Xi Jinping is a strongman. That does not mean he gets his way

Oct 22nd 2016 | TANGSHAN | From the print edition of The Economist

BY NIGHT the fires of Tangshan burn and the air stinks. In this city in the northern province of Hebei, more than 100,000 people work in factories making steel and many more in firms serving the industry. “Save energy and cut emissions,” reads a red slogan outside one plant, heavy machinery roaring within. Earlier this year China’s president, Xi Jinping, ordered the steel business to cut production. Small and inefficient mills like this one were supposed to close and larger ones to shut down some furnaces. Yet many still operate around the clock. Their city is close to Beijing, virtually on Mr Xi’s doorstep, but the steel bosses openly flout his orders.Nearly four years into his rule, Mr Xi is commonly described as the most powerful Chinese leader in decades. He has taken charge of all the most important portfolios, cultivated a huge personal following and purged his opponents. Bypassing ministries, he rules through informal “leading small groups”, heading so many of them that foreign commentators have labelled him “chairman of everything”. Rumours fly (without evidence) that Mr Xi may even try to extend his powers beyond the normally allotted ten years. Given his seeming strength, it would be logical to suppose that he could do almost anything he pleases. The toiling mills of Tangshan, however, suggest how hard the president often finds it to persuade local officials to carry out his wishes. Mr Xi may be chairman of everything, and he may well be stronger than any leader since Deng Xiaoping. But in a country so vast, diverse and with so many entrenched interests, he often seems to be master of nothing.

Nearly four years into his rule, Mr Xi is commonly described as the most powerful Chinese leader in decades. He has taken charge of all the most important portfolios, cultivated a huge personal following and purged his opponents. Bypassing ministries, he rules through informal “leading small groups”, heading so many of them that foreign commentators have labelled him “chairman of everything”. Rumours fly (without evidence) that Mr Xi may even try to extend his powers beyond the normally allotted ten years. Given his seeming strength, it would be logical to suppose that he could do almost anything he pleases. The toiling mills of Tangshan, however, suggest how hard the president often finds it to persuade local officials to carry out his wishes. Mr Xi may be chairman of everything, and he may well be stronger than any leader since Deng Xiaoping. But in a country so vast, diverse and with so many entrenched interests, he often seems to be master of nothing.Mr Xi spars with crusty generals, powerful bureaucracies and large state-owned enterprises controlled by the central government. But an even greater impediment to his power is an age-old one: local authority. This is reflected in a popular saying that refers to the compound in Beijing where China’s leaders live and work: “Policies do not go beyond Zhongnanhai.”

Mr Xi spars with crusty generals, powerful bureaucracies and large state-owned enterprises controlled by the central government. But an even greater impediment to his power is an age-old one: local authority. This is reflected in a popular saying that refers to the compound in Beijing where China’s leaders live and work: “Policies do not go beyond Zhongnanhai.”

Xi’s out of controlAs the Communist Party prepares to hold a five-yearly congress late next year at which sweeping leadership changes will be announced, Mr Xi is fighting on two broad fronts. One is with rivals in Beijing who want the reshuffle to favour their own cronies. The other is with

As the Communist Party prepares to hold a five-yearly congress late next year at which sweeping leadership changes will be announced, Mr Xi is fighting on two broad fronts. One is with rivals in Beijing who want the reshuffle to favour their own cronies. The other is with footdraggers in the provinces who want to do their own thing, regardless of who wins in the capital. It is with the wider country in mind that Mr Xi is now focusing on what he calls “party building”, ie, instilling loyalty and discipline into the party’s myriad cells. This will be a theme at an annual four-day meeting of 350 or so of the party’s most senior members that is due to begin on October 24th. In July Mr Xi warned starkly what a slackening of discipline could mean: “Our party will sooner or later lose its qualifications to govern and will unavoidably be consigned to history.”China is eminently capable of getting things done, even in the face of considerable NIMBYist resistance. Its thousands of miles of high-speed rail and its mushrooming cities testify to that. But because its leaders are afraid to delegate power, they can give their attention only to a limited range of priorities. Many government schemes, particularly ones that are tricky, pricey or unpalatable to local politicians, go largely unheeded.

