels of public cynicism about the behaviour of senior officials. Posts on China's social media will provide glimpses of the wider response to the trial; popular opinion is likely to be divided – as it was when Bo was still a serving official, and has remained since his removal from office. 

Given that the party seeks to present itself as being 'responsive' to public concerns, the main political implications of the trial will be seen in the impact it has on the leadership's credibility, not in elite politics. It is that imperative, not judicial reform, which explains what we have been allowed to see of the trial. 

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After a year in which there were precious few high level political visits, China is now getting two in the same week: the UK Chancellor George Osborne and the Mayor of London Boris Johnson. The irritation at David Cameron and Nick Clegg's very public meeting with the Dalai Lama last year has now been replaced by an era of warmth and mutual understanding. That, at least, is what the press releases for these visits will have us believe. 

In fact, while the ministerial freeze has been on, the UK has been doing fine – having more than double the Chinese investment of any other EU member, and increasing its exports to China. Chinese visitors to the UK brought in £300 million last year – a formidable achievement in view of the highly unwelcoming visa regime the UK currently has towards people from China (something George Osborne has promised to reform while in Beijing). 

The UK and China are always keen to assert differences, but at heart they are pragmatic nations. They are both utterly at one in seeking growth, and they see in each other compatibilities that can be benignly exploited. For the Chinese, there are decent assets in the UK in the energy and manufacturing sector that are very reasonably priced, and which exist in one of the most liberal investment regimes in the world. For the UK, China is a vast market that its companies, small and large, need to conquer. Any tactical advantage in this battle for access is good in view of the competition that is going to come from other international companies, but also players inside China that want to find their way to the hearts of Chinese consumers. The next decades look set to belong to these consumers. The long term theme of Johnson and Osborne's separate visits is getting as close as possible to these new actors in global growth. 

Overcoming hurdles

Boris Johnson and George Osborne are unlikely to be publicly explicit about the challenges that British trade interests face in China, but in private meetings they have to be raised. The first is that China is becoming a master of indirect protectionism, and the treatment being given to companies ranging from GlaxoSmithKline down to small consultancies is getting harsh. The UK has a strong interest in the success of the EU in negotiating better trade access, from the right for companies to bid for government procurement in China to the perennial problems of state subsidies for Chinese companies and intellectual property rights protection. It is important to find smart ways to leverage the newfound interest China has in deploying its capital abroad, to give UK companies better deals in China. This has to be subtle work, but the primary interests in the UK are the same as our EU partners – having a liberal, rule-based, global order where China is far more integrated. 

There are also some domestic issues. Large trade missions to China have been happening since the reign of George the Third. Lord Heseltine led a vast army of companies in the early 1990s to Beijing. Trade missions have become an unquestionable part of the whole performance of UK politicians going to China. But just how much these achieve is debatable. A decade ago, in The China Dream, Joe Studwell poured cold water on some of the noisier delegations and what real business they did. Perhaps it is time for the UK government to give more support for small and medium businesses. Many of them will have to think about a China strategy if they are not already there, and will face a tough and time consuming task in making inroads in China. Some solidarity amongst them and with the government would be a big advantage. 

This impacts on the delicate business of how the UK undertakes its business and political relations with China in the first place. China is now the world's second largest economy on some measures, and George Osborne said his visit was to change UK perceptions of the country so that British people can see it as more than just an enormous factory producing cheap goods. For that to happen there needs to be a more dynamic, inclusive operation in the UK which cultivates links with Chinese business, rather than the ancient groupings of associations and dining clubs that prevail at the moment. These are good for the egos of those already doing well in China, but are not reaching out enough to the many in the UK who might find they can work in or with China. 

Academic understanding

There is a deeper values debate that China and the UK might have. Our history means that we have shared a lot of good and bad things. The UK needs to support as many young people in learning Chinese, visiting China, and knowing about China as possible. And the good news is that relations will be helped by the quarter of a million Chinese students who have studied in the UK and had experience of life here in the last 15 years. As much outreach to this group, many of whom are back in China and developing exciting careers, is important: each one is an invaluable ambassador for life here. Decades after the visit of Osborne and Johnson has faded from memory, it will be these people that truly shape the future. 

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One year after a transition at the top of China's Communist Party, a major party gathering − the third plenum − was held on 9-12 November, with Chinese officials preparing a 'comprehensive plan for reform' in the context of apparently slowing growth in China as well as social and environmental challenges.

