Join        Login             Stock Quote

A Look At China’s Political Process

 February 29, 2012 06:16 PM

As 2011 closed and 2012 dawned, China's leadership transition—"elections"—began, with new leadership expected to be announced in March. As we've written, there's a historical tendency for China's communist government to cool its centrally planned economy in the year prior to transition—and attempt to goose it during the transition year. But a look inside the dynamics of China's "elections" and intraparty tensions can help shed light on why.

To be sure, China's method of transitioning leadership differs greatly from processes existing in the West. Their elections aren't so much citizens choosing between Republican or Democrat, Socialist or Green, etc. It's a one-party nation, meaning choices are between communist and, well, communist. What's more, it isn't as though Chinese citizens actually turn out to the polls and directly vote for senior party leadership.

[Related -Demand For Safe-Haven Bonds Surged Last Week]

In theory, China's government system is based on elections every five years at the provincial level. These locally elected officials then select the next rung of leaders, who select the next rung and so on—all the way to the top, culminating in the selection of the president and premier. (While this process may seem a version of bottom-up representation within the party, in practice, power flows the other direction.)

The president and premier are restricted to serving two consecutive five-year terms and are part of the nine-member Standing Committee. The Standing Committee is picked from the 24-member Politburo. If you're not part of the Politburo, the highest you can get is the State Council—although most members of the Politburo also hold multiple ministry positions in the State Council.

[Related -Thoughts on MetLife and AIG]

Despite being a one-party system, there are many factions with different interests. Two seem to dominate, differentiated primarily by socioeconomic backgrounds. On the one side are the wealthy elite, hailing mostly from the wealthy coastal region (a large set from Shanghai). On the other side are politicians mostly from poorer backgrounds who've fought their way up on some form of merit.

The current president (Hu Jintao) and premier (Wen Jiabao) are from the group with poorer backgrounds. As such, they have attempted to emphasize closing the wealth gap between urban and rural populations (although this policy position takes a backseat to government stability—always important in non-democratic societies—tied to high growth and low inflation). The previous president, Jiang Zemin, was from the wealthy elite and focused on urban development. Prior to stepping down in 2003, Jiang packed the Politburo and Standing Committee with his allies, allowing him to continue to wield significant power despite no longer being president.

Next Page >>12


Comments Closed

rss feed

Latest Stories

article imageDemand For Safe-Haven Bonds Surged Last Week

The crowd piled into investment-grade bonds last week as economic worries triggered an exodus out of risky read on...

article imageThoughts on MetLife and AIG

In some ways, this is a boring time in insurance investing.  A lot of companies seem cheap on a book and/or read on...

article imageA 2016 Recession Would Be Different

If the US or the Eurozone entered a recession this year, a few macroeconomic variables would look very read on...

article imageWhat's Next For Chipotle?

After stumbling badly on negative publicity about foodborne illness at some of its restaurants, the fast read on...

Popular Articles

Daily Sector Scan
Partner Center

Related Articles:

A 2016 Recession Would Be Different
More Articles on: China

Fundamental data is provided by Zacks Investment Research, and Commentary, news and Press Releases provided by YellowBrix and Quotemedia.
All information provided "as is" for informational purposes only, not intended for trading purposes or advice. iStockAnalyst.com is not an investment adviser and does not provide, endorse or review any information or data contained herein.
The blog articles are opinions by respective blogger. By using this site you are agreeing to terms and conditions posted on respective bloggers' website.
The postings/comments on the site may or may not be from reliable sources. Neither iStockAnalyst nor any of its independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. You are solely responsible for the investment decisions made by you and the consequences resulting therefrom. By accessing the iStockAnalyst.com site, you agree not to redistribute the information found therein.
The sector scan is based on 15-30 minutes delayed data. The Pattern scan is based on EOD data.