November 15, 2012.
BEIJING—Xi Jinping took the helm Thursday of a new Communist Party leadership that insiders said was shaped less by the daunting economic and political challenges facing China over the next decade than by bitter personal and factional rivalries within a secretive and scandal-ridden Party elite.
In a surprise move, Mr. Xi replaced outgoing Party chief Hu Jintao as head of the powerful Central Military Commission, which controls the armed forces, making Mr. Hu the first Communist Chinese leader to cede all formal powers without bloodshed, purges or political unrest.
Mr. Xi, smiling and waving, led a new Politburo Standing Committee—trimmed from nine to seven members—onto a crimson dais in the vast Great Hall of the People in Beijing in a ceremony shown live on state television on Thursday morning.
Following Mr. Xi onto the dais in second place was Li Keqiang, who is widely expected to take over from Wen Jiabao as premier and chief steward of the world's second largest economy at a parliament meeting next year.
The decision to shrink China's top governing body was widely anticipated and seen by many Party insiders and analysts as a positive move that would make collective decision-making easier and downgrade the post that controls the vast domestic security apparatus.
But in the fierce contest for the remaining seats on the Standing Committee, more progressive figures linked to Mr. Hu and Mr. Wen appeared to have been edged out by protégés of Jiang Zemin, the former Party chief who retired in 2002 but remains a powerful political force.
Among those who did not make the new leadership were the two figures in the Party elite most closely associated with political reform: Li Yuanchao, the head of the Party's Organization Department, and Wang Yang, the Party chief of Guangdong province.
China in Transition
See an interactive guide to China's 18th Communist Party Congress, read more about the outgoing leaders and some candidates for promotion.
One of several Jiang allies on the new body was Wang Qishan, the former Vice Premier responsible for finance and a key interlocutor with the U.S. in recent years. He was appointed on Wednesday to the Party's anticorruption body, which he is expected to lead.
The new leadership has been formed not through policy debate, polls or any other institutional mechanism, but through horse-trading behind closed doors among outgoing leaders and retired party elders, according to Party insiders and political analysts.
The lack of transparency about the transition of power in the world's second largest economy highlights the disconnect between a rigidly Leninist political system and an increasingly demanding and Internet-enabled population.
The veneer of unity and austerity that has enveloped China's leaders was shattered this year by a string of scandals that has shaken the party to its core, most notably the downfall of Bo Xilai, a onetime candidate for the Standing Committee whose wife was convicted in August of murdering a British businessman.
The Standing Committee will quickly need to confront a daunting array of problems, chief of which is a slowing economy. It is facing increasingly vocal calls—even from within its own ranks—for a new wave of reforms to pry open the kind of state-sector monopolies and vested bureaucratic interests that many party insiders believe contributed to the collapse of the Soviet Union.
Even Mr. Hu warned in his opening speech at the 18th Party Congress last week that official corruption had become so serious that, if not tackled, it could "cause the collapse of the party and the fall of the state."
Yet the new Standing Committee has been shaped less by those policy challenges than by powerful interest groups within the party, especially a faction headed by its 86-year-old former chief, Mr. Jiang, according to political insiders and analysts.
Mr. Jiang, who stepped down as party chief in 2002, was believed to be close to death last year, but appears to have made a remarkable recovery and played a key role in selecting the new leadership, outmaneuvering Mr. Hu in some cases to install favored protégés.
Such is the opacity of the political system that Thursday's ceremony marked the first moment when the Chinese public learned not just who has made it to the new Standing Committee, but whether the body was trimmed from nine people to seven, as many party insiders expected.
On the eve of the ceremony, it was also unclear whether Mr. Hu would retain control of the armed forces or become the first Chinese Communist leader to give up all formal powers in one go, without bloodshed, purges or political unrest.
"At this stage the Politburo Standing Committee is unbalanced, lopsided," said Willy Lam, analyst at the Jamestown Foundation, on the eve of the ceremony. "And Hu has indeed been outfoxed by Jiang."
Mr. Hu may have succeeded in promoting his protégés to positions that make them leading candidates for the Standing Committee in 2017, when several key Jiang allies will have to retire from party posts, according to political insiders and analysts.
For the next five years, however, many party insiders expect Mr. Hu's allies to be in a minority on the Standing Committee.
The only one who was sure to join the top leadership Thursday was Li Keqiang.
Messrs. Xi and Li are the only members of the previous Standing Committee who aren't retiring. They will take up their state posts in March, with Mr. Xi expected to be promoted from vice president to president, and Mr. Li expected to rise to premier.
Other members of the body—and its overall size—have been decided by the power struggle between outgoing and retired leaders, which has been especially ruthless this year because of the downfall of Mr. Bo.
The outcome of that struggle was a closely guarded secret, but many party insiders and political analysts believed the new Standing Committee was likely to be cut to seven—axing two posts, including the one that controls the domestic security apparatus.
Some party insiders see that outcome as a positive move that could make it easier for Mr. Xi to forge consensus among his peers, but most say it would have been driven by concerns that the security post had become too powerful and could have been taken over by Mr. Bo until his downfall.
A smaller Standing Committee also means fewer places up for grabs, and many party insiders predicted that the new body might not include one or both of the two candidates for promotion who have the strongest track record of political reform: Li Yuanchao and Wang Yang.
Mr. Li has overseen pilot schemes to enhance democracy within the party. Mr. Wang won plaudits last year for reaching a negotiated settlement when a village in Guangdong rebelled over land grabs by local officials.