China’s TV And Film Industries: Unexploited Soft Power

A report crosses this Bystander’s desk from Oxford Economics, a consultancy commissioned to quantify the economic impact of China’s film and TV industries. The commission comes from the Motion Picture Association of America, Hollywood’s lobbying arm, and the China Film Distributors and Exhibitors Association. It is, no doubt, intended as an opportune prod in the direction of more opening of China’s domestic film and TV markets by emphasizing the potential for growth at a time when boosting cultural industries and “going out” is to the forefront 0f Beijing’s mind.

The reports lays out quite how significant, fast-growing, and promising the industry is — as would be expected in a country with a large population, strong economic growth and rising incomes. Oxford Economics tots up for 2011 a 100 billion yuan ($15.5 billion) contribution to GDP, 909,000 jobs and 22 billion yuan in tax revenue from the industry directly.

Taking into account the multiplier effect across the rest of the economy, the report boosts those numbers to a 272 billion yuan contribution to GDP, 4.5 million jobs and 57 billion yuan in tax revenues. That later GDP number is equivalent to 0.6% of total GDP, similar to the contributions of  the computer and telecoms equipment industries. Where the film and TV industries are much different is in their level of exports. Total exports in 2011, Oxford Economics reckons, were 2.3 billion yuan, 90% of which was accounted for by film. The telecoms equipment makers did more than 10 times as much each quarter.

Cultural exports are these days a central part of a country’s soft power — as Hollywood’s bear testament, just as much as do China’s tight quotas on foreign film imports. While the leadership in Beijing is now paying more attention to this aspect of China’s global projection of itself, China has not been able to convert its popular arts and culture into an arm of diplomacy in the way that, say, its neighbour South Korea has. Hallyu,  a mix of popular South Korean films, TV, food and K-pop music culminating in the Gangnam-style phenomenon, has proven to be an extraordinary calling card for the country. South Korea has risen to 11th on Monocle magazine’s annual ranking of soft power, a list on which China doesn’t make the top 20.

It has also made South Korea a destination for cultural tourists, particularly from the rest of the region. What little film and TV tourism there is in China is local and localized. That is a hugely untapped opportunity, the Oxford Economics report suggests, treading safe ground rather than venturing into the deeper waters of exporting cultural values and projecting soft power. In the same vein, it casts the impact of hallyu in the light of domestic tourism within South Korea.

The unsaid part highlights another difference between South Korea and China, whose state-planned cultural exports have focused on traditional high-culture aspects of China’s arts and heritage, as might be expected of programmes devised by government officials and intellectuals. South Korea’s cultural image is very much a reflection of its contemporary and popular culture, which is driven, for better or worse, by a commercial market. China, where even popular TV is sanitized for social correctness, doesn’t have such a readily accessible and identifiable non-political contemporary culture, or the rambunctious marketplace to nurture it.

China Is The World’s New No. 1 Nation Of Tourists

A Chinese in Paris. Source: Wikimedia Commons

China is on the move as never before — as tourists. For the first time Chinese top the ranking of the world’s top tourism spenders compiled annually by the U.N.’s World Tourism Organization (UNWTO).

Chinese spent $102 billion on travel abroad in 2012, a 40% increase on the previous year and a fivefold increase in the number for 2005. Last year’s increase was sufficient both to leapfrog the Americans and then the Germans in to top spot. It was also sufficient to pass the $100 billion mark for the first time. In 2005, China ranked seventh, behind Italy, Japan, France, the U.K. as well as the U.S. and Germany, with a spend of $21.8 billion.

It is not just the country’s rapid growth that has made it the world’s fastest growing source of tourists over the past several years by putting more disposable cash in the pockets of Chinese, a phenomenon seen in the other Brics, too. There has also been an easing of travel restrictions and an expansion of the country’s urban middle class, which has taken to foreign travel (and shopping) as if to the manner born.

UNWTO counts a more than eightfold increase in the number of foreign trips made by Chinese travelers last year compared to 2000, 83 million versus 10 million. In recent years, a strengthening yuan hasn’t hurt their purchasing power, either.

