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[Transcript] One Year Later, China’s New Leaders

Transcript of the November 7, 2013 Asia Society Program

Nearly a year to the day after seven new leaders ascended to their posts on the Standing Committee of China’s Politburo, the Asia Society held a public conversation with The New Yorker’s Evan Osnos; Dr. Susan Shirk of the University of California, San Diego; Former Ambassador to China, J. Stapleton Roy; and Orville Schell. The discussion, which you can watch and read below in full, covered China’s leadership transition so far—its successes, shortcomings, and controversies—as well as the future of the China’s political system.The Editors

[3:50]: Orville Schell: It’s great to have you all, thanks for coming. And it’s wonderful to have this very interesting group of colleagues to reflect on this moment. As you know, Chinese history in its most contemporary guise tends to go in ten-year periods, when new leaderships are appointed, and they have two five-year terms. And of course the most powerful part of any leadership is the party.

The government is sort of divided into two branches: the government itself and the party structure. So when you look at China, you have to be aware that there is this sort of double vision going on. So the question is: We are now one year out, Xi Jinping is not only the Party General Secretary, and the President, and the most powerful of the two leaders, and Li Keqiang is the Premier. And each time a leadership comes in, we tend to have a tremendous amount of projection, and I think also somewhat do a little dreaming of ourselves’, trying to divine what it is that they stand for and might do. And one of the most interesting things about China is how little these guys usually reveal. And in the new scheme of things, there is a reason for that. Whereas before we were accustomed to having China being presided over by larger-than-life leaders—whether Chiang Kai-shek, Mao Zedong, or Deng Xiaoping—in the last twenty-odd years it’s tended to become more consensual, where it behooves these gentlemen—and believe me, they are gentleman, there are few women among them—to play their cards very close to their vest, to get ahead, not by sticking out, but by working quietly behind the scenes. And thus we don’t know as much about them as we are accustomed to knowing about other leaders. So who are they, what do they stand for, what have they been doing that gives us a hint about what they will do, and where is China going over the remainder of this decade that is yet to be played out?

Now in some measure, I think it would be fair to say that Xi Jinping is about to announce some rather dramatic—we think, we don’t know—economic reforms. But politically, things have gotten rather retrograde in motion in many ways. A lot more control, a lot more Maoist rhetoric, a lot of things we haven’t heard for many, many years have come back. So how are we to interpret that? What does it mean? Why is it happening? What does it portend for the future? So, to start, I’m just going to throw a question out. And then, this is a group with plenty of self-locomotion, so we will just let them just go and then throw it open to you. Let’s sort of go, start with you, Stape, because you’ve really been in this longest. What do you think has changed about China in the leadership, since you were Ambassador? What do you really notice as sort of hallmarks of the trend line?

7:13: J. Stapleton Roy: Orville, there is a certain delicious freedom in talking about leaders, about whom we know little, so we are not constrained by fact. But I’m fascinated by Xi Jinping. He is the first leader of his type that China has had. Let me say what I mean. First, he is the only Chinese leader in modern history who has come into the top position actually knowing a bit about the United States. Hu Jintao didn’t really know the United States. Jiang Zemin didn’t really know the United States. Deng Xiaoping didn’t really know it. Go on back. So that’s one aspect of it. Secondly, he is the first top Chinese leader who was not selected by an older group of leaders or individually, such as Deng Xiaoping selecting Hu Jintao to be the successor of Jiang Zemin. So in a sense, he is a leader who is coming out of a collective process of determining who is the next leader should be, as opposed to simply being identified. Third, he’s trying to deal with a massive contradiction, which is: he is he is trying to create a modern country with a pre-modern form of governance. I call the Chinese system essentially a pre-modern form of governance. It doesn’t believe that power corrupts. It believes power should be used by the Communist Party to accomplish certain purposes, and this takes you back to the divine right of kings, and the idea that power is given to you and then you have to use it. I call that pre-modern. Modern systems think of powers corrupting, and therefore you have to have checks and balances in society. Xi Jinping specifically rejects this. The party has to be above the military, the party has to be above the judicial system. But he has come out of the gate fast. He has done more in his first year than China’s previous leaders. Jiang Zemin came into office, you know, in the turmoil of ‘89, and he was really constrained until the Fourteenth Party’s Congress in 1992, and he didn’t really become the top leader in his own right until the Fifteenth Party’s Congress in 1997. Hu Jintao in his first year made some important ideological changes, but he didn’t do a lot of things.

9:57: Just tick off some of the things that Xi Jinping has done. First of all, he is really defining the so-called strategic objective for China and the United States in this concept of creating a new type of major power relationship. We’ve bought into that, but the idea really originally came from Xi Jinping. He advanced it when he was here as Vice President two years ago. And since it does describe the nature of the strategic rivalry between China and the United States, Hillary Clinton, Secretary Clinton, endorsed it, and President Obama has endorsed the concept. But he has tried to show that China is not simply focused on the United States. So his first trip was to Russia, and he has been to the BRIC countries, Brazil, Russia, India, etc., and he has been to third world countries. So, in other words he is putting special emphasis on the U.S. relationship, but not at the expense of all the other relationships. He has a 360 degree foreign policy, if you want to call it that. On the domestic front, he has taken over a communist party whose legitimacy has been badly shaken by the Bo Xilai affair that showed the corruption had penetrated into the upper reaches of the Communist Party; and by the revelation of the extraordinary differentials in wealth, with the people who hold the power in China enriching themselves. So in a sense, the party is becoming the party of the plutocrats rather than the party of the proletariat. And he is addressing that. He has launched an anti-corruption campaign, which he is going after the “tigers,” these are the big people, and the “flies,” who are the lower level people. And in fact he is going after some very big people. There is a former, retired, member of the standing committee of the Politburo, whose closest colleagues have been brought into the corruption net now, and it may extend to that person. He has launched an ideological campaign to support the anti-corruption thing. This is designed to improve the image of communist party. What does that involve in doing? Well, the slogan is “look into the mirror, straighten your clothes, take a bath, and cure the disease.” Now what does that mean? (AUDIENCE: [Laughter.])