The speaker will comment on the outcomes of the plenum and the debates which led up to it, and examine likely policy changes and their impact on developments in China.

Despite the hype surrounding it, the gathering of the country’s ruling elite in Beijing is likely to prize measured change over dramatic reform.

If there was a clearer idea of what makes China’s new elite leadership tick, then the Plenum of the Central Committee of the Communist Party that is about to be held in Beijing would not be such a big deal. But in a polity which privileges concealment over overt statement, it is viewed widely as the one chance for outsiders to see more clearly what the leadership aims to achieve. Expectations were raised by the October statement by one of the most staid members of the current Standing Committee of the Politburo, Yu Zhengsheng, that the plenum would presage a new era of reform.

In Chinese politics reform is a word that has a wholesome, positive air about it. But the question is where and when reform will happen and who will gain from it. The plenum is not like a party convention in the Western sense. It is not an eye-grabbing, media-dominating event that produces surprises. Comparing this year’s installment with the great Third Plenum of 1978 that heralded the repudiation of late Maoism and the embracing of the market, the non-state sector and foreign capital – all anathema before then – is misleading. The significance of the 1978 meeting was only obvious in hindsight. It took years for the scale of the radical transformation of the whole strategic direction of the Communist Party to be appreciated. That 2013 will prove a similar historic moment is unlikely, perhaps even impossible.

What is much more likely is that the highly tactical leadership now in charge will reaffirm its commitment to incremental reform. It will make some statements about the radical urbanization that China is about to undergo and say something about social welfare reform. China’s leaders will do what they have always done in plenums over the last three decades, namely set the broad parameters of politically permissible activity that provinces, ministries and other stakeholders will then need to implement.

This plenum will also have to produce something about the need to achieve greater egality and balance in the economy. It needs to answer some of the questions about how Premier Li Keqiang, in particular, intends to meet the goal of 'fast, sustainable growth' when a falling overall GDP figure looks likely. It needs to communicate to as broad a constituency as possible the arch-narrative of a world where the raw statement of growth on its own is no longer the be all and end all of government policy. It needs to say something about how the party is going to fulfill the increasingly complex aspirations of the Chinese people, aspirations that exceed purely having a materially good level of life and concern broader questions of well-being that vex the politics of all developed economies.

Observers will want to see some signs too of addressing the most sensitive issues. Yu Zhengsheng talked of economic reform. Reforming the economy is now a wholly uncontroversial mantra in China. However, it impacts on one enormously important issue that reaches beyond economics: whether wealth, prosperity and development benefit the few or are accessible to the many – in other words, good, old-fashioned questions of economic and social justice. At the heart of this lies the question of how state-owned enterprises have become vehicles of profit not just for the party state, but also for tightly knit networks of vested interests. Reforms that lap at the doors of these entities also creep into the space of powerful political players, who will resist any attempt to cut down their wealth, and who have the power to resist.

China’s new leadership is proving more confident than was expected and displays a high sense of historic mission. President Xi Jinping speaks increasingly like a politician who believes it is almost his historic destiny to sit at the centre of the leadership of a renascent 'rich, strong country'. The ultimate question for the plenum is not what outside observers make of it but what the vastly complex mixture of groups in China does. For them, a sign that the leadership is willing to take on some of the entrenched vested interests that penetrate the operations of some state-owned sectors to the core is critical.

This is likely to be couched in the language of more support for the market, which is the key channel in any attack on vested interests – through widening access to wealth and economic benefits, and support for the non-state sector and entrepreneurs. It is hard to see how deeper reform can occur without these two crucial elements. And it is through these that the attitude of China’s leadership to political and legal reforms – far more complex issues that, almost certainly, will not be addressed at the plenum but will lurk in the background − will become clearer. The leadership thinks it is too early to tackle these issues directly, but this plenum will still be part of the process for it to come up with ideas for how to transform not just China’s economy, but its polity too.

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China’s leaders set out their intention to push forward with policy reform following the Third Plenum. The full decision released on 15 November makes clear the aim to loosen constraints on the market, and suggests a dilution of state-owned enterprise influence. A new national security committee could also lead to greater policy integration between domestic security and international affairs.

The Third Plenum of the Chinese Communist Party’s 18th Central Committee took place in Beijing from 9−12 November. Initial reactions based on the communiqué released on the last day of the meeting were mixed. However, on 15 November the authorities published the detailed decision approved by the plenum, and an explanation given to the plenum by Party General Secretary Xi Jinping – in which he acknowledged major problems facing China.