Inauspicious Beginnings

A new strain of bird flu and a new strain of Kim. Both unknown quantities and potentially deadly. Not the way any new leadership in Beijing would want to get underway.

China’s Urban Margins

Mostly anything with a $6 trillion price tag catches our attention. China’s new leadership plans to spend that much on infrastructure over its decade, with urbanisation the focus as an engine of economic growth.

Lucy Hornby and Jane Lee writing for Reuters underline the Achilles heel of such plans: cheap, shabby and often sub-standard working class — in China’s case, migrant worker — housing gets bulldozed to be replaced by expensive high-rise apartment blocks that the displaced can’t afford. The always promised affordable housing rarely materialises.

Some 350 million more Chinese are expected to move from the farms to the cities over the next two decades, completing one of the most remarkable transformations ever of a country from a predominately rural to a majority urban population. China isn’t the first country to face the problem of providing affordable housing for city workers, or of trying to strike the right balance in the provision of public and private urban housing. At the same time it has a rare opportunity, and the money, to build sustainable, efficient and livable cities.

Unlike most industrializing and emerging economies China has avoided large-scale slums in its cities. That is not to say that people aren’t living in makeshift accommodation, crowded and sub-standard tenements and dormitories that are no more than sub-divided rented rooms. Officials in places like Shanghai may be embarrassed to have residents living in old shipping containers (though it is possible to turn even those into designer homes), but the harsh reality of urban life is that many residents live on the margins. Even $6 trillion won’t change that for most of them.

‘Live TV’ Execution Of Mekong Murders Mastermind Stirs Controversy

China’s execution of Naw Kham, a drug lord convicted of masterminding the execution-like killing of 13 Chinese seamen on the Mekong River in October 2011, has whipped up a storm of controversy for its lead-up being carried live on state TV. Laos had extradited Naw Kham, a Burmese, and three of his gang, one Thai, one Lao and one stateless, to China in May 2012. They were convicted and sentenced to death by a Kunming court last November. CCTV, in a live two hour broadcast, showed the men being taken from their cells and subsequently prepared for execution by lethal injection. It did not air footage from inside the death chamber.

Naw Kham being handed over to Chinese authorities in May 2012

Condemned criminals were once commonly paraded before their execution but the practice is now rare, and certainly on live TV. Yu Guoming, a professor at Renmin University’s School of Mass Media, was quoted as saying the broadcast was a response to widespread outrage in China over the brutality of the killings, as well as an attempt to emphasize the heinousness of the crime and the efficiency of China’s police and courts in doling out justice. Civil rights activists have criticized the broadcast as an affront to human dignity.

The broadcast was also likely an attempt by authorities to reassure Chinese that their government is paying attention to the safety of its nationals abroad as China’s increasing global reach puts more of its citizens in harm’s way around the world.

Hammered

This Bystander has been in sufficient army mess halls and enjoyed sufficient banquets and receptions to know that a drop or two of alcohol may, on occasion, get consumed. But even we were slightly taken aback to see that the abstemious Xi Jinping’s ban on senior military officials holding extravagant alcoholic banquets was enough to knock more than 5% off the share price of Kweichow Moutai. The state owned conglomerate counts being China’s leading distiller among a range of business interests from IT to airport investment. Most pertinently, it makes Moutai, the premium white spirit that is a PLA favorite. We could do nothing else but take a reviving glass to steady our nerves.

A Big Test For Little Hu

Hu Chunhua (right) has already been pencilled in by China long-term watchers as a likely successor to President Xi Jinping in 2022. So Hu’s appointment as Party boss in Guangdong is particularly noteworthy. It not only takes him from one end of the country to the other–his most recent post was as Party chief in Inner Mongolia–but it also sets him atop one of the highest profile provinces. This will let him broaden his experience and prove his abilities in a big province. Guangdong is China’s largest provincial economy, about the same size as Holland’s and four times the size of Inner Mongolia’s.