12:15: Orville Schell: I believe he is referring to something that Mao once said back in the ‘40s. About the ideological problems are a disease. The best form is self cure, otherwise we’ll have to come in and cure it for you.

12:27: J. Stapleton Roy: I take this gobbledygook and reduce it into one. What he is talking about is sprucing up about the party, and the party is in desperate need of sprucing up. He’s come up with his ideological guidance for the Chinese military, which is: number one, obey the party, this is the soul. Number two, fight winning battles. This is the core. And number three, have a good style. This is what he calls the guarantee. Remember number one, obey the party, so Xi has been moving quickly, faster than Hu Jintao, to put his stamp of the authority on the military. And he has more of a military background than Hu Jintao had. On the economic front, he’s talked big about reform and we are going to see in the next few days whether there is real substance in that. If there isn’t real substance he is damned by his own words. Because he has picked up a phrase Deng Xiaoping used in the south when he went there in 1992, which is “Empty talk hurts the country, and hard work can revitalize the country.” He has come up with a new slogan for what China needs, which is this “China Dream” which consists of wealth and power and revitalizing the country. These are old themes in China, but he has repackaged them as sort of his slogan in terms of what China is trying to do. So he doesn’t talk about China’s rise. He talks about China’s revitalization. Let me halt there. He has done a lot of things and one could continue the list of these types of things. But this is not a passive person. This is somebody who has seized hold of things and is trying to move them.

14:16: Orville Schell: OK. So Susan, as described by Stape here is a leadership that’s trying to regain control of the situation that they felt had in some senses deteriorated. But they are using a lot of techniques that are kind of thrown back to an earlier period. What’s your assessment of that? Do you think it can be successful?

14:41: Susan Shirk: Well, Xi Jinping is certainly trying to rule like a strong leader, a strong man. And the whole structure of the standing committee facilitates that, in a way that we didn’t have before. Because they had the problem last year when they were selecting the people for this now seven-person leadership group, that there were more people in the next rung in the Politburo than the number of seats to move up. So they had this problem of potential disappointed losers who could maybe make trouble, stir up trouble. So that was a big problem. What they did is they decided to promote the oldest people, because seniority is such an attractive rule when you have to allocate scarce opportunities. Seniority—everyone can agree that there is some logic in that.

15:50: So the oldest ones moved up to the Standing Committee, and the younger ones were told to wait five more years, and we will promote you. As a result, Xi Jinping, the General Secretary of the Party, the President, and the head of military, and Li Keqiang, the Premier, are the only ones who will be there for ten years. The rest, the other five are only going to be there for five years. Then they will retire, and they will bring another five in. So you have a two-tier Standing Committee, which I think is very significant, because the last ten or twenty years, this collective leadership has been pretty ineffective and indecisive, and I think there has been a lot of criticism of them not really being able to address problems in a decisive manner. Of course nobody wants to go back to a dictator, because this whole collective rule was to prevent the rise of another Mao. Deng Xiaoping told them, this is the way to organize things. So this is supposed to be I think a kind of compromise between a Mao dictator and just a collective leadership with the number one guy just being first among equals.

17:12: Well Xi Jinping has taken hold of that opportunity, as Stape said, and really try to consolidate his power. And I guess the hope is that he is trying to consolidate his power, so that he can tackle this very tough job of carrying out a third wave of market reforms. That’s the hope. But what’s interesting is the way he is doing it, as you say, is reminiscent of a lot of Mao’s own techniques. And that makes some people very uneasy, because it looks like he is trying to intimidate people by having this public criticism, self criticism, going after major public intellectuals who have millions of followers on the internet and bringing them on TV and getting them to confess that they bought sex from prostitutes, or to do confessions on television in a very disturbing way.

18:37: He talks about public opinion struggle, using the term struggle—the language is very Maoist language—to really shake things up and it has people quite nervous. He may believe…that may be the only model in his mind for how to be a strong leader. Another possibility is that… well, remember Bo Xilai used a lot of the same Maoist nostalgia. So maybe the nostalgia for Mao is stronger than we realize. Maybe not just among the public but among the elite. You know, people really yearn to go back to a simpler time, when you knew what was black, what was white, and you had a strong leader. But I worry that it’s actually in contradiction with the objectives of a third wave of economic reform. For one thing,it’s got private business people really terrified. And capital flight is increasing; people are lining up to buy nice houses in La Jolla, where I live. Because many of the people who have been targeted are wealthy business people with liberal democratic ideas. So I don’t see how you go after this group politically, try to have a leftist ideological line, and then have a market economy that really functions well, no matter what the policies are that are announced next week.

20:34: Orville Schell: So there is a certain inherent contradiction in what’s going on.

Susan Shirk: In my view, yes. So it’s puzzling.

20:42: Orville Schell: So let’s maybe depart from the leadership for a minute. [To Evan:] You lived in China eight years plus, and just got back. Evan, if I might again say, is about to publish a book.

Evan Osnos: I’m glad that you mentioned that. (AUDIENCE: [Laughter.]

Orville Schell: All authors are.

Evan Osnos: Your checked in the mail, I promise.

21: 01: Orville Schell: So, how do you think this is going play out, or is playing out? I mean we have the Internet, we have just ordinary people, we have students, we have civil society, private businessmen. What do you think is going to be the effect of what we so far know about Xi’s policies?

21:19: Evan Osnos: I think it’s interesting to imagine and to think that what Xi Jinping looked like to his people a year ago this month. I went to the unveiling, this is the day at the end of the party’s congress when the seven members of the new standing committee including the President walked out on stage and you get to see the first time who is going to run the country for the next five years, and who the top two who run the country for the next ten years would be. And it was packed full of reporters. It was called a meet-the-press opportunity, though we were not there to ask question, we were there to be met. (AUDIENCE: [Laughter.])

21:57: And they came out on stage, and they were in, as you may remember, I think a lot of people remembered the image, they were in almost identical outfits: perfectly matching suits, perfectly matching hair (AUDIENCE: [Laughter.]), and with the exception of one, perfectly matching red ties. The one exception was Wang Qishan, and I think, we can talk about this later, I don’t think that was a mistake, I think that was on purpose. Then you focused on the top guy, Xi Jinping, who’s standing in the middle, with his committee arranged around him. And he looks calm. He looks terrific, actually, which was really noticeable because for the week leading up to it after all, we’ve been through the congress, and his predecessor Hu Jintao for all of his virtues was known to his people, the nickname among regular people, at least in my neighborhood, was “Wooden Face,” because he was so faithful to preventing any expression of human emotion. (AUDIENCE: [Laughter.])