These documents make the implications of the plenum much clearer. In sum, it offers a clear political signal that as China’s fifth-generation Party leadership enters its second year, it is intent on taking forward a ‘comprehensive deepening of reform’ across a wide range of issues. As an indication of the importance of this, a new high-level ‘leading small group’ will be established to coordinate and oversee this process. The decision spells out various new measures, and reiterates many which are already part of the government’s agenda.

More market in the economy

The most important material is on the economy, where the decision makes clear that the leadership envisages a ‘decisive’ role for market forces, and the establishment of ‘fair and equal’ competition in the economy. This will provide a guiding principle for policy-making over the coming years.

One of the ways of achieving this is to reorganize the functions of government. Here the decision reiterates the themes which the government has been working on since Premier Li Keqiang took over in March this year, namely reducing or removing the need for government approvals to businesses, freeing up the investment environment, and allowing businesses and the market to take the lead unless there is a strong reason for government intervention. Better governance is a wider theme of the decision, covering the judicial system and reforms to the party’s disciplinary organs which would clarify leadership and accountability in anti-corruption investigations.

SOE reform

A possible impediment to market reforms is the power of China’s state-owned enterprises (SOEs), and the original communiqué gave the impression that nothing much would be done about SOEs. However, the ability of these so-called ‘vested interests’ to stymie market reforms has been weakened by the targeting of a number of senior SOE-related cadres in the party’s latest anti-corruption campaign, which began at the end of 2012.

Further, the detailed decision suggests further reforms are in the offing. Although the relevant section of the document begins by restating the leading role for state ownership, a series of subsequent policy aims could serve to dilute it, such as ensuring equality in property rights protection and competition; developing mixed (state and non-state) ownership through cross-shareholding and bringing private capital into state-led projects; shifting from managing SOEs to managing state investments in enterprises; better supervision of SOEs which operate in natural monopolies; and removing administrative monopolies.

International affairs

The decision talks about further opening of China’s economy, but the vast majority of the issues covered in the decision are domestic in nature, and announcements such as a further relaxation of birth control policies have attracted most attention. Even the points on military and defense issues relate more to internal management than external capacity.

There was, however, one announcement which could have important implications for China’s foreign policy, which will be watched carefully outside China, the establishment of a ‘national security committee’. Xi said that this was being set up in response to external pressures to protect national sovereignty, security and development. He also cited internal pressures to maintain political security and social stability. It is too early to judge what the exact remit of this body will be, but it could lead to greater policy coordination and integration between domestic security issues and international affairs, at a time when China is playing a more important role across the international spectrum.

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Following the Third Plenum of the Communist Party’s 18th Central Committee in November 2013, the panel will offer their thoughts on whether the economic, political and social reforms announced, such as the relaxation of the one child policy and establishment of a national security council, signal a new era for China’s domestic and foreign policies. The speakers will consider how significant these reforms will be in comparison to those announced in 1978 by Deng Xiaoping following the Third Plenum of the 11th Central Committee.

Professor John Ikenberry will examine the challenges to global order that are posed by the rise of China and current shifts in global power. He will argue that a liberal-oriented international order, as championed by the United States and Europe over the last century, remains the best hope for stability and growth in the 21st century.

Professor Ikenberry will contend that, while non-Western rising states seek greater voice and authority in the global system, they – perhaps surprisingly – still embrace the basic principles and institutions of liberal world order. Thus, the United States and Europe have powerful incentives to work together to reform the world’s governance institutions to accommodate new stakeholders and tackle problems of rising economic and security interdependence.

ASK A QUESTION: Send questions for the speaker by email to questions@chathamhouse.org or using #askCH on Twitter. A selection will be put to him during the event.

This event will be followed by a reception.

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China’s rise was highlighted again recently by reports that World Bank calculations of purchasing power parity could put the Chinese economy ahead of the US this year. China’s global influence has clearly spread substantially over recent decades, though the extent and impact of the country’s rise remain debated, and its economic size is not yet matched by influence in other areas.

Within China itself, the idea that the country has become a major power has become stronger. Put alongside Chinese analysis of global flux, this has resulted in changes in China’s approaches to foreign and security policy.

