China's Communist Party Elite Meet to Discuss Leadership Changes, Poverty

China’s Communist Party leaders clustered behind closed doors in Beijing today to discuss economic planning and personnel changes that may decide the nation’s next leader and the scope of any political reforms.

Dozens of black Audi A6 sedans, the official cars of the nation’s top leaders, were parked outside the Jingxi Hotel in the western part of the capital. Security guards shooed away reporters and insisted they erase photographs of the building.

Tackling China’s gaping wealth gap is likely to dominate the agenda, the official Xinhua News reported. The agency, often a mouthpiece for the government, released a feature story to coincide with the opening of the four-day Central Committee plenum that highlighted a man in Beijing scavenging for plastic bottles next to apartments selling for $11,200 per square meter.

“The widening gap between rich and poor is the severe social reality faced by China’s Communist Party and government,” Xinhua said. “It hinders the harmonious development of the world’s most populous country.”

President Hu Jintao and Premier Wen Jiabao are concerned that rising income gaps in China threaten to spark more riots, strikes and other social unrest that might threaten the 61-year rule of the Communist Party. A study released in August by Credit Suisse AG reported that Chinese households had 9.3 trillion yuan ($1.4 trillion) in hidden income, with most of that concentrated among the wealthiest.

The top 10 percent of China’s households earn 139,000 yuan a year, more than triple the official figures, according to the Credit Suisse report. In contrast, the bottom 10 percent earns 5,350 yuan, the study written by Wang Xiaolu of the Beijing- based China Reform Foundation said. China’s statistics bureau called the methodology flawed.

‘Inclusive Growth’

Xinhua earlier this week said the party is expected to endorse Hu’s call for an “inclusive growth” model to address inequality. The agency cited the World Bank’s finding that the Gini coefficient -- a measure of inequality -- reached 0.47 in 2009, exceeding the 0.4 mark that is a predictor of social unrest. The figure was 0.21-0.27 three decades ago, Xinhua said.

Street scenes across China lend credence to the Credit Suisse report. The country is now the biggest market for Porsche SE’s Cayenne sport-utility vehicle. The cars, the turbo version of which sells in China for as much as 2.35 million yuan, are increasingly seen on Beijing roads. Paris-based PPR’s Gucci brand has six stores within 6.7 kilometers (4.2 miles) of Beijing’s center, the same number as within 30 kilometers of downtown Manhattan, according to Gucci’s Web site.

The 200-odd Central Committee members and 160 alternate members are set to discuss personnel changes and a new five-year economic plan that starts in 2011.

Xi Jinping

Vice President Xi Jinping will likely take a position on the party’s military commission, paving the way for him to replace Hu as the country’s top leader when he begins stepping down from his posts in late 2012, three political analysts, including Northwestern University Professor Victor Shih, say. Hu is chairman of the commission.

Politics will also be high on the agenda at the closed-door plenum as leaders jockey to have their protégés promoted within the party and government. In the run-up to the plenum, Wen has called for a relaxation of state control of social and political affairs. At last year’s session, Hu advocated more “intra-party democracy,” to give lower-level officials a greater hand in appointments and policymaking.

A group of retired officials drawn from the military, state media and academia, this week accused “invisible black hands” of suppressing a speech last month in which Wen called for greater political openness to match economic gains. The open letter by party elders including Li Rui, Chairman Mao Zedong’s former secretary, was published on the Internet Oct. 11.

‘What Right’

“What right does the Central Propaganda Department have to muzzle the speech of the premier?” the letter said, referring to the party branch that focuses on ideology. “What right does it have to rob the people of our nation of their right to know what the premier said?”

The central committee named in 2007 had 204 members and 167 alternates. In addition to the top leaders, members include China Securities Regulatory Commission Chairman Shang Fulin and China Construction Bank Corp. Chairman Guo Shuqing.

China’s next five-year plan, which will be enacted at a meeting of the country’s legislature in March, will be discussed at the plenum, Xinhua said.

During the plan’s period, from 2011-2015, China will spend more than 4 trillion yuan on tax cuts and support in areas including alternative energy, environmental protection, information technology and advanced manufacturing, the South China Morning Post reported today, citing two officials involved in the drafting.

--Michael Forsythe. Editors: Ben Richardson, Bill Austin

To contact the reporter on this story: Michael Forsythe in Beijing at mforsythe@bloomberg.net

To contact the editor responsible for this story: Bill Austin at billaustin@bloomberg.net

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