23:02: So Xi Jinping got up there and gave a speech like nothing I’ve heard in a long time in China, which is: he spoke in Chinese, he spoke in the language that people really recognize. He didn’t talk about harmonious society. He never mentioned it. He never mentioned kexue fazhan guanli, the scientific outlook on development. He said people are, and I’m paraphrasing, he said people are struggling, people are concerned about how they are going to pay for education, they are concerned about how they are going to look after their children, how they are going to get medical care for their parents. It was extraordinarily adept language. And what I thought though at the time was: this is a demonstration of how perilous he realizes his job is. And it’s perilous because he is the first Chinese president in the history of the People’s Republic who is being evaluated in real-time, and can know what people think of him, and has to be responsive to that.

23:55: It sets up this contradiction. The contradiction between what I thought of the skillfulness of his comments, and the responsfullness [sic.], and the creativity with the way he talked with the very formal structure in which he has to operate, the same suits, the same hair, and the same ties. Afterwards, I went up and saw, they kind of let us go free range after this thing, and I went up to the stage and they had these little vinyl numbers on the ground where they were all supposed to stand, and his was the number one. And I looked out over this poinsettias and the TV cameras and thought: he must be terrified. Because he knows the scale of the problems he is facing. Very briefly, I think over the course of the next few months what he did was set up expectations for his people, by unveiling a concept that people could understand, the Chinese Dream. He certainly set out to project very clear ideas, we now know it means China’s ability to reestablish itself on the world stage as a great power. It means the ability to defend itself against threats from abroad. It means the revival of its economic might. But I can tell you that in my neighborhood that is not what people thought.

25:04: When you asked people; and I went around and I said: “What is the Chinese Dream?” My neighbor in particular—I said, “What is your Chinese Dream?” And she said, “My Chinese Dream is to win the lawsuit I have against your landlord.” It’s very complex, she is in a very complex landlord… uh, lawsuit. But she had truly interpreted it as the zhongguomeng [the Chinese Dream] was available for her to interpret. And I was in a taxi a couple of days later, and I asked the guy what is the Chinese Dream. And he said, “Well my Chinese Dream...” (And they all attached the “my” to it. It was not available to them in Xinhua, but they added the my Chinese Dream to it.)

25:37: He said: “Well, mine is to go…” Actually he wanted to go abroad, he wanted to travel. He is now retired. He wants to take some more time with his family. So that’s a problem. Because you have the expectation of, that there is the possibility that you have the right to aspire to something. Now they have to figure out how to accommodate that.

25:55: Orville Schell: So if you all look at this leadership, how do you think they are doing in terms of the “mandate of heaven”? In other words, do you think their relationship with the people is in good order?

26:10: Susan Shirk: No. (AUDIENCE: [Laughter.])

Orville Schell: Stape?

J. Stapleton Roy: No.

Orville Schell: Evan?

Evan Osnos: They got a lot of work to do.

Orville Schell: So explain.

26:18: Evan Osnos: Well, I don’t want to say much. I would be interested in what you think. But I do think that at this stage he recognizes his single biggest threat is not from overseas. He talked a lot about nationalism, but that’s for domestic reasons. He realized his greatest threat is at home. He has to rebuild the legitimacy of the communist party in an age when communism doesn’t exist, and the party has been dishonored by its own actions. That’s a hard... that’s a heavy lift, and he has to figure out how to do it. And prosperity, which was the way he did it, which was the way his predecessors did it for thirty years, is not as available to him as it was before. It is not as easy for him to guarantee that everybody’s lives would be better in five years as they were five years before.

27:00: J. Stapleton Roy: Let me just expand on that a little. We have already discussed some of the things that he is trying to do. But he is trying to do it in a situation where China is truly remarkably open compared to what China has been since 1949. Censorship is unable to keep the Internet from becoming a rapid means of communication among literally hundreds of millions of people. Chinese can travel freely; not only do millions now go to Taiwan, but millions go to other countries in East Asia.

27:40: And the middle classes they meet everywhere in East Asia, basically, are under democratic systems, by and large. I was at a conference just ten days ago, at which a young researcher in the Central Party School said you know it’s really good to have Taiwan as part of China, because they have a democratic system, and we need to learn from them. Now this was from the Central Party School, which is hardly a of hot bed of liberalism in China. (AUDIENCE: [Laughter.]) And this was said in front of older Chinese who would not have put it that way. So I mean this is illustrative. As I was describing to you earlier one of the professors gave us a speech, in which she basically denounced Chairman Mao as a feudal ruler, illustrating by, in a professorial way, how his positions on various issues had changed in totally irreconcilable ways as he went along. In other words, she presented him as a totally arbitrary, feudal-style ruler, who thought he could do whatever he pleased without any ideological or other types of restriction.

28:58: So when you try to maintain party control over a system that has generated tens, hundreds of millions of middle-class people with middle-class mentalities who have access to outside information, can travel outside the country, it is not easy. So what he is concerned about is becoming a Chinese Gorbachev, namely pushing ahead reforms in a way that loses control of the process, and so you see what outsiders see as contradictory elements, but from his standpoint they are not.

29:36: Orville Schell: So, let me ask you this, Stape, do you think given that recognition, that they desperately need more economic reform, they do not want to fall apart or unravel, do you think he is totally justified in sort of making some of these control mechanisms, which are rather emphatically anti-democratic, more confirmed?

30:02: J. Stapleton Roy: I don’t like the word justified, because that introduces an ethical moral question into this.

Orville Schell: Well, practically speaking then?

J. Stapleton Roy: Frankly, if you American values and apply it to the situation in China, then he is not doing the right thing, and he is not treating people the way that we think they ought to be treated. But if you put yourself in the shoes of somebody who’s trying… who has inherited a China that has changed more radically over the last thirty years in a positive way with the living standards dramatically better than they used to be. And with the freedoms in China far greater than they have been before, then the question is not “Are they justifiable?” it’s “Are they effective?”

