Dispatch

The Princeling and the Paupers

In China, a divisive fight over political succession underpins a public fight over the internal immigration system.

Three decades after Deng Xiaoping unleashed his market reforms, resentment over China's internal immigration policy -- particularly the hukou registration system -- has finally boiled over. On March 1, 13 state-run newspapers, including the well-regarded Economic Observer, simultaneously carried a front-page editorial calling for the system to be abolished because of the "invisible fetters" it placed on all Chinese citizens. The government seemed wise to the growing resentment, with Premier Wen Jiabao promising to reform the system in an online chat days before the editorial came out and announcing some reforms today. But the unprecedented outcry from the press still caught many in Beijing off guard. So is the Fourth Estate beginning to flex its muscles in China?

Not really. It is hard to imagine that the papers brandished the editorial without advance official sanction. Although one editor might have had the courage to risk his career with the editorial, organizing so visible a joint protest would have brought severe punishment had it not received some wink of approval from on high. Indeed, it is more likely that the government recognized that it needed to fix the hukou system and decided to appease resentment over it in advance of the just convened National People's Congress (NPC) -- during which the Chinese Communist Party will try to stifle or hide all evidence of a house increasingly divided.

The hukou system, modeled on the Stalinist propiska (which also lingers on in today's Russia), effectively controls internal immigration: The government decides how many people can move their registration from one, usually rural, district into another, usually urban, one. People who move to another part of the country without permission risk losing basic rights. They cannot officially live or work anywhere. Their children cannot get schooling; they cannot get medicine. (On a personal note, when I wanted to get married in China in 2006, I could not do so in a civil registration because, having lived abroad, I could not produce a hukou.) Unless illegal migrants can bribe a local official to transfer their papers, they become a refugee in their own country.

The lack of a hukou and its corresponding rights and privileges is why most migrant workers -- the vast majority of whom are male -- rarely bring their families with them when they move to a city seeking work. And, as it impacts China's huge number of internal migrants (estimates place the number between 100 million and 150 million), it -- alongside the relentless petty corruptions of Chinese society -- is a major point of public anger.

The Chinese Communist Party (CCP) knows it, hence the promise of hukou reform. The timing of the affair also suggests official connivance. The articles appeared just days before the NPC's annual meeting in Beijing. Organized displays of discontent around the time of the NPC are rarely tolerated. The NPC receives petitions from aggrieved citizens in the run-up to the meetings, and the number of petitions has been growing each year, from 100,000 in 2004 to well over 400,000 last year. This swelling unrest has prompted officials to order both strenuous efforts to keep petitioners from flocking to Beijing to present their petitions in person, and also to anticipate and try to dampen public resentments when possible.

Keeping the NPC docile is particularly important this year because the end of the Hu Jintao/Wen Jiabao era is in sight -- and the transfer of power is not going as smoothly as party elders had hoped. President Hu and his heir apparent, Vice President Xi Jinping, due to take over in 2012, are on the opposite sides of China's political spectrum when it comes to crucial domestic policy issues. Xi -- a "princeling," as the descendants of communist China's revolutionary founders are called -- is a follower of the "Shanghai School" of development. He prioritizes China's dynamic urban centers and market-based reforms. Hu, on the other hand, is increasingly keen to focus on rural development and state control.

The urban/rural, market/state divide within the CCP has prevented Beijing from making progress on subjecting the yuan to market forces, fragmented China's stimulus package into industrial policies, and is forcing the Chinese people to keep high saving rates for covering health and retirement expenses. All of this is making the much-needed "rebalancing" of China's economy toward more domestically based growth more difficult.

The friction became public last September when CCP leaders failed to make Xi deputy commander in chief of the armed forces. The suggestion is that Hu maneuvered to keep Xi off the powerful central military affairs commission because he intends to use continuing chairmanship of that body to maintain his influence after he leaves office (something Deng Xiaoping did during his years as the country's paramount leader, when he nevertheless held no official party or state position). This political wrestling match probably goes some way toward explaining China's current diplomatic bluster and the domestic crackdowns in Tibet and Xinjiang.  After all, with nationalist feelings on the rise, no Chinese leader wants to look soft and give his rivals an opportunity to attack him.

But the CCP leadership realizes that nationalism alone will not keep the population content. Only growth, and a systematic easing of the plight of the country's most desperate people, can do that. Removing -- or at least reforming -- the hated hukou is part of this political effort. Plus, it has the added advantage of playing to both Hu's and Xi's constituencies by dampening the resentments of both urban migrants and countryside peasants, dreaming of a move to the city.