The impact of these changes remain uncertain. As set out in a new report on China’s Global Personality , there are several debates in China about the country’s approach to international affairs: around the implications of its rise for its continued identity as a developing country, whether it should become more ‘revisionist’ towards international affairs, and how assertive Chinese foreign and security policy should be.

So far, China’s post-2012 leadership has taken forward a number of areas of policy change. Institutionally, the creation of a new National Security Commission, chaired by Communist Party General Secretary Xi Jinping, is likely to strengthen policy coordination and integration across a broad range of domestic and external issues.

The Chinese leadership has also promoted a much-discussed ‘new type of major power relationship’ in its approach to the US. The aim here is to avoid conflict between the US and a rising China, and to work towards a relationship characterized by equality, including in Asia – this therefore does not imply a desire to be a regional hegemon. The outcome, however, remains to be seen, and US responses so far have been cautious.

In dealing with disputes in East Asia, Chinese policy has become more assertive since around 2010, though the leadership has also set out its desire to deepen relations with its neighbours, and Beijing has been among the first to reach out to new Indian Prime Minister Modi. However, there are clear limits to this: relations with Japan in particular are likely to remain poor, and those with Vietnam have deteriorated substantially over recent weeks.

These issues are not simply bilateral, but should be seen as part of a wider renegotiation of regional order, involving not just China, but Japan, the US, and others. The last few years have seen changes in US approaches to the ongoing evolution of the international order and in particular to East Asia – the so-called ‘rebalance’ strategy, including ongoing – but slowing – negotiations for a trade and investment Trans-Pacific Partnership. And Japan’s security policy has been changing under Prime Minister Abe.

The idea of renegotiation can also be seen in the debates around institutions of global economic governance, such as the International Monetary Fund. Our research finds that China’s engagement with the existing international order remains strong, but there is also a growing element of gradual revisionism from China (and maybe others) within that order. China’s approach is consistent with the open and rules-based way that international institutions have developed, but it looks for its voice to be considered more in the setting of those rules.

The view from Europe

The implications of this analysis are that the questions policy-makers need to address should not be framed simply in terms of dealing with the rise of China and the changes in Chinese approaches this brings. Instead, the framework should be one which takes account of global flux and policy changes by other actors.

This means that there is space for European governments, for example, to engage in shaping the future global and regional order. In doing so, there could be particular challenges if strategic difficulties in the US-China relationship continue − the perceptions of opportunities and threats in Asia as seen from Europe may increasingly diverge from Washington’s. As China’s rise continues, it will not just affect relationships with China – Europe’s relationships with the US, and their stances on questions of regional order and governance in Asia, will also be called into question.

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With China’s economic power on the rise, there is a growing sense among many publics around the world that the global balance of power is shifting and that China already is, or will soon be, the world’s leading power, according to a new survey. The Pew Research Center’s latest Global Attitudes survey found that despite China’s rise in economic power, the People’s Republic is not very popular in Asia, Europe and the United States. As for the US, although the ‘Obama Bounce’ effect of more positive attitudes toward the United States is waning in Europe and China, anti-Americanism in most countries remains much lower than it was during the Bush administration, but remaining consistent in the Middle East. 

Bruce Stokes will present these findings and the expert panel will discuss the insights it provides into an emerging superpower rivalry. In addition they will discuss how these nuances in global attitudes might increasingly shape the security and economic policies of governments around the world.

With extensive and diverse engagements across sub-Saharan Africa, China is one among a range of international partners that is evolving its policy and relations with African states. At this roundtable meeting, Ambassador Zhong Jianhua will discuss China’s interests in Africa, the challenges it has faced and how China cooperates with international governments and across sectors in Africa. 

The US derives significant geopolitical power by issuing the dominant reserve currency. Not surprisingly, China would like to wield similar power and is successfully promoting the use of the renminbi to settle trade. The speaker will argue that the RMB’s chances of becoming a major reserve currency are poor, as financial liberalization, although a necessary condition, is insufficient. China must also earn the unquestioning trust of global money managers. History suggests this takes decades even for a rules-bound democracy, let alone an opaque, unpredictable single-party state.

In light of China’s economic reforms and a high-profile anti-corruption campaign, the speaker will argue that fundamental political, economic and social shifts have changed the nature of opportunities and risks for foreign businesses in China.