30:48: Orville Schell: Are they?

J. Stapleton Roy: So far, he has been able to, well he and his predecessors have been able to maintain the stability, which they consider fundamentally necessary for continued economic growth. But the instability factors in China, in my judgment, are getting stronger, and the openness of China means that you can’t fully suppress them. And that’s the problem. He is wrestling with contradictions, and he is creating contradictions. So that the real question is: Are they going to be good enough to manage this rather tricky process?

31:25: Orville Schell: Or could anybody really manage it is another way of putting it. So Susan, let me just shift here slightly for you because you have done a lot of work in U.S.-China relations. You have written a lovely book, The Fragile Superpower. How do you think this is all going to play for U.S.-China relations? How can the United States buddy up to this new system (SUSAN SHIRK: Exactly) that Stape describes, which is manifestly anti-democratic but perhaps with some logic behind it in terms of the development imperatives…?

31:57: Susan Shirk: Well I don’t agree with the logic, by the way.

31:59: Orville Schell: So disagree with Stape first, then talk about.

32:00: Susan Shirk: No, no. That’s OK. I’ll talk about U.S.-China relations. I think that it doesn’t sit very well with the United States. And I think Xi Jinping actually had a whole range of different options of ways to rule, and ways to push forward economic reform, and ways to fight corruption. And you know fighting corruption is very popular. That we know, that that’s one part of the platform. It’s very popular. But fighting corruption the way he is doing it, completely through party justice, is you know not going to work very well. He could have done it; he could have combined straightening legal system with fighting corruptions. And that would have actually helped with economic reform, too. So he had a lot of different specific choices to make. And he made choices that I think will be hard for the United States, Americans, to accept because he has ramped up repression. There’s just no doubt about that. And the people’s right to know, that norm, in China has really gotten stronger among the urban educated class.

33:24: So you look at the examples of these kind of censorship incidents or crises—and I won’t get into the details of them—but what happens is you immediately get this huge reaction all around the country from educated people, from movie stars quoting Solzhenitsyn, in support of a newspaper, whose censor has changed the content of what’s in the paper, all sorts of things like that. And now the crackdown on the media is very, very strong.

34:05: And I think the whole situation is very tense. So, you know, I feel that expectations for economic reform in China among Americans are quite low. We don’t expect China to democratize tomorrow, to start introducing elections, but we recognize we have to deal with the government we have. So we’ve worked hard to try to give China status, respect, to try to develop cooperative relations with a system that is so very different than our own. We kind of hold our nose, and try to figure out a way to work together, and hope that over time things will move in the right direction. But when, politically, China is not moving in the right direction in the eyes of Americans, I think it does become much, much more difficult for us to cooperate.

35:12: And when China is, when the propaganda authorities and Xi himself and…, they are talking all the time about hostile foreign forces trying to subvert the Chinese system, and all of our efforts at engagement are really just disguised way of trying to bring down the system, the intentions are hostile—you know, it becomes very hard to develop a constructive, big power relationship.

35:51: Orville Schell: So Evan, where does this sense, this feeling that has been so prevalent throughout modern Chinese history of distrust for foreigners come from? And, if in fact we have to get along with them, which we do, we really do need to establish a collaborative relationship. Can it be overcome? What could the United States do, which is probably a relatively narrow bandwidth of possibilities, that hasn’t been done, to advance a more accepting relationship?

36:20: Evan Osnos: Well one of the things that I think a lot of us know is that China is informed intensely and very consciously by its own history. So anybody growing up right now in a Chinese school is taught to remember the country’s humiliations, and this is not an incidental part, this is an essential part of the education program, it became more important after Tiananmen Square because at a certain point when China was becoming obviously a more open society, was becoming a free market-like economic system, it could no longer blame its past historical problems on class enemies, that was getting more difficult. So there was a shift to reframing some of China’s historical failures as the fault of the outside world.

37:14: It wasn’t wrong, I mean, look, the reality was China had been invaded repeatedly; “carved up like a melon” was the language that was used in the nineteenth century. There was in fact a… and it is really interesting because it used to be the Party of course would not want to talk about moments when China had suffered and had failed, but in fact now that was used as a constructive part of forming the identity. So that’s the foundation on which people are engaging these issues, they are remembering that China has in the past when it is not vigilant, when it is not standing up for itself, it has been abused by the outside world. So that’s very fertile territory for the government to invoke that message if it wants to. So in a moment like this, when you’ve got the economy slowing down, you’ve got young, educated, white-collar college graduates looking for work and unable to find it, they’re feeling as if the promise that they have been given, that they were raised with, has not yet been fulfilled for them. They don’t have the house and the car that they need in order to get married, for instance. And so one of the ways that you can explain it, one of the ways that you can reframe the conversation, is by focusing on the threats from abroad.

38:32: Before we came down here, we were watching this movie, yeah, if you were wondering the glamorous life of China hands, we were watching this Chinese propaganda movie on the computer called “Silent Contest,” which is this… quite… (I recommend anybody to watch it. You can find it online,) it is actually quite a remarkable thing. It is a film that is designed to indicate and to demonstrate the ways in which foreign institutions like think tanks in Washington and the Ford Foundation - things that we don’t think of necessarily as being in the China threat business—it creates a narrative in which they are posing an imminent threat to the prosperity and the security of China. And this is a narrative that we have seen grow over the course of the last two years and this sounds like, this is not a helpful solution, but I don’t think there is all that much we can do in the United States to reassure China that we are not actively seeking to undo them because I don’t think that we are driving this narrative. This narrative is being driven for domestic reasons, and I would also add I think it is a very dangerous narrative, when you start rallying nationalism at home, and you start bringing people into the streets; we watched it in 2012, there were protests in streets against Japan. Those protests can very easily turn in another direction; and they can turn against, first, local authorities, then higher ranking authorities and eventually against the system itself.

39:55:

And I once had a really interesting conversation with a professor at Peking University who said you know, you guys in the West always think that there are buses that carry the students to the nationalist protests—which is true; but he said, you interpret that as the government backing these protests and trying to encourage them. He said, “you don't get it.” The reason they do that is because otherwise people will get distracted on the way and maybe start protesting other things. So the danger of nationalism is very present at the same time that is it a potent and quite reliable political tool.