It will also test Hu on a bigger stage and under a harsher spotlight. Hu, who as a protege of outgoing President Hu Jintao is known as little Hu, earned his stripes running under-developed inland places with ethnic minorities considered tough to govern. Rich, coastal and relatively liberal Guangdong, with its large migrant population and manufacturing rather than resource-based economy (Hu has long connections with the coal industry), will present a new set of administrative challenges. Public expectations of his performance, set by his predecessor Wang Yang, who is moving on to an as yet unnamed job following his unsuccessful bid for a place in the Politburo, will also be very different. Hu will have to demonstrate not only his competence but also his ability to manage how that competence is perceived. He is not only being groomed. He is also being tested.

China’s Party Factions Prep For The 2022 Leadership Succession

The Jiang Zemin-led Shanghai faction’s predominance among the members of China’s new Politburo standing committee at the expense of outgoing President Hu Jintao’s has been widely noted, including by this Bystander. It seems a throw back to an earlier generation of Party leadership. In a sense it is. Elite, conservative state capitalists again dominate the inner sanctum of power. But the change is by no means permanent, to our eye. Hu’s faction, rooted in the Communist Youth League, is much more prevalent among the Politburo’s 25 members, a de facto layer below the standing committee, and, a rung of power below that, among the 376 members of the Central Committee, which has also taken on a distinctly younger look.

We count at least nine Politburo members in or aligned with the Hu faction, a number Jiang’s faction cannot muster. The disparity in the Central Committee is even greater. Hu’s  proteges are also well represented on the Party’s Central Military Commission, which oversees the PLA. Such influence is likely to have been the price Hu extracted for giving up the committee’s chairmanship at the same time as he relinquished his Party post. It may also have given him some surety that that would make it more difficult for hardline, dissident elements of the military to move against either the people or the Party in the event of some breakdown of social order.

Hu’s proteges are also more broadly represented in the so-called sixth generation of leaders coming along behind those being ushered in as China’s fifth generation under new Party general secretary and President assumptive Xi Jinping. Five of the seven members of the Politburo standing committee hit retirement age at or around the time of the next Party Congress in five years time. Jiang himself is already 86. Prominent Hu loyalists and proteges such as Li Yuancho, the head of the Party’s organization department and  Wang Yang, the 57-year old Guangdong party boss, both of whom failed to get promoted to the standing committee this time but retained Politburo membership, may feel their time will come again then, especially as the sixth generation of leaders will be starting to stake out their ground then for 2022 leadership transition.

It is early days, but Inner Mongolia party boss Hu Chunhua and Sun Zhengcai, newly appointed as party boss in disgraced Bo Xilai’s old stamping ground, Chongqing, are being marked out to succeed Xi and prime minister assumptive Li Keqiang, respectively, in 2022. Hu Chunhua is a Hu Jintao protege and Sun is allied to outgoing prime minister Wen Jiabao.  To our mind, that means that the factional in-fighting that marked the run-up to the leadership transition now underway will continue, if not as virulently as earlier this year. Factional jockeying for power is part of the warp and weft of China’s elite politics. Xi will need to move decisively to establish his authority, impose unity, and, perhaps, establish his own faction in the vacuum that Jiang’s looks likely to leave.

Party Factions And China’s New Top Leadership: A Scoresheet

China’s leadership election couldn’t be further in style from the U.S.’s public horse race, but that doesn’t deter this Bystander from keeping score of how various factions have done in the composition of the new Politburo standing committee. Factions overlap, as the list below shows. Xi Jinping overlaps more than most of his fellow collective leaders, one reason he is primus inter pares.

