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China is losing its single voice

The Australian, Canberra

China is losing its single voice

Rowan Callick, China correspondent

24 April 2006

Businesspeople naturally admire decisiveness. This is one reason why China is so widely sought by corporate Australia as a trade and investment partner.

The apparent lack of debate inside China about the direction of development would seem to underline this infectious sense of focus. Just go for it!

But although Australia Inc tends to hear only a single voice, there is actually growing contestability within China - about policy and about influence.

This doesn’t mean the Communist Party is losing control - the opposite is probably the case. It is being reinforced by economic success, and boosted by the compliments routinely showered by international business leaders on China’s growth.

But it is becoming more catholic, and differences of opinion are inevitably emerging, both within the party and beyond.

For instance, a couple of weeks ago a meeting was held in Beijing of researchers from universities and government think tanks - with a few retired officials and party theoreticians - that pledged to fight the reform pace being pursued by what they denigrated as "rightist liberal elites".

As wealth and regional gaps yawn wider, and as parts of China acquire the problems of success such as pollution and over-development, tensions are naturally growing.

The system still works pretty smoothly though, especially in diplomacy and trade, and so a business visitor from Australia is likely to encounter only a common, harmonious line, unless he or she has the capacity to step outside the program arranged for them. Then, they will almost certainly find a range of forceful and articulate alternative voices, especially on issues relating to land, to development and to relocation.

Today’s conference in Beijing about Australia’s hopes for accelerating services trade and investment, under the bilateral Free Trade Agreement (FTA) being negotiated, is a typical case. It matters intensely, in this case, which of various views within China will eventually have the muscle, and the motivation, to prevail.

President Hu Jintao, in Washington last week, urged the US not to politicise trade disputes while American business leaders warned of the danger that political tensions could damage growing commercial links.

Australia’s case is the reverse. Political harmony stands to boost commercial ties.

And Australian service providers need China’s political leaders to prevail over the chorus from the bureaucracy that says the single important aim of the FTA is to acquire cheap minerals and energy from Australia.

Premier Wen Jiabao was hearteningly enthusiastic, before and during his visit, about the diversity of Australia’s potential contributions to China’s development. But will he retain sufficient interest to override the Beijing bureaucracy’s natural inclination towards minimalist FTAs?

The Chinese state retains ownership, through the State Council’s State Owned Assets Supervision & Administration Commission, of the 169 corporations viewed as "strategic". They remain overwhelmingly organisations that manufacture tangible products.

The powers that be are only with difficulty beginning to grasp the concept of a services industry - which is the main employer in every Western state, as well as in China’s own financial centre of Hong Kong of course.

In China, the hundreds of millions of people who need to be redeployed from under-employment on unprofitable farms - the people who will ultimately decide whether this communist dynasty survives or not - are unlikely to find many opportunities even in a rapidly expanding services sector.

There is a downside for Australia in the constant repetition of the palpable truth, that its economy and China’s are wonderfully complementary: it is that this underlines the Chinese perception that it’s all about buying iron ore and uranium especially cheaply - in time, they hope, as cheaply as the liquefied natural gas acquired under the first deal with the Australian LNG consortium, negotiated with considerable political guidance on both sides.

President Hu and Premier Wen have since their accession as the fourth generation of leaders of the party’s dynasty since 1949, stressed the importance of reducing pollution, refocusing government efforts from the rich coastal regions to the poorer interior and to the rustbelt northeast, reducing energy consumption, improving industrial safety (especially in mines) and fighting corruption - popular causes all.

But they appear to be making heavy weather of it. Growth remains the single key measure of success for provincial cadres. And as the South China Morning Post editorialised recently: "Even though China has always had a unitary government, local officials have thousands of years of experience in paying lip service to imperial edicts from the capital."

The ancient saying, "the mountains are high and the emperor is far away", has a powerful continuing currency.

For the sake of fresh opportunities for Australia’s vibrant services sector, it’s going to be important either to convert those contesting voices, or to look to the emperor to be sufficiently engaged, to seek to ensure his position prevails.