40:34: Orville Schell: So, Stape, you’ve watch this over the decades, what do you think the remedy is for this sort of incipient, anti-foreign sentiment that often bubbles out in this idea of sort of conspiracies being hatched up abroad to thwart China’s development and rise?

40:55: Stapleton Roy: The way you ask the question raises a point that Dr. Kissinger likes to make which is that the Americans think there is a solution to every problem, and the Chinese think that there is a process that has to be managed but there is not necessarily a solution. So you are saying what would I do to fix the situation.

41:16: Orville Schell: How do you view it, I mean is this…

41:18: Stapleton Roy: Well the way I view it is this: first of all, Susan makes some important points and from a values standpoint, I am entirely on her side. But I am not impressed of the ability of Americans to run China. Americans actually has substantial influence over the opening and reform process in Russia and look at what we got. We supported democracy in Egypt, and we got it, and we got President Morsi.

41:50: So in other words I think when we try to put ourselves into the posture of saying “they ought to be running their country this way,” this is like a bunch of Saudi Arabians sitting around and saying “we are really concerned about the influence of the religious right in the United States, what should we be doing about it?” Believe it or not, I have been in that type of conversation in Washington, where people waste their time, wondering how they can influence things that are totally outside of the perimeters of their ability to affect it.

42:24: Evan Osnos: Though the Saudis and the Tea Party might actually have a lot in common.

42:25: Stapleton Roy: Well, I dream of having the Saudis running New England with only eighteen of them who speak English, because that’s what we tried to do in Iraq. We only had eighteen Arabic speakers and the 800 Americans we sent in to run the place. So I think we have to let China run itself, and I have what’s called a “quantum theory” of foreign affairs. Quantum mechanics deals with the minutiae, unlike relativity it looks at the grand picture, and it turns out when you look, go deeper and deeper into situations, you find there is total chaos down there. And when you look at the minutiae of China, you see all sorts of chaotic factors there, but what if you step back?

43:17: I look at this table, which is based on total chaos at the subatomic level, and I see a table, and when you look at China…

Orvile Schell: You’re getting pretty deep here, Stape.

Stapleton Roy: Let me conclude my point. Step back, in a quantum sense from China, and look where it was in 1978, and where it is today; with a GDP that is rapidly going to overtake that of the United States, with a large middle class, with literally hundreds of thousands of Chinese educated in the United States. The whole nature of political debate in China has changed over the last thirty years, because you now have people at every level of government, at the provincial level, in universities, in the business community, who have spent years in the United States and have been educated here. To me, these factors are far more important than the factors that Susan cites, in terms of the likely future direction of China, there is going to be a struggle in China, between what I would call the modernizing forces and the anti-modernizing forces.

Oville Schell: ‘Twas ever thus.

Stapleton Roy: What? ‘Twas ever thus.

44:33: Susan Shirk: I think that struggle is really quite acute right now, so that… that is why the situation is so tense. I think that opinion inside China has become quite polarized on these issues.

44:51: Stapleton Roy: I agree with you on that, I think that is what Xi Jinping is trying to deal with.

44:53: Susan Shirk: Well he sort of created it, in a lot of ways.

44:55: Stapleton Roy: Well, I began by saying that there is fundamental contradiction between trying to modernize the country and retain a pre-modern form of governance. So the more he is successful in the modernization side, the more acute I see the contradictions becoming.

45:16: Orville Schell: Do you see an alternative?

45:17: Stapleton Roy: Yes, well, I go back to a wonderful Mao Concept, he had two concepts that I think are worth paying attention to and throw the rest away. One was, basically governments and the party should serve the people, I like the idea, I was a public servant for years; and the other was his essay on the correct management of contradictions. Americans think that we should deal with the world in terms of principles and rights and responsibilities, and I think it’s much more sensible to think of it in terms of managing contradictions. You know, equality and… what?, opportunity in a sense is contradictory, because opportunity creates inequality, and you have to manage that contradiction. And I think that’s the problem Xi Jinping is struggling with. The difference between China right now and us is that China is trying to manage that problem with people who have decades of experience dealing with problems of governance in China. China would have collapsed or fallen apart a lot sooner if it was selecting its top political leaders the way we do, where you can move into top positions without any of the requisite experience or background necessary to deal with these problems. I’m very serious on this. China runs itself like a large corporation, it pays careful attention to succession issues, it is highly competitive to move in to the top level of governments, and everyone on the top levels of governance in China has literal decades of heavy experience of dealing with the problem of running China.

46:59: Orville Schell: How do you think they are doing in shareholder value?

47:02: Stapleton Roy: I think that if you invested in China thirty years ago, then you would be wealthy.

47:06: Evan Osnos: Though I do think that you could also make a case that the fact, and I agree with you that the experience they have in governance is to their benefit and particularly in a situation as complex as it is, on the other hand it also makes them incredibly invested in the existing arrangement as currently constitute. So even an intelligent, self-interested reform becomes even more difficult. The other thing I think that it precludes is a softer factor, but an important factor, which is the inspiration problem; which is that they are failing to inspire people at the moment, and it matters because there is now the apparatus for people to share information and emotion in a way that just simply didn’t exist before, and that takes on an energy and it is political dynamic that I think they have not yet figured…

47:54: So you’ve got these guys who are still technocrats and highly capable but I think they are having a hard time acclimating to the reality around them.

Stapleton Roy: I agree.

Evan Osnos: And they don’t have the time unfortunately, you know, we’ve talked a little bit about time, in the end, if Xi Jinping can work out his own created contradictions, then he presumably can win, right? But Deng Xiaoping had three years after his Plenary session before people even needed to know what was happening; Xi Jinping may not have the luxury of that, in the sense that things are happening so fast now, that he will be…

48:26: Stapleton Roy: It’s a new ball game, I mean, literally, you refered to this in your remark and it’s absolutely right. He now gets instant feedback from the Chinese people, because of the way the media is operating in China, and that inevitably requires changes in the nature of their governance. And the question is: Can they continue to manage that? I was in Indonesia as an American ambassador in 1998, when the system that Suharto had set up collapsed, because economic growth, which he had delivered for thirty years, was destroyed by the Asian financial crisis, and that took his legitimacy away. This is China’s problem. If there is a sharp economic slowdown, the legitimacy of governing system which rests on performance, is gone.

