As China prepares for its leadership transition later this year, Beijing has faced an unusual number of high-profile political incidents of late, from the fall of Bo Xilai to Chen Guangcheng’s appeal for U.S. assistance.

In a Q&A, Douglas Paal explains that these incidents may help shift the balance of power within China’s leadership to give a larger voice to proponents of reform, but it’s too early to tell. And despite Washington’s role in both incidents, U.S.-China relations have not been affected thus far. The two countries are engaged in a high-level dialogue to minimize incidents during this politically sensitive year. 

Is the situation with Chen Guangcheng damaging the Communist Party’s reputation?

Douglas H. Paal
Paal previously served as vice chairman of JPMorgan Chase International and as unofficial U.S. representative to Taiwan as director of the American Institute in Taiwan.
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China had the potential in seeing whatever positive things it’s trying to do with its soft-power initiatives damaged by this incident. Beijing efforts include creating things like Confucius institutes on campuses around the world and trying to put a softer image forward.

This would have been significantly damaged if they had used harsh methods to demand the return of Chen, imprison him, or continue to do tough things to his family. But they chose a mixed bag: China’s security forces are what they are and they are doing things that are not very nice, but the public image of China, where the foreign ministry and leadership were involved, was to try and accommodate Chen. They tried to treat him, since he was not being charged with any crimes in China, as an ordinary citizen and allow him to go freely to the hospital and to go study abroad.

Will Washington’s role in Chen Guangcheng’s departure damage U.S.-China relations?

So far it has not had a negative effect. The two countries had a rather productive Strategic and Economic Dialogue in the immediate aftermath of this affair.

In the longer term, it’s harder to tell, because in this short space of a few months we’ve had two American diplomatic institutions involved in things which are, from the Chinese point of view, domestic politics. And some of the things that were done at the American embassy are questionable—even though they were done in the spirit of trying to help someone and were humanitarian and understandable efforts—because in international behavior sometimes there is a price to pay if you violate the rules. China thus far has not, to my knowledge, imposed a price on the U.S. embassy. But I wouldn’t be surprised if there are those in the Chinese system who are sharpening their knives to go at this.

In the aftermath of the Bo Xilai fall from power in Chongqing, we had a situation where the United States was involved in a very consequential matter in Chinese high politics. And then this Chen Guangcheng affair, the U.S. embassy got involved in a matter that was more low politics but high tension in the Chinese leadership.

So I can see how people who are losing in recent battles might want to pick up an American stick and beat their opponents with it. It’s not happening now—all of the evidence is running the other way. But China often doesn’t show you what’s really going on until sometime later.

What is the significance of the Bo Xilai saga?

Bo Xilai, when he was party secretary of Chongqing, pursued policies that were out of step with the Chinese leadership. And one thing China likes is to have people be in step, not out of step. Some of his solutions—and they were very expensive solutions—to social inequality and promoting growth in his province, were controversial, to say the least. And his harkening back to Cultural Revolution themes stirred patriotism in some cases but in other cases it stirred deep fears about returning to bad old days. He was pushing a kind of American-style political campaign to insert himself in the top leadership.

As I said, they like to stay in step and don’t like people to march to a different drummer. And he gave them the opportunity through his reported misdeeds to push him out.

But pushing him out affects the complicated balance of interest groups within the Chinese leadership, which thus far had sort of stabilized, in a newly institutionalized way. It’s both highly personal and highly institutionalized around several former and current leaders. And that balance has been upset.

Does the news coming out of Bo Xilai’s fall tell us anything about the stability of China’s political establishment?

I think it could. A lot of outside investors on the economy would be concerned if they saw the system, which seemed to be more institutionalized over the last fifteen years, start to lose that institutional quality and therefore become more unpredictable. That may be why the Chinese have in the last couple of weeks been extraordinarily pliant and pragmatic in dealing with things that have been very neuralgic for them to deal with in the past, from Taiwan arms sales, to dissidents, to involvement in their internal politics.

They may be so concerned not to show the outside world or their own people their differences that they’re accommodating us in the short term. If that’s true, then it’s going to be very hard to keep this volcano from blowing up at some point. That could very well happen as it did in 1989 when the streets filled in several cities in China with millions of protesters. Leaders know that so they don’t want to send a signal that there’s a division that people can exploit.

How will Washington and Beijing manage relations in this year of transition?

The United States and China have been in discussions since late 2010 about how to handle relations in this very politically sensitive year, both in the United States and in China. And they’ve been giving each other reassurances at the top levels: the national security adviser calls his counterpart, the secretary of state calls her counterpart, and they stay in touch. The leaders, Hu Jintao and Barack Obama, have met quite a few times—eleven times I believe. So they’ve been able to reassure each other that they are within the boundaries and they will try to maintain the relationship. We’ll keep the politics, which exist on each side, from breaching the jetties on the side of the stream.

Obama has talked about Chinese trade practices and currency practices very publically, but he hasn’t carried it into a campaign against China. And China raises its concerns for the purposes of discussing them with their own people, but they haven’t let this reach the banks.

On the Chen Guangcheng case, the good news is that the man had no charges against him. If he had charges against him, this might have been harder for the Chinese government to solve. This gave them a platform from which to say, okay, we can do business in a normal way over this Chinese citizen.

Has internet activism reduced the central government’s control?

The new media in China are fantastically efficient. There are over 300 million—I think closer to 500 million—internet users in China now. And a lot of them get on these microblogs and talk about issues that are sensitive, and when the Great Wall of Censorship is imposed on them so they can’t mention specific names, towns, or actions, they find homonyms and workarounds so that people are communicating constantly about issues that were unthinkably sensitive just a few years ago. The Chinese government now has to be more responsive to what it sees as public opinion by observing internet traffic, and the proliferation of ordinary television, radio, and print media.

And these places are all searching for market share and therefore tend to run to the extreme in telling their stories, and that puts even more pressure on the officials to show backbone against the Americans, for example, or to be exposed for putting unnecessary pressure on some people, like Chen Guangcheng who was being brutalized by local authorities without apparent authority from the center.

Is there a possibility of reform in China?

Reform has stopped. Both political and economic/financial reforms have been stopped for some time now, and in some respects are going backward. They have to get financial and economic reform underway. In the long-run they have to get political reform going as well, although they can probably get away with postponing that a little longer.

But public taste for change is coming—they are demanding it. With the Bo Xilai affair, there’s a possibility there’s been a shift in the momentum of the reformers, who had been trying to push reform but have been unable to achieve consensus in the Politburo standing committee where the top nine leaders meet. It’s possible now that if it goes to seven leaders, it might be a more reform-minded group that would restart some of the stalled economic and financial reforms, and we can always hope that they’ll try to begin the gradual introduction of political reforms as well.

But that’s still an unanswered question, we don’t know whether that’s going to happen or not.