• STRATFOR ANALYSIS

    How China will escalate the anti-corruption campaign

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    FORECAST

    In spite of limited resources, the Communist Party of China will meet its unprecedented anti-corruption targets for 2016.

    The stepped-up investigations will yield increasingly cutthroat power struggles.

    President Xi Jinping will manage to use the anti-corruption campaign as he has in the past to intimidate and eliminate potential political rivals before the 19th Party Congress in 2017.

    BEIJING’S normally passive political factions are on the move. Usually, they must lie low to avoid unwanted attention or being singled out as a threat. But in 2016 this passivity will become a liability. The 19th Party Congress will begin in October 2017, bringing the retirement of several top officials and marking the halfway point of Chinese President Xi Jinping’s tenure as the Communist Party’s general secretary. The networks of power that form — or break — in the next year will determine the shape of China’s next political order.

    Xi, however, has prepared for the coming order. In 2012, he launched a nationwide anti-corruption campaign, which he used to eliminate his rival, Bo Xilai, and capture the presidency and the position of general secretary. For four years he has been steadily rooting out barriers to his power throughout the government. In the coming year, Xi will escalate this campaign to unprecedented levels.

    The Central Commission for Discipline Inspection (CCDI), already stretched to its limits, now plans to push the campaign even further. The agency announced Dec. 6 that it would finish inspecting all 280 government bodies by the end of 2017, having already investigated 149 since late 2012. Of the remaining 131 organizations, the CCDI will investigate at least 100 in 2016. Although it will severely tax the agency, the target is feasible. However, the hectic and broad CCDI investigations of 2016 will likely force targeted groups to take desperate action, including bribery or murder, and will enable ambitious cadres to hijack the process to further their own interests. Xi will need to proceed carefully to avoid destabilizing the party structure while strengthening his hold on it.

    Current capabilities
    Xi’s ambitious anti-corruption plan for 2016 will be impossible to meet under the CCDI’s current procedures and personnel. The agency will need to perform roughly two-thirds the number of inspections it has carried out since 2012, all within a single year. At the moment it is not equipped for such a task. The CCDI only has 15 investigation teams, each of which is assigned two targets per round of inspections. These inspection teams are assembled on an as-needed basis to minimize corruption and co-optation. Each round of inspections lasts two months, with a space of a month or two between rounds to allow investigators to rest and prepare for their next mission.

    The CCDI has completed three rounds per year since 2014, suggesting that the agency can theoretically carry out 90 inspections per year, though it has never conducted that many. The CCDI’s 2016 plans would mean pushing the number of inspections up to 100. While this expansion might not seem difficult, one needs to keep in mind that the organization’s current capabilities are the result of a tremendous expansion of investigations in 2015, when each team was ordered to double its target set. Thus, 2015 stretched the agency nearly to its limits; 2016 will mean pushing beyond them.

    That said, the CCDI has options. The anti-corruption agency itself is directly responsible to the Communist Party, but there are commissions for discipline inspection (CDIs) attached to lower-level party organizations, including local governments and state-owned enterprises. They play a key role in maintaining a permanent presence in lower-level organizations and can initiate their own investigations. The CCDI can deputize these teams to support its efforts. And because they are permanently embedded, CDIs have deeper local knowledge and can watch out for the kind of passive resistance to reforms that is harder for the CCDI to spot.

    The CCDI has already prepared for a situation in which it would have to rely on the smaller CDIs by tightening its control over them. In the spring of 2015, the party adjusted personnel appointment guidelines to make CDI personnel beholden to the CCDI, rather than the organization in which they were embedded, for career advancement, changing the incentive structure. This was followed up on in August, when new inspection guidelines formally changed the CDIs’ relationship with the CCDI from one of “guidance,” in which the CCDI offered informal instruction, to one of “leadership,” in which CCDI was formally vested with the authority to give them orders. But that authority can only go so far. The lower-level CDIs are still vulnerable to being co-opted by local interests because of their ties and different incentive structure.

    Ramping up again
    To complete 100 inspections in 2016, the CCDI has a number of options. It has deployed each of these before to achieve its current tempo, and it will need to revisit them if it is to meet its new target.

    The first option would be to simply expand the number of teams at its disposal, something that has already occurred twice. In 2013, the CCDI had only 10 inspection teams. The agency expanded to 13 teams in 2014 and to 15 teams for the final round of inspections in 2015. However, the CCDI has ruled out expanding teams in the short run, saying that the strength of its inspection teams is fixed.

    The second method would be to expand the number of targets assigned to each team beyond the current amount of two per round. The CCDI expanded the targets under simultaneous investigation from one to two in 2015, when Politburo Standing Committee Member and CCDI Secretary Wang Qishan announced the inspection of 26 state-owned enterprises, tremendously expanding the anti-corruption campaign and the CCDI’s workload. The agency compensated by stretching the inspection timeline out from one month to two. Expanding once again may not be realistic and would strain the organization. Doing so would require time and preparation — and possibly delays.

    The agency could also change the format of its inspections, which it tried in mid-2014 when it introduced “special inspections” lasting a month per target. The schedule was much shorter than the three months that had been allocated to each round of inspection in 2013 and early 2014. The key difference is that the special investigations were much more focused; investigators relied on information gleaned from previous inspections, anonymous tips and local CDI inspectors.

    Lastly, the CCDI could try to conduct more inspection rounds by cutting out gaps between rounds or shortening the rounds. But an increase in the operations tempo would by necessity require shortening either the preparation period or post-investigation work, if not the inspection rounds altogether.

    Changing the format of inspections once again appears to be the CCDI’s best option, and it has admitted as much, publicly stating that limited bandwidth will require it to develop innovative methods for inspection. The precise nature of this streamlining is not yet clear, but the CCDI will find a way to make it work, just as it did at the start of 2015 when it doubled its inspection targets per round from 13 to 26. But compressing the timeline and scope will come with serious consequences and could mean sloppy or incomplete investigations.

    Reverberations in Beijing
    Meeting the anti-corruption campaign’s goals will inevitably take a toll, both within the CCDI and, more important, on the Communist Party and government as a whole. As more and more political factions are scrutinized and possibly eliminated, many will become desperate. As in the past, targets will probably offer enormous bribes, both to the increasingly strained inspection personnel and to the lower-level CDIs that support them. Investigation targets could also retaliate with violence, as they did in the murder of investigators in Shantou in 2000. Such violence would lead to serious trouble: In the case of Shantou, Beijing dispatched 1,000 corruption investigators to conduct an intense campaign of raids in the city. But already in 2015, there have been mysterious deaths connected to corruption investigations. With the pressure ratcheted up in 2016, more might be compelled to risk the consequences of violence.

    Political factions could also take advantage of the hectic, paranoid atmosphere to hijack the investigations for their own gain. Xi certainly has numerous targets lined up to further centralize control. Other ambitious party cadres may also now try to turn the CCDI on their rivals by releasing critical leaks and tips. These moves could escalate into cutthroat power struggles that may have unintended consequences if they are allowed to get out of hand.

    Regardless, Xi and the CCDI will push forward with the new inspection targets. The 19th Party Congress is simply too important for Xi, who must staff the party with his allies while freezing out his political rivals. For each budding or established political faction in China, the risks ahead of 2017 are great, but the rewards are greater.

    ©2015 STRATFOR GEOPOLITICAL INTELLIGENCE

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