49:14: Orville Schell: So let’s talk about that just a minute, because it is so crucial to everything that happens. Here we have a country, which against all odds, ignoring all Western development models, did find a way to develop on its own. And it has been going on this onward and upward trajectory now, you could say with the exception of 1989, for three decades, or at least almost twenty-five years now. What are the chances? I mean just the odds, never mind the realities, of this being able to cohere a lot longer and if it doesn’t, is there the structural wherewithal to get through an economic downturn, of significant proportions?

50:02: Susan Shirk: Well, I mean economic growth will slow, inevitably, because of demographics, because this big bulge of working age population is getting older, one-child family, you know, so it’s inevitable, that growth will slow. Also, China took off with this very steep takeoff because you had a closed, centrally planned economy, with a quite well educated labor force, mostly agricultural. You say, okay now you can enter the market and you open to foreign trade and investment, and it just goes—whoosh—very steep takeoff, and it has been great, but, you know, it has to slow down, I mean, just economic logic…

50:55: Orville Schell: But it also can do more than slow down.

Susan Shirk: Well, yes, it could go off a cliff, I think, I personally think that’s much less likely because despite all the debt problems, the real estate bubble, you know, we can all list the terrible problems facing the Chinese economy, they still have a lot of levers, and a lot of ways to do a shell game, and convert dirt debt to non debt. And you know government responsibility in different ways and before you know, it will look a lot better. So you know I know there are people who are very bearish and think that they are on the brink of a collapse, but I don’t see a run on the banks, or anything like that, but growth will slow.

51:56: But you know, I think people in China, of course they care about jobs, for sure, but they also care about the environment now, which is of course deadly, and they care about food, medicine quality, I mean when you leave Beijing and go out to other parts of China—small towns or cities or other parts—people are really fixated on this quality of life issues. That’s what their care about: that their families will be safe from harm. And they don’t trust anything, they don’t trust anything Chinese. So that’s why they want to get baby formula from other places, that’s why they want to get Japanese paint for their apartments instead of Chinese paint, there is no confidence. That’s really corrosive and I don’t really know how you restore confidence in your own system, and I don't see Xi Jinping, I don’t see anything he is doing today, addressing those sorts of concerns.

53:08: Evan Osnos: I think that the… I mean I absolutely agree with what Susan is saying. The problem now is that people have a thicker conception of “the good life.” You know Deng Xiaoping famously said that “Development is the only hard truth.” What he meant by that was that everything in the end has to be evaluated on the basis of “Does it contribute to economic growth?” And that concept now looks like a Studebaker; it just cannot keep up with the country as it’s arranged today. People want these other things. And, you know, you said, “Can he figure out a way to do that?” I think there are ways that you can demonstrate to people a system that they can trust, and there are… and this is where we are now getting close to the bone, which is: it is about rule of law and transparency. And this is where we have to start talking about the System, with a capital S, because is it possible to graft rule of law and transparency onto a one-party system? I ask that as a question. Because I am not convinced. At the moment, they don't know how to do it. And I think the distance between lip service and reality is growing and people are aware of it. And you know if people living in a neighborhood in Beijing get up in the morning and say that they actually care about rule of law they didn’t used to care about rule of law in a meaningful way. It was an abstract problem. What they cared about is getting food on the table and they want stability of a reasonable kind in their lives. They’ve now got enough of those, they are okay on those and they really want the other stuff. And Xi Jinping…, I think he gets the problem. This goes back to what I begin with, which is I think he understands how grave this crisis is, that it’s not just a timing problem, it’s not a policy problem. It’s a fundamental problem.

55:03: Orville Schell: Before we open the questions to you all, let me just ask you three: do you think this new leadership is going to be able to deliver on enough of the things we have talked about tonight to sort of elide itself over through a peaceful ten years that is moving sufficiently forward in enough constructive ways to keep people happy? Susan?

55:25: Susan Shirk: Well I am trying to give Xi Jinping the benefit of doubt; I know it doesn’t sound that way from what I have been saying. But you know I really, I am watching to see what happens with this economic reform, because every economic reform, you know, needs a political strategy, and part of it is to have a strong leadership. But then there is a lot more to it than that. There is building constituencies of support for the reform, by creating vested interest, new vested interest in reform, and if you structure things right, as they did in the 80s and the 90s, you can do that. So I am sort of watching to see whether or not Xi built himself up as a strong leader, so now he can carry out a third wave of economic reform which is successful and if he can do that then I think he’ll save his administration, and he will buy China more time.

56:54: Stapleton Roy: I basically agree with where Susan comes out. I think that the contradictions in China are getting more difficult to manage; I think that their leaders are very competent in trying to manage this. But then at some point, the contradictions may become unmanageable.

57:15: Orville Schell: You think their tool box has enough variety of tools or do you think they are too beholden to the old things they know to actually remedy these problems?

Stapleton Roy: That’s part of the contradiction. My own sense and this goes back to some things we have done with Chinese, a symposium we’ve had on reorganizing the government for example. I come from Washington where Republicans and Democrats and everybody else talks about the dysfunctionality of our government. The fact that you now require sixty percent of the vote in the Senate for simple things used to always require fifty percent of the vote. And when we have this conference, the Chinese reaction was, well if something doesn’t work we change it; and the American reaction was a lot of things aren’t working in Washington, and we have no way to change it. The Chinese mindset is if it doesn’t work, you experiment and find a different way of doing it. And I think that gives them a flexibility that we desperately need in our own system, in order to deal with some of the problems that we have created on the government’s side.

Orville Schell:Isn’t that a paradox?

58:29: Stapleton Roy: I think the problems we have to deal with are infinitely easier to deal with than the problems of Chinese leadership is going to struggle with over the period ahead.

But I think that the Chinese leadership, so far, has shown an ability to change. I mean to me… one of the statistics I just love to cite, is that in 1982, which isn’t that long ago, there wasn’t a single university educated member of the Chinese Politburo. And now essentially all the members in the Chinese Politburo are university educated, or have the equivalent level of education.