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How is China’s growing international status likely to affect the future trajectory of global governance? Will it operate within the confines of liberal order, or attempt to substantively revise the existing global framework? The speaker will argue that China is now playing an active role in shaping the rules, norms, and institutions of global governance. She will offer some fresh insights into this new trend in Chinese foreign policy by placing a lens upon key global policy-making realms, including the maritime commons, where conflicts over international norms and national interests are most stark.

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Long predicted, many observers now think that China has or is about to become more powerful than the United States on the global stage. Joseph Nye will explore the facts behind these beliefs and question if the century of American centrality in the global balance of power is at an end.

LIVE STREAM: This event will be live streamed. The live stream will be made available at 18:00 BST on Tuesday 9 June.

ASK A QUESTION: We will endeavour to ensure that questions are put to the speaker from our online audience as well as from the audience in the auditorium. Questions can be sent in advance via email to questions@chathamhouse.org and during the event on Twitter using #CHEvents.

The speaker will argue that Chinese foreign policy should be viewed as an extension of domestic policy to a degree not seen in other countries. China's foreign policy aims to support domestic growth and employment, must be aligned with nationalist and narratives of ‘rejuvenation’ and the ‘China Dream’, and must help dilute hostile foreign values. The ‘One Belt, One Road’ project, also known as the ‘New Silk Road’, exemplifies this. The speaker will illustrate its origins and development, discuss how it promotes the Communist Party’s domestic agenda, as well as look at (secondary) geostrategic aims and difficulties. Finally, he will look at the lessons for Europe, and why and how this Chinese initiative should be welcomed.

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It has become routine for China’s leaders to use high profile international events as a means of projecting a preferred image of what China stands for and how it will act as  a great power, one that is perhaps now second only to the US in the league table of global powers. So it is no surprise that Xi Jinping has used his interventions at the UN development summit and his address to the General Assembly to showcase China’s growing role as a global aid actor, and to call for greater ‘democratization’ of global governance institutions (or, in other words, a greater role and say for China and other developing countries). China’s alleged and self-proclaimed (and challenged) predilection for peace, a desire to build a ‘new type’ of (vaguely defined) international relations, and support for the UN as the sole arbiter of when sovereignty might possibly be put aside (instead of the US or a coalition of the willing) are also now relatively well-established and rehearsed Chinese positions.

In addition to wielding China’s financial power in support of this national image projection, Xi’s activities also represent a move towards mobilizing discursive power (话语权) as well. To date, and for a number of years, this discursive power has been primarily deployed in a defensive manner, with the aim of denying the supposed universal nature of many of the norms and principles of the international order. These norms, as articulated by both Chinese government officials and some supportive academic scholars, are not universal at all, but merely the product of a small number of Western countries’ histories, philosophies and developmental trajectories. So, in this formulation, while it is important to have a common set of principles and responsibilities as the basis for international interactions, each country should be free to develop its own nation-specific definitions based on its own unique histories and contexts. And it is only these Chinese-inspired definitions and aspirations – of human rights, for example, or development – that China should be judged against.

But this position has changed under Xi, with China’s leaders increasingly keen on promoting Chinese understandings and definitions as the basis for international debates and international action. Hot on the heels of Chinese attempts to take a leading role in defining the basis for global cyber diplomacy,  China is now seeking to shape the way that development is defined and understood – which of course has massive implications for how development, thus defined, might be attained.

Leading on development, missing on security

Xi’s willingness – or should that be desire – to establish Chinese potential global leadership was less apparent when it came to solving the major security challenges of the day. To be sure, there was talk about the need for new ways of dealing with insecurity that recognize the consequences of globalization and that no country can solve problems on its own – including, presumably, the United States. The pledge of more peacekeepers will cement China’s position as one of the world’s major contributors to UN overseas activities, and the promise of a military assistance fund to the African Union shows that Beijing really is an important security actor beyond its own borders. But when it comes to conflict in places like Syria, China seems content to maintain its back seat and allow Russia to take the lead in a crisis that is admittedly some distance from China’s own backyard. Expect a Chinese-led agenda for the G20 summit in 2016 in China that reinforces this differential willingness to assume leadership roles depending on the specific issue at hand.  

So for the time being, the aim seems to be primarily to confirm the idea that China is a new and very different type of great power; one that is a friend and supporter of those smaller developing states and emerging powers that had previously suffered from the asymmetric economic and military power of great powers in the West (or in some cases, still do). As part of this ‘difference’ a second related objective seems to be to establish China as a global leader on development issues.

