Party Time In Beijing

China last week had its first orderly transfer of power since 1949--perhaps a bit too orderly. Communist Party boss Jiang Zemin, still a sprightly 76, stepped aside in favor of a new party chief, 59-year-old Hu Jintao. Half of the Central Committee was replaced with younger faces (average age: 55.4). And the party Constitution was even revised to welcome into its ranks private entrepreneurs, once reviled as capitalist "exploiters." When members of the new Politburo Standing Committee finally appeared in a neat chorus line before hundreds of journalists, they were a picture of bland uniformity. Even their outfits matched: somber navy suits, white shirts, red power ties.

One among them, No. 5 in the lineup, beamed and waved at the media like a celebrity, as if the moment were his. And in some ways, it was. Zeng Qinghong has long served as Jiang's protege and hatchet man, and he had helped his boss engineer a quiet coup. Two thirds of the new Standing Committee's members are allies of the outgoing party boss. And Jiang himself managed to stay on as head of the Central Military Commission, further ensuring his continued clout. (He is due to step down from the largely ceremonial post of president in March.) A number of Jiang loyalists, moreover, were promoted despite being tainted by allegations of scandal and corruption. Hu Jintao, the colorless leader whose main attribute is that he is accepted by all party factions, won the most powerful post in the country--but it was far from clear that he was yet the most powerful person.

How did Jiang and Zeng pull it off? Patronage and protection may have had something to do with it. Succession in China these days isn't just a political contest; it's a tussle for economic turf. Jiang's maneuvering is a form of retirement planning, ensuring his own influence while also safeguarding his family's interests. (President Jiang's U.S.-educated son, Jiang Mianheng, has been dubbed China's "prince of information technology" because of his involvement in a number of Shanghai-based ventures, including one that briefly counted Defense Secretary Donald Rumsfeld among its investors.) Many aging cadres also have relatives in key businesses; some have to be concerned about becoming targets of influence-peddling probes.

One party stalwart who might have had cause to fret is the unpopular Jia Qinglin, former mayor and communist boss of Beijing. Jia's wife was implicated in a multibillion-dollar smuggling and tax-evasion scandal in the mid-1990s, when Jia was party chief in Fujian province. During the investigation, Jiang Zemin went out of his way to be photographed with Jia, who had reportedly been best man at Jiang's wedding. The public embrace probably helped serve as a kind of shield: Jia was officially cleared. "Everyone in the Fujian party apparatus knew about the smuggling," says a well-connected Beijing businessman. "So either Jia knew and he was corrupt--or he didn't know and he was incompetent." As of last week, Jia is one of the nine most powerful--and politically indebted--people in the country. "He'll be very dependent on Jiang," says Sinologist Jean-Pierre Cabestan. "Jiang saved him from arrest and prosecution."

Not all Chinese politicians have been accused of sleazy dealings, of course. But according to an internal party document, 78 percent of the suspects in fraud cases involving more than $600,000 have been related to senior officials. A full 98 percent of senior officials had relatives in key government or business posts, with incomes up to 120 times the average in China. Chinese economists estimate that various types of corruption have bled about 14 percent from China's GDP yearly since the late '90s. Meanwhile, the much-needed reform of state enterprises has left more than 25 million workers without jobs. Not surprisingly, public resentment over "red-collar crime" is growing.

Fighting corruption was a big theme during last week's Party Congress. Jiang himself warned that without a serious crackdown, the party could find itself "heading towards self-destruction." Yet just four days later, Jiang's scandal-tainted crony, Jia Qinglin, emerged as No. 4 in the party lineup. "People just said, 'What a joke'," says Ho Pin, author of a book titled "China's Princelings," about the powerful children of party leaders. Few Chinese were laughing.