China Communists Set Nov. 8 Date for Congress Amid Upheaval

China’s Communist Party will hold its 18th congress starting Nov. 8 as it looks to complete a once-a-decade leadership transition that’s been roiled by the downfall of former Politburo member Bo Xilai.

“The congress will thoroughly examine the current international and domestic situation and take into account of the new requirements for the country’s development and new expectations from the people,” the official Xinhua News Agency said today.

The congress will see more than 2,000 delegates from the 82-million member ruling party gather in Beijing to anoint new leaders whose positions have already been worked out in years of jockeying by the country’s power factions. Vice President Xi Jinping is forecast to succeed President Hu Jintao as party general secretary, and would take over as China’s president early next year.

Party leaders had been intent on orchestrating a handover like the one that saw Hu take the reins in 2002, the first smooth transfer of power since Mao Zedong founded the People’s Republic of China in 1949. That has been undermined by the decision to sideline Bo, who was officially expelled from the party today, and the new leadership will take over the reins as the economy slows and following the worst quarterly loss for Shanghai stocks this year.

The new leaders will need to address a widening wealth gap, corruption and pollution that have fueled public distrust and social unrest. Earlier this month, Xinhua reported that some Chinese officials were “prone to slip into a credibility crisis in the Internet era,” and said that winning public support “seriously matters.”

Slowing Economy

Leaders must grapple with a slowing economy that will struggle to reach its 7.5 percent expansion target this year, according to data from sectors including exports and production. Hu, Premier Wen Jiabao and other outgoing leaders took power in 2003 with growth exceeding 9 percent.

The Shanghai Composite Index lost 6.3 percent this quarter, the most since the three months ended December, on concern a slowdown in the world’s second-largest economy is deepening. The gauge is valued at 9.7 times estimated earnings, compared with the average of 17.9 since Bloomberg began compiling the weekly data in 2006. The index has dropped 13 percent in the past year.

Opponents of Change

The next generation of leaders must overcome opponents of change, including state-owned companies and banks that are “powerful, resourceful and resolute in protecting their interests,” according to a February report by the World Bank and the Development Research Center of China’s State Council.

The months preceding the congress have been dominated by the scandal surrounding Bo and efforts by the party leadership to contain the fallout from it. Bo’s wife, Gu Kailai was convicted of murder and sentenced to death with a two-year reprieve in the poisoning of a British businessman, Neil Heywood.

Bo, once seen as a candidate for the ruling Politburo Standing Committee, was removed as Chongqing party secretary in March as the allegations surrounding Gu emerged. In April, Bo was suspended from the Politburo, and his former police chief was convicted earlier this month of helping cover up the murder.

That turmoil, coupled with Xi’s two-week disappearance, have drawn attention to the opaque succession process in the world’s most populous country and second-biggest economy.

Japan Tensions

China has also seen tensions flare with Japan over islands claimed by both sides in recent weeks. Japan’s Sept. 11 decision to buy the islands spurred street protests and attacks on Japanese businesses, prompting speculation that leaders might be trying to whip up nationalist sentiment ahead of the handover.

“The looming transition has probably increased Chinese willingness to respond to what it viewed as Japan’s challenge with greater resolve,” Taylor Fravel, a political science professor specializing in China at the Massachusetts Institute of Technology, said in an e-mail interview.

Before the congress convenes, the smaller Communist Party Central Committee is set to meet in Beijing. The central committee, with more than 300 full members and alternates, can formally remove people from the Politburo, such as in the case of Bo.

The congress will culminate with the naming of the next Politburo Standing Committee. The group, now with nine men, exercises supreme authority in China.

Seven People

The party indicated that Xi would take the top spot when he was listed at the 17th party congress in 2007 as the sixth most senior member of the Politburo Standing Committee, the highest among the younger generation of party leaders. Vice Premier Li Keqiang, number seven in the present hierarchy, is forecast to succeed Wen as premier.

The next standing committee will probably be reduced to seven people at the congress and may include Xi, Li, Vice Premier Wang Qishan, Shanghai Party Secretary Yu Zhengsheng, Vice Premier Zhang Dejiang, Guangdong Party Secretary Wang Yang and party organization head Li Yuanchao, a Bloomberg News survey of 26 China political analysts published Sept. 14 found.

To contact Bloomberg News staff for this story: Michael Forsythe in Beijing at mforsythe@bloomberg.net

To contact the editor responsible for this story: Peter Hirschberg at phirschberg@bloomberg.net

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