But simply asserting something does not mean that it is true, and its something of an understatement to suggest that China’s pacific and non-interventionist self-identity has not been accepted by everybody, particularly in East and Southeast Asia. China’s developmental achievements have also been questioned. The response in Beijing to Hilary Clinton’s tweet that it was ‘shameless’ that Xi was co-host of a meeting on women’s rights shows that the defensive nature of Chinese policy remains in place: ‘those in the best position to judge the state of women's issues in China are Chinese people, particularly Chinese women’, according to the foreign ministry. And Clinton’s comments also show that the field of ideas is not being left open for China to do whatever it wants just yet; gaining widespread acceptance for Chinese preferences is not going to be an easy task and will likely face considerable resistance. But the suggestion here is that the world is likely to see a growing Chinese presence over the coming years not just as a global development and aid provider, but also as a putative developer of new global norms.

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Professor Brown will examine how Xi Jinping has consolidated authority since becoming head of the Communist Party in 2012 and explore what his goals are for the future of China. Is Xi trying to cement his own power or protect the interests of the party by guiding it towards a more sustainable rule?

This talk will introduce the key arguments in CEO China: The Rise of Xi Jinping, the speaker’s full-length, English language study of Xi, his background, current position and core beliefs.
 

Much of the focus on China’s 13th Five Year Plan – its centralized and integrated economic guidelines for the next five years – has been on the estimated growth rate of 6.5 per cent, its lowest in recent history. This reflects the so-called ‘new normal’ of China’s development, as President Xi Jinping’s administration describes its aspiration for higher-quality growth in the context of a slowing economy.

But this growth target is an estimate, rather than a pledge. The emphasis on ‘ecological civilization’ – another of Xi’s signature buzzwords, referring to a broad set of approaches environmental protection – is striking. Further, by putting innovation and ‘green development’ at the heart of its ambition to create a ‘moderately prosperous society’, China has sent an important signal: that the country’s strategy for future prosperity in many respects converges with a shift away from its environmentally costly development model.

Environmental goals

The plan endorses a ‘vertical management system’ that will help overcome structural impediments to the local enforcement of environmental laws,  and of its 13 binding targets, 10 relate to the environment and natural resources. In the plan, China commits to an 18 per cent reduction in carbon emissions per unit of GDP from 2015 levels by 2020 and a 15 per cent reduction in energy consumed per unit of GDP from 2015 levels by 2020. It also re-commits to generate 15 per cent of primary energy from non-fossil sources and introduces an important new target of keeping energy consumption below 5 billion tonnes of standard coal equivalent by 2020. Underlining how air quality has become a major driver of energy and climate policymaking, it also promises a 25 per cent reduction in harmful PM2.5 particulates.

In short, the plan suggests that decision makers in China not only take seriously its UN pledge to see a peak in the country’s emissions before 2030, but also that they hope the country will be the leading supplier of low-carbon technologies. Among its non-binding targets are some significant innovation-related measures: to raise gross expenditure on research and development as a percentage of GDP to 2.5 per cent, from 2.1 per cent today; and over the same period to almost double the number of patents owned per 10,000 people, from 6.3 to 12.

Innovation

The document makes clear the principal driver of China’s economy should be innovation, rather than investment. Innovation, says the plan, ‘must be placed at the heart of overall national development’ and ‘integrated into all the works of the Party and the country’. There is emphasis on strategic areas at the ‘frontiers’ of science, ‘mass entrepreneurship’ through new models such as crowd-funding, and digital economy projects – what the leadership likes to call ‘Internet+’ – including around the Internet of Things, quantum computing and big data.  

Under China’s 12th Five Year Plan (from 2011 to 2015), the state focused on a defined number of specific technology goals in its ‘strategic emerging industries’. Renewable energies and electric vehicles, for example, were afforded specific preferential policies. By contrast, the new plan has a greater focus on ‘clean coal’ and hydropower in the energy sector; and while it doesn’t abandon solar and wind, it also suggests greater diversity in its overall approach, with more of an emphasis on reform of the energy sector, developing smart power grids and investing in energy storage technologies such as batteries and fuel cells.

Moreover, innovation in the plan is not framed as simply being about hardware – the commercialization of science and technology. Rather, the text reiterates that innovation should come in many different varieties: ‘theoretical, institutional, scientific and technological, and cultural innovation’. This raises the intriguing and hopeful possibility that the country’s planners recognize some of the challenges and opportunities the public, particularly in the form of newly vocal, engaged and connected urban constituencies, pose in the governance of innovation.

