China's old guard gather in secrecy to anoint new leaders

President Jiang Zemin prepares to hand over reins of power and welcome capitalists into fold

The world's largest political movement – the Chinese Communist Party (CCP) – meets tomorrow for the start of its 16th party congress, a ritual that remainsshrouded in mystery.

Representatives of the CCP's 60 million members will gather at Beijing's Great Hall of the People to choose a new leadership, but no one is yet entirely sure whether President Jiang Zemin, 76, who rules over a fifth of humanity, is retiring or not.

His bespectacled face still beams from hoardings around the country and, on village walls, slogans urge the nation to study his teachings, called Three Represents. He is likely to hand over the empty title of head of state and the general secretaryship of the party, but may hold on to the chairmanship of the central military commission, the post that the late leader Deng Xiaoping retained.

Somehow the CCP has stumbled into the 21st century with just the same Leninist organisation with which it was born 82 years ago. The party is the revolutionary vanguard in a "dictatorship of the proletariat" and the way it chooses its leaders is surrounded with more mystery that the election of a new Pope.

Yet, due to Mr Jiang, it is about to undertake the most daring reform in its history. In a move akin to the Labour Party abandoning Clause Four, the 16th party congress will change its constitution. It will no longer represent the working class, but the entire nation, and will welcome capitalists into its ranks. A full-scale privatisation of state enterprises is expected in the next five years, and when that is over the party will have to change its name.

The congress is being talked of as the largest transfer of power within the party for over two decades and the first peaceful transition in its history. The last Chinese leader to retire without conflict was the Emperor Qianlong in the 18th century. He was 86 and had ruled for 60 years.

Even before it starts, about half of the top posts in the country – ministers, provincial governors, city mayors – have been reshuffled, putting the so-called fourth generation of leaders since Mao Zedong into the top slots. Most are men in their forties and fifties who used to be Red Guards under Mao.

These men, and a very few women, are committed to turning China into an aggressive hi-tech market economy, but it is not certain that they will manage to start any political reforms. The last party leader to try, Zhao Ziyang, was put under house arrest just before the 1989 Tiananmen Massacre.

The designated heir of Mr Jiang – his deputy in the party and the military – is an obscure party apparatchik, Hu Jintao, 59. Despite a decade at the top he has never given an interview or voiced an opinion that strayed from the party line.

His popular nickname is sunzi (grandson), bestowed for his obsequiousness towards party gerontocracy, a belligerent cabal of old men that has ousted two leaders – Mr Zhao and Hu Yaobang – for attempts to instigate change. The elders had given up their official posts, but as the Central Advisory Commission could crush upstart "bourgeois liberals".

The commission has been disbanded, but in many senses the party "dead" still rule from the tomb. Mao's portrait still hangs outside the Forbidden City in the centre of Beijing. Well before Deng died in 1997, he had appointed Mr Jiang as his successor and nominated Mr Hu the next in line. And in the past year Mr Jiang has packed the upper ranks of the party with his followers.

It is also uncertain whether the newly retiring generation of leaders will form another Central Advisory Commission and stifle any chance of change. Li Peng, the party number two, is thought to have obtained guarantees before promising to retire and marked out his own man, Luo Gan, to control the police and security machinery in the new lineup. And he may also have insisted that the most liberal leader in the party, Li Ruihuan, goes with him.

Many foreign investors are loath to see the premier, Zhu Rongji – number three in the hierarchy – step down after just one term. He will not officially relinquish his post until next March at the National People's Congress, but his successor, Wen Jiabao, has already taken over his responsibilities. Many outside China would like to see Mr Zhu stay because he successfully pushed the party into joining the World Trade Organisation, which has fixed China's economic path for years to come.

In preparing the new line-up, Mr Jiang has managed to balance the different factions in the party. Under Mao, it was torn apart in what came close to violent civil war and, under Deng, the divisions led directly to Tiananmen.

It is this talent that gives Mr Jiang the hope that he may remain in control, whether he officially retires from all his posts or not. He has managed to crush the left, which made a comeback after 1989, so ruthlessly that it cannot mount any effective opposition to his move to change the constitution.

He has also reversed other firmly held policies, such as China's anti-American stance; he has become so trusted by the United States that he was entertained last month at President George Bush's private ranch in Texas. And he has cleverly prevented the military from launching a dangerous venture to conquer Taiwan. Instead, he has steadily brought the two sides closer. The next 12 months may even see the two opening shipping and air links for the first time since 1949.

Despite this, questions remain over how forces advocating democracy will fare in the future. Mr Jiang has put the leaders of China's fledgling Democracy Party in jail or in exile, leading dissidents to write an open letter urging delegates to the congress to release political prisoners and expand direct elections for officials.

The prospects for genuine political reform look bleak, but Mr Jiang, who has changed his position on so much else, could still take the initiative.

Out with the old...

Jiang Zemin, 76

The core of the "third generation" of leaders, Mr Jiang is due to relinquish the presidency of China and leadership of the Party, but unlikely to completely loosen his grip on power. Mr Jiang's rise to power stemmed from a purge of liberal leaders after the Tiananmen Square rally in 1989. Not regarded as an inspirational statesman, but has overseen gradual economic reforms while maintaining the Communist Party in power.

Li Peng, 74

...and in with the new

The Party number two, and still the most hated man in China for ordereing martial law in Beijing in 1989 before the Tiananmen Square massacre. Most observers doubt he will risk relinquishing power, as that would make him and his family the target of an anti-corruption purge. In the past year his wife, Zhu Lin, has denied corruption allegations, while his youngest son was named by investors angry about a trading scam.

Hu Jintao, 59

Jiang Zemin's deputy in the Communist Party and the military, and his designated heir. Seen as a Party apparatchik, Mr Hu was a Party youth league organiser during the Cultural Revolution when students fought pitched battles at Qinghua University, the breeding ground for top Party leaders, but fought against the radicals. A former labourer, Mr Hu was Party Secretary of Tibet when martial law was declared in 1989.

Wen Jiabao, 60

The Vice Premier has already taken over the responsibilities of the Premier, Zhu Rongji – the number three in the hierarchy – but assumes the post officially in March. Many outside China would like to see Mr Zhu stay on because he successfully pushed the Party into joining the World Trade Organisation (WTO). Mr Wen, a geologist by training, is thought to be a pro-market liberal and an environmentalist.