59:04: Think of another country in which you’ve had that type of a change in the nature of the people who run this authoritarian system. This is one of the reasons China hasn’t collapsed. And as long as they are able to keep adapting, I think there is a chance they can, as Susan said, buy time. But I don’t think it’s infinite time. Everywhere else in Asia, forty years of rapid economic development have produced movement from authoritarian systems, to representative forms of governance. Without exception. South Korea, Taiwan, Thailand (which showed there can also be some retrogression), Indonesia. China is a much bigger country, is it subject to the same law, the same time frame? Don’t know.

59:54: But if you date the rapid growth from 1992, there are only twenty years into the process, and what we are seeing is those precise types of contradictions are beginning to drive the internal debate in China. And I think they are going to become stronger down the road, and hopefully they will have leaders smart enough to realize they’ve got to include political reform in order to manage continued economic reform.

01:00:02: Orville Schell: So Evan, are we looking at not so much a new model for development of, maybe call it authoritarian capitalism, but a transition, or do you think the Chinese have actually pioneered some unique system that is kind of Socialism with Chinese characteristics which against all of the naysaying of Westerners ten or twenty years ago, has served them pretty well?

01:00:46: Evan Osnos: Not yet. I don’t think they have actually had… they haven’t had the moment in which they need to redefine the survival of the party. What they have done between 1978 and now is tolerate paradox, tolerate contradiction, they are willing to accept the idea, that there is such a thing as Socialism with Chinese characteristics. The reality is today they are not living in Socialism with Chinese characteristics, but I agree with Stape that I think it is entirely possible and I think it actually has been demonstrated, that China has the capacity, to decide when it is up against the wall, which part of it it is willing to give up and which part it is willing to maintain. And in 1978 Deng Xiaoping said “we are giving up essentially the scripture, we are giving up socialism, and we are going to hold on to the saints, we are going to hold on to Mao, we are going to hold on to the leadership of the Party.”

1:01:43: And that has worked. But I think there is a certain point at which, in pretty practical terms, they have to open up the information culture. The frustration that people feel on a day to day basis, which is used to be abstract, you didn’t know what you were missing, when you pick up the newspaper and didn’t know what was being written about. Now you go online, anybody can go online, and feel themselves being censored. And when you have this much liberty in your economic life, it is very hard to accept that kind of small beer[?], small ball humiliation. It just doesn’t feel very good, and they need the support of those people.

1:02:17: So I think they have to open up information culture in some way, and I think also they have to go after corruption. I think that the tigers and the flies, what matter are the flies. I think the tigers are useful for the newspaper but in the end, the things that bother people, the corruption that really irritates them, is that when they open up a business, that they can’t make that business work because the guy down the street’s been able to play the system in a corrupt way. So that’s where they have to go. I actually think that our focus should be on how much they are doing systemic corruption fighting at the lowest level, because when that starts to happen then they will restore some faith from their own people. So I think it’s possible.

01:01:53: Orville Schell: There will be microphones, and we have a few questions coming from the web. So while we are finding a microphone let’s try one here. “What surprised you most in a positive way about Xi Jinping so far?” Let’s make these answer short. Susan?

01:03:09: Susan Shirk: In a positive way?

Orville Schell: You want to think about it a while?

Susan Shirk: I mean, stylistically, especially at the beginning, although now it just seems more traditional the way he pays his inspection visits and everything, it is just like out of the old textbook of the Chinese Communist leadership…

01:03:33: Evan Osnos: There’s a little bit too much Kim Jong-il pointing at things that we were seeing in there.

Susan Shirk: So I mean but originally, you know, sharp wife, more normal way of speaking, all that kind of thing, I guess that’s the main thing that impressed me in the beginning, but you know, as I think I have made pretty clear, I have been disturbed, by more of his actions than I have been impressed.

01:04:10: Stapleton Roy: Just to expand on the point Susan made. In terms of policy lines and the way he is trying to deal with the things, I couldn’t have written the script, but I don’t find anything surprising in the way he’s tried to do it. But I do find that his personal style, I think, is easier to relate to than that of his predecessor, who was much more uptight in his way of dealing with both issues and people. Xi Jinping has an easy sense about him, he showed it in that first press conference when he came out with the other leaders he showed that all of his appearances, he doesn't want to speak from scripts all the time, he is able to ad-lib and talk freely. He is somebody who seems to be comfortable with himself and comfortable with the issues that he has to handle. And I find that a positive factor in a leader.

01:05:08: Evan Osnos: I think beyond style, which we have talked about, I think he also understands how serious the problem is. That is very important. In the sense that he is talking about it, there is a second half of this which I will talk about, that he is setting expectations high, because he knows he has to set expectations high. He is talking about a profound revolution in this third Plenary session. He is kind of talking about comprehensive reform. His predecessor in that generation talked about very cautious—everything is about caution, everything is about moving slowly, he is saying he understands that they have to make a big change. Look, I think in the end it will be hard for him to then fulfill those expectations, but I think he is doing the right thing by acknowledging that people expect a major break, not just more of the same.

01:05:57: Orville Schell: Okay questions from you all, let’s see right there, at the end. Quickly say who you are.

01:06:06: [AUDIENCE] Bill Crane, I’m just sort of a commoner in the audience. Interestingly, the minority issues of China we are not mentioning at all this evening, and my question is the Tibetan issue and the Uighur issue. Is this minutia or is this going to be a significant problem in next ten years?

01:06:29: Stapleton Roy: I will take that on. I think it’s going to be a significant problem. I think that these are difficult problems to deal with, but the method that China has used to deal with them is essentially a failure. The problem is not getting better in the case of either the Tibetans or the Uighurs in making them feel comfortable as part of China. And that’s because they don’t have a sense... I mean both of them both live in so-called autonomous regions, but in fact that’s not an accurate description of how their regions are actually run. The Chinese who are very skillful in diplomacy in some areas are total failures also in their diplomacy in dealing with these problems with Tibet and Xinjiang, because it illustrates the political science principle that domestically driven foreign policies are always out of touch with reality. I’ve watch for forty-plus years their effort to explain their Tibetan policy, and they can’t persuade a single foreigner of the validity of the Chinese position. So I think this is an area for China to revise its approach in very significant ways.