China is eminently capable of getting things done, even in the face of considerable NIMBYist resistance. Its thousands of miles of high-speed rail and its mushrooming cities testify to that. But because its leaders are afraid to delegate power, they can give their attention only to a limited range of priorities. Many government schemes, particularly ones that are tricky, pricey or unpalatable to local politicians, go largely unheeded.Strikingly, Mr Xi even sometimes fails to implement policies that he has declared to be a priority. He reportedly said that he had the capacity to tackle only one big economic issue this year, and that was to trim the bloated steel and coal industries. As a result, in February, the government revealed plans to cut steel capacity by 100m-150m tonnes in the next five years and surplus capacity in coal production by 500m tonnes. To give his edict extra prominence, officials took the rare step of inviting foreign journalists to Zhongnanhai to quiz a deputy finance minister on it.

Strikingly, Mr Xi even sometimes fails to implement policies that he has declared to be a priority. He reportedly said that he had the capacity to tackle only one big economic issue this year, and that was to trim the bloated steel and coal industries. As a result, in February, the government revealed plans to cut steel capacity by 100m-150m tonnes in the next five years and surplus capacity in coal production by 500m tonnes. To give his edict extra prominence, officials took the rare step of inviting foreign journalists to Zhongnanhai to quiz a deputy finance minister on it.Yet, as the smoky streets of Tangshan show, the president’s stentorian words do not always translate into local deeds. Since February, steel output has risen nationwide every month year-on-year (see chart). By the end of July producers had cut less than half of the capacity they were supposed to. Custeel, an industry body, says this includes many facilities that had already been mothballed. The central government admits that only four provinces have made substantial progress out of the 22 for which it has published results. Only one of the four, Jiangsu, is among the big steel-producers.

Yet, as the smoky streets of Tangshan show, the president’s stentorian words do not always translate into local deeds. Since February, steel output has risen nationwide every month year-on-year (see chart). By the end of July producers had cut less than half of the capacity they were supposed to. Custeel, an industry body, says this includes many facilities that had already been mothballed. The central government admits that only four provinces have made substantial progress out of the 22 for which it has published results. Only one of the four, Jiangsu, is among the big steel-producers.Local businesses often pay more heed to the market than to mandates. Some larger mills relit their burners as global steel prices rose. Local governments have their eye on their revenues, too. Hebei produces nearly a quarter of China’s steel. In places like

Local businesses often pay more heed to the market than to mandates. Some larger mills relit their burners as global steel prices rose. Local governments have their eye on their revenues, too. Hebei produces nearly a quarter of China’s steel. In places like Tangshan the steel industry contributes substantially to tax revenues. Local banks risk writing off large loans if mills have to shut. At one, Tangshan Baotai, workers live on-site in low, grey housing. Those who lose their job lose their home as well. Local governments fear that lay-offs could fuel unrest.People desperate to get on China’s property ladder may wish that their plenipotentiary president could do better. Mr Xi was clearly behind measures announced this month aimed at holding down soaring house prices in the biggest cities. But this effort seems as doomed as previous ones, partly because local governments delight in the market’s surge. Selling land is a big source of their income; big cities control a very limited supply of it, because of tight restrictions on their expansion.

People desperate to get on China’s property ladder may wish that their plenipotentiary president could do better. Mr Xi was clearly behind measures announced this month aimed at holding down soaring house prices in the biggest cities. But this effort seems as doomed as previous ones, partly because local governments delight in the market’s surge. Selling land is a big source of their income; big cities control a very limited supply of it, because of tight restrictions on their expansion.The weakness of Mr Xi in the face of local power has been evident even in his efforts to

The weakness of Mr Xi in the face of local power has been evident even in his efforts to curb tobacco use (his wife, Peng Liyuan, is an “anti-smoking ambassador”). In 2015 he backed a stringent ban on smoking in indoor public places in Beijing. Yet a recent draft of a law to enforce this nationwide offers a big loophole: smokers would still be able to use designated indoor areas. The interests of tobacco-producing areas may explain why. In Yunnan province in the south-west, tobacco accounts for over half the tax take, compared with 7.5% of government revenue in China overall. Read more..

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