China isn't the monolith it's made out to be

In 2012, the Chinese government will undergo renewal. Premier Wen Jiabao and President Hu Jintao will make way for new blood, most probably in the form of Li Keqiang and Xi Jinping, respectively. With Xi Jinping's recent elevation to the vice-chairman position in China's powerful Central Military Commission, his position is assured.

Few in the west are aware that Hu Jintao and Wen Jiabao represent a more liberal side of Chinese politics. During the recent furore over the awarding of the Nobel Peace Prize to Chinese dissident Liu Xiaobo, many western commentators were quick to point out that on the 3rd of October, Wen Jiabao went on record to state: "I believe freedom of speech is indispensible to any country".

On the face of it, this would appear to be quite hypocritical, but in reality it's no more hypocritical than a Democrat or Republican outlining different ideals.

China isn't the monolith it is made out to be. Within the vast sprawling arms of the Chinese Communist Party (CCP) many factions exist. Since the awarding of the Nobel Prize, Wen Jiabao has made a number of somewhat risky comments stating that he will never give up advocating a reform to the Chinese system, and that the will of the people can't be resisted.

These comments have been reported in some more liberal Chinese newspapers, and been blacked out in others. To understand the reasons why, one must consider the fact that the Hu-Wen alliance is just one faction within the CCP. There remains a significant number of senior figures within the party who were closely aligned with the former President Jiang Zemin.

Jiang Zemin first arose to power in the wake of the Tiananmen Square protests, because he was seen as having a harder edge. He was, simply put, a strongman, however he was the one who presided over a great deal of China's transformation into a capitalist economy. This gives a fair description of the Shanghai faction's tendencies - more enthusiasm for allowing market forces free reign, albeit significantly less devotion to increasing human rights in China. Insofar as such limited terms can be applied to China, one can imagine the Shanghai faction as being more "right wing". They are the "hawks" of China, and you can see their hand in the draw-no-quarter reactions to recent international disputes.

However, the idea of "market forces" in China remains quite different to the west. Those who envision that the Shanghai Faction would embrace the economic reforms the west desires (such as revaluing the renminbi) would most probably be disappointed. This will happen, but not at the pace the west desires and you can be sure that China will only do so when it is in their best interests. That time may well come soon, but not as soon as President Obama would like.

That however, remains academic, as Li Keqiang and Xi Jinping are more likely to follow in the footsteps of the Hu-Wen faction. It may well be that Wen Jiabao's recent comments have been made in the knowledge that his successors share similar views, which would explain his unusually strident commentary.

So what does this mean for the west?

In recent commentary in The Australian, Greg Rudd put the case very well, when he said that the West should give up trying to "change" China, with the caveat that the West also should be suspicious of Chinese business deals, because the Chinese are also suspicious of each other. That's how business is done there.

Provided that Xi Jinping and Li Keqiang take the place of the Hu-Wen faction, not a lot is going to change in the short term. This outcome is to be hoped for. In the event that the Shanghai Faction gains ascendancy, we are more likely to see stricter controls placed on the Chinese people which would lead to further insecurity on behalf of the governing party. Insecurity breeds the kinds of hostile reactions that China has displayed to foreign commentary on matters regarding China.

Interestingly, during the recent stoush with Japan over the fishing trawler incident in the Diaoyu islands, the government did not attempt to stir up nationalist, anti-Japanese sentiment. One wonders whether the hawks in the Shanghai Faction would have shown the same restraint.

Regardless of which faction is in power, it is important to scrutinize business dealings with China carefully and indeed suspiciously, as the Chinese do for most business arrangements.

Australia is right to be wary of Chinese companies purchasing natural resources in Australia. Foreign investment has always been a key component of Australia's development, however in the past, those companies were not enmeshed with foreign governments in the way that the large Chinese companies are.

When Chinalco was attempting to secure a slice of Rio Tinto, they claimed they were independent of the Chinese government, however the no-strings-attached 30bn loan offered by China's Exim bank as a sweetener which followed would seem to detract from this. Point to any large company in China, and you will find the vast majority of board members are members of the CCP. It's necessary for networking and to secure business deals. It also means that the CCP has insights into all the major boardrooms in the country.

Recent negotiations for mining interests in Australia have also included requests for China to be able to import cheap labour, as Chinese companies do in Africa and around the world.

One can argue that with Australia's low unemployment and skills shortage this is justified, especially given Australia's tendencies toward using temporary migrant workers for a range of unskilled and low-skilled industries such as aspects of Australian agriculture. However it also raises the question as to how these companies - embedded with the Chinese government, as most large Chinese corporations are - would operate in the event that they had majority ownership of, or even significant clout in, Australia's mining sector. Given the recent ousting of a Prime Minister, due in part to ructions over a proposed tax on mining, wouldn't it be fair to say that at the present moment in Australian history, the mining sector remains an influential part of both Australian politics and the economy?

And given that Australia appears to be putting a large number of eggs in the mining basket for the foreseeable future, it seems logical to ensure that foreign state-owned companies whose interests may extend beyond extracting profit, should remain a minority voice. At least until they can show that they are merely companies, not organs of State power.

Australia should remain firm on its beliefs, particularly those regarding human rights. Regardless of whether or not you like or hate the US or like China, neither stance means we should remain silent when we disagree. Not because we wish to change China, but because in remaining firm, we show the Chinese people what we stand for. The Chinese don't respect weakness, and in remaining firm we can show the CCP and its factions that respecting human rights grants strength instead of detracting from it.

This is not mere idealism. The CCP is terrified of social unrest, which is why the phrase a "harmonious society" is so popular there. With more than 70,000 incidences of "social unrest" recorded annually in China in recent years, and with a five-thousand year history of peasant rebellions dethroning emperors, they have every cause to be worried. The CCP has two very difficult jobs: running the country and holding on to power.

They ostensibly run the country for the country's sake. They undoubtedly believe that holding on to power is also what's best for the country, and this may be true - if they are willing to enact reforms that dilute their power… and that may also be necessary for their own survival. The West won't change China, not by actively trying to anyway.

China however, just might choose to change itself.