The two dozen senior politicians who walk the halls of Zhongnanhai, the compound of the Chinese Communist Party's leadership in Beijing, are worried. What was inconceivable a year ago now threatens their rule: an economy in freefall. Exports, critical to China's searing economic growth, have plunged. Thousands of factories and businesses, especially those in the prosperous coastal regions, have closed. In the last six months of 2008, 10 million workers, plus 1 million new college graduates, joined the already gigantic ranks of the country's unemployed. During the same period, the Chinese stock market lost 65 percent of its value, equivalent to $3 trillion. The crisis, President Hu Jintao said recently, "is a test of our ability to control a complex situation, and also a test of our party's governing ability."
With this rapid downturn, the Chinese Communist Party suddenly looks vulnerable. Since Deng Xiaoping initiated economic reforms three decades ago, the party's legitimacy has relied upon its ability to keep the economy running at breakneck pace. If China is no longer able to maintain a high growth rate or provide jobs for its ever growing labor force, massive public dissatisfaction and social unrest could erupt. No one realizes this possibility more than the handful of people who steer China's massive economy. Double-digit growth has sheltered them through a SARS epidemic, massive earthquakes, and contamination scandals. Now, the crucial question is whether they are equipped to handle an economic crisis of this magnitude -- and survive the political challenges it will bring.
This year marks the 60th anniversary of the People's Republic, and the ruling party is no longer led by one strongman, like Mao Zedong or Deng Xiaoping. Instead, the Politburo and its Standing Committee, China's most powerful body, are run by two informal coalitions that compete against each other for power, influence, and control over policy. Competition in the Communist Party is, of course, nothing new. But the jockeying today is no longer a zero-sum game in which a winner takes all. It is worth remembering that when Jiang Zemin handed the reins to his successor, Hu Jintao, in 2002, it marked the first time in the republic's history that the transfer of power didn't involve bloodshed or purges. What's more, Hu was not a protégé of Jiang's; they belonged to competing factions. To borrow a phrase popular in Washington these days, post-Deng China has been run by a team of rivals.
This internal competition was enshrined as party practice a little more than a year ago. In October 2007, President Hu surprised many China watchers by abandoning the party's normally straightforward succession procedure and designating not one but two heirs apparent. The Central Committee named Xi Jinping and Li Keqiang -- two very different leaders in their early 50s -- to the nine-member Politburo Standing Committee, where the rulers of China are groomed. The future roles of these two men, who will essentially share power after the next party congress meets in 2012, have since been refined: Xi will be the candidate to succeed the president, and Li will succeed Premier Wen Jiabao. The two rising stars share little in terms of family background, political association, leadership skills, and policy orientation. But they are each heavily involved in shaping economic policy -- and they are expected to lead the two competing coalitions that will be relied upon to craft China's political and economic trajectory in the next decade and beyond.
One thing is for sure: They have the profoundly difficult task of quickly and effectively transforming the country's long-standing model of export-led development. That task will require a delicate balance of innovative reforms, further market liberalization, and occasionally, strong government intervention to reshape China's economy into one driven largely by domestic demand. It is a daunting challenge, particularly when the men at the helm differ so profoundly. There are bound to be power struggles. But there is also a good chance that these everyday rivals, understanding that the party's survival hangs in the balance, will put aside infighting to guide China out of the crisis.
The team of rivals arrangement is not a choice, but a new necessity for the Chinese leadership. In elevating both Xi and Li in 2007, Hu signaled the importance of the different constituencies each represents and the belief that only consensus-building will successfully forestall serious political upheaval in the so-called fifth generation of leaders, of which Xi and Li are members. The idea of turning rivals into allies "for the sake of the greater good," as Abraham Lincoln put it, has been widely cited in the Chinese media. A recent article published in China Youth Daily, one of the most popular newspapers in the country, called the "team of rivals" (zhengdi tuandui) a "brilliant idea to achieve political compromise in order to maximize common interest and political capital for survival."
The two groups can be identified as the "populists" and the "elitists." The populists are currently led by President Hu Jintao and Premier Wen Jiabao. Members of their core group, including Li Keqiang, Director of Party Organization Li Yuanchao, and Guangdong Party Secretary Wang Yang, are known as tuanpai, after the Chinese Communist Youth League through which they advanced their careers. Most tuanpai -- they now make up 23 percent of the Central Committee and 32 percent of the Politburo -- served as local and provincial leaders, often in poor inland provinces, and many have expertise in propaganda and legal affairs. President Hu is himself a tuanpai, and the leaders of this faction are widely regarded as his longtime confidants; most of them worked directly under Hu in the early 1980s, when he headed the youth league. Tuanpai are known for their organizational and propaganda skills, but they are lacking when it comes to handling the international economy. Their credentials weren't as highly valued in the Jiang Zemin era, when foreign investment and economic globalization were stressed above all else, but they are considered critical now as the risks of social unrest and political tensions increase.