Jiang faction 5 — Xi Jinping, Zhang Dejiang, Yu Zhengsheng, Wang Qishan, Zhang Gaoli;

Hu faction 2 — Li Keqiang, Liu Yunshan;

Princelings 4 — Xi Jinping, Zhang Dejiang, Yu Zhengsheng, Wang Qishan;

Youth League 2 — Li Keqiang, Liu Yunshan;

PLA connections 2 — Xi Jingpeng, Zhang Dejiang;

No/weak PLA connections 5  – Li Keqiang Yu Zhengsheng, Liu Yunshan, Wang Qishan, Zhang Gaoli;

SOE connections 5 — Xi Jinping, Zhang Dejiang, Yu Zhengsheng, Wang Qishan, Zhang Gaoli;

No/weak SOE connections 2 — Li Keqiang, Liu Yunshan;

Elite university graduates 3 — Xi Jinping, Li Keqiang, Zhang Dejiang (if North Korea’s Kim Il Sung University counts);

Other university graduates 4 — Yu Zhengsheng, Liu Yunshan, Wang Qishan, Zhang Gaoli;

Party power monopolists 7 – Xi Jinping, Li Keqiang, Zhang Dejiang, Yu Zhengsheng, Liu Yunshan, Wang Qishan, Zhang Gaoli.

China’s New Gang Of Seven

Men in Black: Xi Jinping (C), Li Keqiang (3rd R), Zhang Dejiang (3rd L), Yu Zhengsheng (2nd R), Liu Yunshan (2nd L), Wang Qishan (1st R), Zhang Gaoli (1st L).

We now have the names of the seven men who will run China for the next decade, the new Politburo standing committee, arguably, the most powerful septet in the world. Xi Jinping, long the heir assumptive as paramount leader, heads, in order of precedence, Li Keqiang, the presumptive prime minister; Vice Premier Zhang Dejiang, the man sent to clean up Chongqing after Bo Xilai’s ousting and who looks set to become head of China’s rubber-stamp parliament; Shanghai party secretary Yu Zhengsheng; propaganda chief Liu Yunshan; Vice Premier Wang Qishan, the economic reformer being shunted off to be the Party’s disciplinarian; and Tianjin party secretary Zhang Gaoli, the most pro-reform member of the standing committee after Wang.

A first reading of the list suggests that the security and propaganda interests have held their ground while the economic reformers have lost some. The important calibration, though, is between the Party’s factions. The list, close to what was expected, bears a heavier than expected stamp of former president  and leader of the Party’s Shanghai faction, Jiang Zemin, at the expense of his successor President Hu Jintao, whose power base lies in the Party’s rank and file organization, the Youth League. Yu Zhengsheng, Shanghai party secretary, makes the final cut, pushing out Li Yuancho, the head of the Party’s organization department and a Hu loyalist. Wang Yang, the 57-year old Guangdong party boss and a Hu protege, also didn’t make the cut, but his promotion had faltered in earlier political horse trading. His losing out may have been the price Hu paid for Bo’s ousting. Both he and Li were identified with political reform.

Most significantly, to this Bystander’s eye, is that Xi takes over the chairmanship of the Party’s military commission, and thus oversight of the armed forces. Hu was expected to hold the post until the end of the leadership transition in 2014 and thus give himself a political base to be a power behind the throne once he yielded his Party and state jobs.

This is a line-up designed to keep a tight lid on China’s development over the next decade. It is not one to to take political or economic risks in a period in which the country will grow less fast than it has for the past three decades and which will face the challenges of dealing with a rebalancing of the economy at home and finding a place for itself in the world abroad. Several of the new leaders have deep roots in state-owned companies and infrastructure investment. The vested interests have circled their wagons.

Jiang’s presidency was marked by a spate of bold economic reforms without any substantive movement towards political reform. China has developed to a point since where a repeat of that formula may just not work. No country has become rich without developing good-quality institutions to support the rule of law, sound governance and political accountability. Without that there is political instability, government inefficiency and the prevalence of corruption. The new leadership has set out its stall in a bet that it can tackle those three challenges without giving up the Party’s monopoly on power. It is a brave bet.

Footnote: Xi and Li are the only two members of the new Standing Committee in their fifties. The other five are all 64 and up. Given that Politburo standing committee members generally retire at 70, it may be only Xi and Li of the fifth-generation leaders who serve two five-year terms.