Policymakers – taking ‘social innovation’ seriously – could begin look at the public as technology users, incubators of demand-driven successes, and innovators in their own right. In a context of low public trust around food and agriculture in China, for example, organic cooperatives and ecological entrepreneurs have pioneered supply-chain innovations, typically facilitated by digital networks, to connect farmers with urban consumers looking for safer food. Lower-tech approaches to energy too – such as inexpensive solar water heaters, which garner a mention in the latest plan – have been driven by rural users and supported by local initiatives, rather than central government coordination or subsidies.

These approaches to innovation would present a quite different model than previous central government plans have encouraged. Whether in the plan’s implementation they are harnessed and given support might be critical to meeting China’s environmental goals, as well as its drive to create a more innovative economy and society.

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It is tempting to read China's refusal in this case to acknowledge the jurisdiction of the arbitral tribunal in The Hague as the defiance of an arrogant superpower that views itself as above international law. No doubt many in Manila, Washington and elsewhere are purveying this view. But there is more here than meets the eye.

For decades, Beijing has complained that the global order was forged in an era when China was weak and the rules of the game are rigged against it.

But this lament is more difficult to sustain in relation to the UN Convention on the Law of the Sea, which China helped negotiate in the 1970s and early 1980s. Beijing signed the treaty as soon as it was opened for signature in 1982 and ratified it in 1996.

The Philippines initiated this arbitration against China in 2013 as part of a long-running dispute over rights in the South China Sea, including over the Spratly Islands (known as the 'Nansha Islands' in China) and surrounding maritime areas. 

Under the treaty, China is not obliged to defend the case but this is no bar to proceedings and it remains legally bound by the award. From a legal perspective, its refusal to participate is thus a risky move, all the more so since the ruling is likely to have legal ramifications for China's highly charged maritime disputes with other neighbours such as Vietnam and Malaysia.

It is well known that the legal proceedings launched by the Philippines sparked a contest of ideas in Beijing. Behind closed doors, some Chinese international lawyers argued that China should prove its commitment to the international rule of law by vigorously fighting its corner in the arbitration. The defeat of these liberal voices is usually interpreted as an inevitable effect of the nationalists' grip on power under President Xi Jinping.

In a significant concession to those on the losing side of the argument, however, China published a position paper setting out its objections to the jurisdiction of the tribunal and formally conveyed this to the tribunal which treated it as ‘effectively constituting a plea on jurisdiction’.

This novel form of ‘non-participating participation’ must be seen against the backcloth of a strategic ambition by China to develop a greater mastery of international law. At an important meeting just two months earlier, the Communist Party called for China to strengthen its ‘discourse power and influence in international legal affairs’ and use legal methods to safeguard its ‘sovereignty, security and development interests’.

Our research team at Chatham House has been tracking impressive steps by China to realize this goal, including new government decision-making machinery designed to promote compliance with international law, a hiring spree of international lawyers and new advisory committee for the Ministry of Foreign Affairs, promotion of scholarship and efforts to show norm leadership especially in ‘new domains’ of international law such as cyber law, and a training programme to share growing Chinese international law expertise with the global South.

We know from Chinese colleagues that maritime disputes are a major impetus for this drive. For years, the Chinese government has fretted about its low capabilities in the international legal field, compared with other permanent members of the UN Security Council and regional rivals such as Japan. Now, impelled by the need to protect its strategic interests in the South China Sea and elsewhere, it is doing something about it.

It may seem paradoxical in light of its bullish attacks on the Philippines and even the tribunal itself, but China's boycott of the arbitration should also be seen as a manifestation of its low confidence in its own capacities in the realm of international law. Speculation is rife that the leadership lacks faith in its ability to convince the tribunal of the legal validity of its controversial ‘nine dash line’ demarcation of China's rights in the South China Sea.  

In the arbitration and otherwise, China has avoided clarifying the precise legal basis and implications of its ‘nine dash line’ claims while sponsoring a vast industry of academic studies to support its position.

In the meantime, China is playing to its strengths, including its deep pockets, in pursuing an extrajudicial approach. An audacious programme of land reclamation and militarization of atolls and escalating patrols and exercises in disputed territories is a clear effort to alter ‘the facts on the water’. And in recent months it has choreographed statements of political support for its South China Sea claims from a motley crew of states with economic ties to China.

