by Bill O’Grady

On October 18^th, the Communist Party of China (CPC) will meet for the 19^th Party Congress.  China’s leadership for the next five years will be determined at this meeting.

In this report, we will offer a background on China’s government, focusing on the difference between de jure (what is the official structure of China’s governance) and de facto (how it really works).  From this discussion, we will examine the likely developments from this meeting and what they will mean for China and the world over the next five years.  As always, we will conclude with potential market ramifications.

China’s Government (Official Version)
China’s government has a parallel structure.  The CPC operates alongside the government of China.  Since the CPC is the only political body in China, the governance of China is dominated by the CPC, but there are elements of power that are separate from the party.  For example, Xi Jinping is both the President of China (head of government) and General Secretary of the Central Committee (head of the CPC).  He is also the Commander in Chief of the People’s Liberation Army.  There exists a National Party Congress (as noted below, the most powerful body in China, at least in theory) and a National People’s Congress, which is the primary legislative arm of the government.  The President has a strict legal limit of two five-year terms, while the General Secretary’s term limit is based on tradition.  In theory, a General Secretary could remain in that role after relinquishing the presidency.  This extended control of the CPC hasn’t happened since Mao Zedong,[1] who remained in control of the party from 1943 until his death in 1976.  Deng Xiaoping brought order to the transition of power, and since then General Secretaries have held office for 10 years, consisting of two five-year terms.

China’s most powerful body is the National Party Congress.  It meets every five years; in 2012, it had 2,268 members.[2]  Its primary job is to elect the Central Committee.  The Central Committee, which had 376 members in 2012, elects the General Secretary, the Politburo and the Standing Committee of the Politburo.  The Politburo consists of 25 members and is the executive body of the CPC.  The Standing Committee of the Politburo has seven members, all of which are also members of the Politburo.  The Central Committee meets annually, while the Politburo meets monthly and the Standing Committee of the Politburo meets weekly.

Thus, in theory, the most powerful body in China is the National Party Congress.  The second most powerful is the Central Committee, followed by the Politburo and the Standing Committee of the Politburo.

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[1] Mao was referred to as “Chairman of the Central Politburo” or “Chairman of the Central Committee.”

[2] As a point of reference, the CPC has 85.13 mm members out of a population of 1.4 bn, roughly 6.2% of the population.