1:07:59: Now I will make one point however, which is we tend to look at these issues through a very narrow prism. I was shocked to discover some articles in Indian newspapers that were talking about the enormous economic development taking place in Tibet, and contrast it with the absence of development in the border areas of India, and we don’t talk about development of Tibet in this country, all we talk about is the religious and ethnic problems. So I think perhaps we need a more sophisticated understanding of the situations, but on balance they have disaffected populations in both regions, and it’s a direct function of the policies they have been pursuing and they need to change them.

01:08:53: Orville Schell: Here is a question: “Was the recent Tiananmen Square blast right in front of Mao’s portrait really a terrorist attack?”

01:09:03: Stapleton Roy: Yes, by any definition. Terrorist attacks are attacks… it has nothing to do with the validity of the cause, it has to do with what do you take actions that put innocent people as the victims in order to promote your cause. That’s terrorism. A freedom fighter who kills a stewardess in order to hijack a plane and flee the country, that’s terrorism, I am sorry, it not a legitimate active of a freedom fighter.

01:09:33: Evan Osnos: I did have an idea after seeing that, though I thought to myself you know that they generated positive… You were mentioning about, how to persuade the rest of the world, that there is logic in policy, and how this trouble they have doing that. What if—they’ve now arrested people in this case in Tiananmen Square—what if they decided to put them on the trial that is as open as the trial that Bo Xilai received? You don’t have to go beyond that, don’t set a new standard, but what if they said “We are going to do a transparent, reasonably transparent trial of our terrorism case.” I think that would change the debate a bit, it would be very interesting to see what would happen. But I don’t think they will do it.

01:10:08: Orville Schell: Unlikely, given the film we just saw which had about fifteen minutes criticising Gorbachev’s policy of Glasnost and Perestroika, it seems very unlikely.

Evan Osnos: Yeah, I mean they are conscious of that experience, they talk about that all the time that Gorbachev did not deal with it, as they say, he didn't deal with Kazakhstan correctly and Kazakhstan is their Tibet, and everything fell apart from there.

01:10:33: Orville Schell: Okay, another question, how about right here…

01:10:38: [AUDIENCE]: My name is Dave Grinbaum[?] I am a journalist, my question is: you talked a lot about the threat that Xi Jinping sees. In the next nine years, unless he is going to get caught directly in a scandal, short of that, is it realistic that there could be anything that would threaten his hold of the leader, I mean enough of a revolt that would threaten his role as the leader or the Communist Party’s grip on power?

01:11:09: Susan Shirk: Sure, you know, if we were discussing the Soviet Union, you know, back in the 1980s, you know, we would not be able to imagine that the Communist Party of the Soviet Union will fall and that the whole country would disintegrate. So things can happen. These types of systems are at greater risk from splits in the elite than they are from a bottom-up revolution. So we are all paying close attention all the time how many protests there are, and public opinion, and even the potential of collective action organized through the Internet, things like that, and by the way, the leaders are paying close attention to that, too, they are very worried about that.

1:12:07: But they are also worried about how do you maintain unity at the top. And the Bo Xilai affair demonstrates that some ambitious politician can try to change the rules of the game, and could jeopardize the power of the individuals at the top or even the whole system. So it would be so easy for an individual or a small group of high level officials within the party to decide that things are just going really in a bad direction, they haven’t got as much as they deserve, personally, and they want… Maybe it’s a crisis when there is a lot of unrest over some issue in the country, an environmental disaster or something, then, you know, a leader could basically step out, post a manifesto on the Internet, and see what happens. So, I think these sort of things are very unpredictable.

01:13:27: Orville Schell: I think we have time for one more question, let’s see right here…

01:13:46: [AUDIENCE]: Hello, Johannas Vantertine, Credit Suisse. Quick question, you mentioned the tigers and the flies, and since the tigers grab all the headlines these days, there have been some high profile pressure on people affiliated with the state-run oil companies specifically, which I think that the Ambassador had referred to earlier in the conversation. How much is that part of the greater corruption campaign and how much is it possibly part of wanting to deal with state interests in the SOEs and any sort of economic reform that might come?

01:14:27: Stapleton Roy: Those are tigers really, and these were not low level functionaries in the state oil companies, these were very senior officials who had a long pattern of association with the former standing committee of the Politburo member. The short answer is I don’t think it should be looked at in the terms of state enterprise reform. The campaign is partly aimed at corruption in the military, is partly aimed at corruption at the upper levels of the economy, which brings in the state-owned enterprises, and it applies pervasively at lower levels. At lower levels much of the corruption are the sorts of things you are talking about, I mean one of the first actions by Xi Jinping was to come out with these eight guidelines, that officials should not stay in luxury hotels, they should not have motorcades, you shouldn’t close off streets, you know, in order for officials to have the luxury of moving easily from one place to another, there are a whole list of things that were designed to urge the party to have a simpler lifestyle. And people who don’t obey those guidelines are in danger of being pulled in at the fly level for violating these things. But at the same time my guess is at senior levels there are a lot of people who are very, very nervous that the spotlight will turn to them, and there is virtually no one in China at high levels who under a spotlight would not reveal some things they don’t want revealed.

01:16:15: Susan Shirk: But can I just say a one quick word, although I agree with Stape that I don’t think the objective of the anti-corruption effort against Zhou Yongkang and his associates in the petroleum group is designed to weaken the state-owned enterprises. It may have that effect, because we’ve also gone after the railroads… You know a lot of the commanding heights state sectors have been criticized for corruption and that may put them a little bit more on the defensive and less able to resist a third wave of economic reform.

01:17:15 Orville Schell: I think maybe we will end in here. Clearly we are at an inflection point. And in the next few days you all want to watch carefully what comes out at this Third Party Plenum, a rather dull sounding name. But this is the time of every new leadership when big policies are annunciated. Now it could be that they will annunciate them very softly, and then do them, write them slightly larger because in the new scheme of things to talk too loudly, too boldly, too clearly about things is sometimes counterproductive.