While China's rejection of the South China Sea arbitration is true to form for a powerful state that, like its great rival the United States, is generally ill-disposed towards binding international dispute resolution processes, it is not inconceivable that this approach will give way when China becomes more confident in its ability to play and win at ‘law fare’, as we are already seeing in the context of World Trade Organization disputes. Until then, in time-honoured fashion, Beijing is biding its time, plugging its skills gap and hoping it can shake off mounting reputational damage from its petulant spurning of these proceedings.

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The arbitration between the Philippines and China on the dispute in the South China Sea is coming to an end. The Permanent Court of Arbitration is to issue its decision on 12 July. This meeting will discuss the notable points of the tribunal’s award and the next steps. 

Attendance at this event is by invitation only.

The ruling by an arbitral tribunal of five members based in The Hague was simple and devastating. It declares that ‘China’s claims to historic rights… with respect to the maritime areas of the South China Sea encompassed by the relevant part of the “nine-dash line” are contrary to the [The UN] Convention [on the Law of the Sea, UNCLOS]’. This is a result that Southeast Asia’s maritime countries have long sought. The way is now clear to resolve all the disputes in the region, if the participants choose to do so.

For decades, countries around the South China Sea lived under the shadow of a quasi-territorial claim that no one really understood. What did the U-shaped, nine-dashed line marked on Chinese maps actually mean? In 2009, the Chinese government attached a copy of the map to an official submission to the UN Commission on the Limits of the Continental Shelf and the region became alarmed. For the first time, it seemed that China was serious about asserting a claim to all the land and water inside the line.

On Tuesday that claim was dismissed as entirely incompatible with international law. Moreover, the Arbitral Tribunal ruled that not one of the Spratly Islands qualifies as an ‘island’. This ruling is at least as significant: it means none of the features in the archipelago are entitled to an exclusive economic zone. Theoretically it should now be simple to resolve all the maritime disputes in the southern part of the South China Sea. The Philippines, Malaysia, Brunei, Indonesia and the Philippines can, in principle, draw lines up to 200 nautical miles out from their coasts and agree compromises where they overlap. China is now irrelevant to this process because its nearest coastline is simply too far away.

All the 50 or so features in the Spratly Islands that are naturally above water at high tide would be granted a 12-nautical-mile territorial sea. The resulting settlement would resemble a Swiss cheese: large areas of exclusive economic zone measured from national coastlines punctuated by a few dozen ‘bubbles’ of disputed territory. This would not resolve the disputes about which country is the rightful owner of those ‘bubbles’ but it would settle the maritime disputes in the sea around them.

Of course, there are still wrinkles. Not least is the Philippines claim to the Malaysian province of Sabah in northern Borneo. This means that, for the time being, those two countries can’t settle the maritime boundary between them. They could, nonetheless, agree how far it projects offshore.

The bigger problem will be China’s attitude. Its response to the tribunal’s ruling has been angry but curiously misdirected. State media have focused their ire on questions of territorial sovereignty – even though the tribunal was barred from even considering this subject. China’s territorial claims to the rocks of the Spratly Islands are entirely unaffected by Tuesday’s ruling. There must be separate processes to resolve those questions.

China has many interests in the South China Sea – including defence, trade routes, fisheries and hydrocarbons – so it’s not surprising that it pursues whatever approach it thinks practical in order to protect them. However, the whole purpose of the UN Convention on the Law of the Sea was to create an international order that defended the rights of countries to exploit the resources off their own coasts without threat from other states further away. China was a full participant in the negotiations between 1973 and 1982 that created UNCLOS and, at that time, was a strong defender of the rights of coastal countries.

While it may feel that it has lost out from this week’s ruling, China has much to gain from a strong community of regional order in the South China Sea. Most Southeast Asian countries remain alarmed by China’s intentions − which is why, in the past few years, they have been strengthening their ties with the United States and increasing military spending. China’s wider interests would benefit from a de-escalation of this tension. Reassuring its neighbours would give them less reason to rely on the US.

Putting a new maritime order in place, based upon UNCLOS and commitments between China and the Association of Southeast Asian Nations, would be a major step towards this. It would also bring many associated benefits – not least cooperation to protect the region’s fish stocks, which are facing disastrous collapse. The first step is accepting the implications of Tuesday’s ruling.

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