China's politicians may not be democrats, but they know a win-win reform when they see it.

China Photos/Getty Images

Dispatch

Cristina Gets Her Handshake

But it won't do her any good. Why the Clinton visit isn’t enough to bolster Argentina's sagging president.

Shortly after last April's G-20 meeting, a YouTube video circulated among Argentina's politically minded youth, showing Argentina's president, Cristina Fernández de Kirchner, extending her hand to U.S. President Barack Obama during a photo call of G-20 leaders. Not noticing Kirchner, Obama passes her by and greets Canada's Stephen Harper instead.

The incident was particularly amusing in Argentina because Kirchner is seen as a president who approaches foreign relations with little seriousness. After she came to power in 2007, she was slow to name ambassadors; Britain, for example, went months without an Argentine representative. When the post was filled, it went to José Nun, an intellectual with experience on the Falklands issue, a conflict that has carried disproportionately huge weight in Argentine-British relations dating back to Argentina's ill-fated 1982 invasion of that minuscule island territory.

So for U.S. Secretary of State Hillary Clinton to encourage Argentina and Britain to sit down and discuss the islands' future was a political boon for Kirchner. Clinton's visit on March 1, of course, was short and perfunctory. But had she left Argentina out of a trip that included José Mujica's inauguration in Uruguay and visits to Brazil and Chile, she would have cost Kirchner politically by reminding Argentines of what is shocking to many of them: that Argentina's steady decline is so advanced that the country no longer ranks among South America's elite club. Clinton's visit just barely rescues Kirchner from the ignominy of exclusion -- but it won't be enough to rescue her from the consequences of her own poor governing.

The latest reason for Kirchner's waning popularity is her battle over the Central Bank's dollar reserves. In January she issued a decree ostensibly creating a fund of $6.6 billion to service public debt and hasten Argentina's return to the international capital markets. But ever since Kirchner nationalized private pension funds in November 2008, she has spent that cash wantonly to maintain her party's patronage networks. Few Argentines expect the Central Bank money to go to any other purpose. Martín Redrado, the Central Bank's governor at the time, refused to allow the transfer. He was soon replaced by the less challenging figure of Mercedes Marcó del Pont. This week, $6.5 billion in reserves was rapidly transferred to the treasury.

Such a move smacks of desperation. As a political force, Kirchner and her husband, former President Néstor Kirchner, are facing death by a thousand cuts. Their struggles began in the middle of 2008, when protests over farming taxes that lasted several months ground parts of the country to a halt. These ended when Julio Cobos, the vice president, cast the tie-breaking vote against a bill backed by the president to raise soybean taxes to almost 50 percent. Kirchner considered stepping down; she did not speak to her own vice president for nearly a year.

By the time of the farming protests, the economy was showing signs of overheating, and the global financial crisis was also beginning to be felt locally. Expecting worsening unemployment toward the end of 2009, Kirchner moved the midterm elections up from October to June. Néstor Kirchner tried to reinvigorate the first couple's political brand by standing as a candidate in the province of Buenos Aires, where 40 percent of Argentines live. He was beaten by a wealthy businessman called Francisco de Narváez. The Kirchners' party lost healthy majorities in both houses of Congress for the first time since Néstor Kirchner took office in 2003.

That left an awkwardly long and tense period from June to December before the new Congress took its seats. During those months, the Kirchners held no popular mandate, but they used their congressional power to pass bills that would aid their political survival until the next presidential election in 2011. The first was a law that reduced the influence of a media conglomerate called Clarín, which has been heavily critical of the Kirchners since the farming protests. The second was a political reform bill that diminishes the chance of small political fractions gaining momentum. De Narváez is a member of one such group.

Now, Kirchner is returning to an easy topic -- the rallying-round issue of the Falklands -- in an attempt to gain a rapid burst of popularity. Recently, the British have been searching for oil in the Falklands, something that infuriates Argentines, who still believe they have a moral right to all resources on the island archipelago off their southeast coast. A British firm called Desire Petroleum plans to install an oil exploration rig this month that will drill more than 10 wells. Some are in areas of the south Falklands basin that were not explored when drilling last occurred in 1998.

Argentina's constitutional reforms of 1994 require the president to fight for full sovereignty over the islands. But Kirchner has already conceded to Clinton, at least, agreeing to help hunt for nuclear material at ports by installing radiation detectors.

Kirchner's pugnacity and pragmatism on these issues suggest that she intends to rule with the blunt instruments of veto and decree for her remaining period in office. Which is not likely to be long, no matter how many times Hillary Clinton shakes her hand.

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