A slumping economy did not deter Chinese from their travels.
China is back to work after the Golden Week holiday. The vacation week brought decent economic news as retail sales grew 15 percent over the 2011 period. The government abolished road tolls during the holiday week and tens of millions of travelers got into their cars and hit the roads, leading to massive traffic jams. China may have much underutilized transportation infrastructure most of the time, but it is never enough during peak travel periods when tens or hundreds of millions of people are on the move.
The tourists slogged through huge crowds at popular sites, then left behind piles of trash and, in Western China, two camels dead from overwork. I had a “staycation†in Beijing with the family, having learned from experience that over these holidays it is best to stay in or go overseas. Traveling abroad is now crowded too, as this vacation Chinese travelers booked 50 percent more foreign trips than they did during the 2011 holiday week.
The holiday spending is a positive sign for consumer confidence, and while the economy is still struggling there was more good news on Monday. An HSBC/Markit survey claims that China's services sector, which Bloomberg says accounts for 43 percent of China's economy, expanded the most in four months. But people hoping for a huge new stimulus package to bolster the economy will likely be disappointed, as Caixin explains in some detail that there are insufficient funding sources for many of the mooted infrastructure projects.
Uncertainty about China's political transition has hurt foreign confidence in its economy and may have led to policy inertia in the face of a slowing economy. Some but not all of that uncertainty disappeared the Friday before the Golden Week holiday with the twin announcements that the Communist Party of China would convene the 18th National Party Congress on Nov. 8 and that Bo Xilai had been expelled from the Communist Party and public office and would be handed over to the judiciary.
Credible rumors of an October date for the 18th Party Congress had been circulating but something looks to have pushed back the opening. Very few people know the truth though many will speculate. Officially, there is no delay, as the party's only prior public statement about the timing of the 18th congress said it would be in the second half of 2012.
The leadership found consensus, at least publicly, about the incredibly complex and difficult case of Mr. Bo, which China scholars like Cheng Li view as a very positive sign. Some observers are guessing that Mr. Bo will go on trial before the party meets in November, though if the cases of Chen Xitong and Chen Liangyu, the last two politicians of Mr. Bo's rank to go on trial, are precedents then it could be many months or even more than a year before Mr. Bo gets his day in court.
Mr. Bo's family could probably keep a New York psychiatrist booked for years. A recent New York Times article tells us that Mr. Bo and his second wife, Gu Kailai, were so paranoid that they thought Mr. Bo's son from his first marriage might have tried to poison Ms. Gu.
Xi Jinping, Hu Jintao's expected successor, will be stepping into one of the most difficult jobs in the world. China is in desperate need of change, as just about everyone agrees. But so far there is no apparent consensus on the types of reforms. Entrenched special interest groups, including re-energized state-owned enterprises, are defending their positions, there is a growing expectations gap between citizens and the government, and Mr. Xi will have to govern while keeping two predecessors - Mr. Hu and Jiang Zemin - happy.
The Chinese government is very aware of all the problems in the economy, and Chinese experts are at least as critical as foreigners - and probably better informed - about the challenges and possible solutions, as two recen t essays demonstrate.
Li Zuojun, deputy director of the Institute of Resources and Environmental Policy Research at the Development Research Center of the State Council, wrote about the Chinese economy's nine major challenges:
According to Li, the nine problems are: declining economic growth, inflation, economic bubbles, the changing economic growth engines, adjustments in industries and regional business structures, environmental constraints, the social costs of development, the deteriorating international environment and resistance to reform.
Deng Yuwen, an editor with an influential Communist Party journal, published “The Ten Grave Problems Facing Chinaâ€:
Although the author echoes the formal party line and extols the peerless achievements of the Hu-Wen decade, Deng goes on to deliver an accusatory accounting of China's underlying social, economic, regional, political and ideological problems. He frames them as monumentally important issues that have grown in scale and gravity as a result of a stability obsessed government that, under the cover of consensual politics, has allowed pressing concerns to fester. They are issues of critical importance not only for China's ruling party, but by extension for the world as a whole. An indictment of political lassitude, “The Ten Grave Problems†is also framed as an agenda that demands the immediate attention of the party-state's incoming leaders.
China's Communist Party has been through worse crises than the Bo scandal and the current economic slowdown. It survived the man-made famine of the Great Leap Forward that killed tens of millions, the chaos of the Cultural Revolution, the attempted coup and death of Mao Zedong's successor, Lin Biao, and the protests and crackdown of 1989.
Betting against the party's staying power has proved to be a poor wager, but one wild card may be that in previous crises the part y had an almost total monopoly on information flow and so had time to perfect a propaganda response. China is now in the microblogging-era of instantaneous information dissemination and discussion, making the party's job more difficult, though far from impossible. Expect Mr. Xi to move quickly to project confidence and commitment to reform.
