Amid the hullabaloo of ongoing protests in Hong Kong, the most important meeting of the year for China’s top leadership — the annual Communist Party Plenum — gets underway in Beijing today.

It is at this meeting, the Fourth Plenum of the Communist Party’s Standing Committee of its 18th Congress, made up of the party’s top 200-plus members — rather than the more ballyhooed annual meeting of China’s rubber-stamp parliament, the National People’s Congress each March — that specific policy goals for the year ahead are made.

But nothing at these meetings is left to chance, nor anything like open debate. Even the main outcomes of the Plenum are agreed ahead of the meetings, at the northern summer get-togethers of senior party officials, including influential former leaders such as Jiang Zemin, at the seaside resort town of Beidaihe, near Beijing.

While last year’s meeting presented a laundry list of economic reforms at its close, many of which have yet to be broached, the Chinese media has been reporting since July that the focus of this year’s Plenum meeting will be China’s legal system and the “ruling of law”.

The law is particularly vexed issue for the party; its Political and Legal Committee has ultimate control over the police, prosecutors and judiciary, but under the Hu Jintao regime the head of this committee, Zhou Yongkang, a member of the ruling Politburo Standing Committee, gained too much power. The party also has independent extra-legal powers, under which is holds and questions its members.

It’s no coincidence that the theme of this year’s Plenum was announced at the same time that the official investigation into Zhou, the highest such official investigation since the Mao Zedong years, was announced. There is an understanding that legal reforms are an essential prerequisite for many economic reforms, yet the party is nowhere near even beginning to set up an independent legal system, and what many experts expect to emerge is a “rule of law with Chinese characteristics”. Zhou’s fate might also be announced.

In a related move, the Plenum is also expected to sign off on a further deepening of the continuing, relentless anti-corruption campaign undertaken by party general secretary Xi Jinping. Xi’s campaign, which has been aimed at opponents in the party and also taken on key vested interest groups, was always going to be something of a balancing act. But the campaign has also had a very human cost as well as helping, perhaps inadvertently, to apply the brakes to China’s economy.

According to media reports, about 30 officials have committed suicide since the campaign began, some to avoid interrogation or to keep their fortunes salted away for their families — under Chinese law an investigation ends with the target’s death.

“The party is also losing its status as a preferred career path for many of China’s best and brightest.”

The economic effects of the campaign are very real. Tough new laws on entertaining have hurt the hotel and restaurants industries, as well as the karaoke and hostess bars that have relied on officials spending up.

One former Australian diplomat who was recently entertained in China said that toasts, which would traditionally have been made with China’s vicious local firewater baijiu, were being made with, of all things, milk — as a beverage all but unknown in many parts of China only a few decades back. Western luxury car, clothing and accessories brands favoured by party cadres over the past decade or two have reported slower Chinese sales as the practice of “gifting” becomes a target or corruption officials and conspicuous consumption is reined in. Last week, for instance, UK fashion house Burberry said that there was “softening in growth from Chinese consumers both at home and when traveling”.

“People are afraid to make decisions; everyone is keeping their heads down and wants to stay off the radar,” one businessman form Beijing said.

The party is also losing its status as a preferred career path for many of China’s best and brightest. Certainly, for young people eyeing a life of comfort — luxury, even — the party is less appealing, with the corruption campaign choking off ways to supplement official incomes with grey or black money. Xi has even cut salaries at large state-owned enterprises.

And there is one issue stemming from the campaign that looks to be directly affecting Australia. While Chinese demand for Australian property is not showing signs of waning, there does appear to be a softening in demand from China for education places in Australia, according to education industry insiders.

While the cause of this is yet to become clear many believe that the anti-corruption campaign is at least a contributing factor. China is the biggest offshore market for Australia’s universities and tertiary institutions, contributing more than 25% of total student numbers, and demand from China has bounced back in the past few years after a series of own goals by the previous Labor government.

One of the key reasons for Chinese student demand has been for them to get permanent residency — and then bring their mothers out, creating what is called the “naked official” syndrome in China, where an official is left by himself in China, with the family safely tucked away overseas as they funnel money offshore — often through Australian property purchases.

It is these “naked officials” who have become an obvious target of Xi’s campaign, so keeping one’s family close at home is yet another way of avoiding obvious attention.

In terms of Xi’s priorities, Hong Kong remains, at least for now, an unwanted distraction. As the Plenum wraps up on Thursday, party officials — and the world at large — will have a good idea of where Xi wants to take China next.

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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