Sunday, August 26, 2012

Will China's new leadership present an opportunity for the U.S.?

I was forced to suspend this blog when I suffered a serious stroke about fourteen months ago. Now that I have recovered enough to start writing again, I’m looking forward to resume sharing my thoughts about China, Asia, Sino-American relations, and US relations with Asia in the months ahead.

I plan to begin with comments on the leadership transitions that are about to occur in China and the United States and their likely impact on the U.S.-China relationship.  I’ll start with China, and write about the U.S. presidential election in my next posting.


A few weeks back, I was asked to participate in a discussion organized around the question of whether China’s new leadership will present an “opportunity for the United States.”   My schedule didn’t permit me to accept that invitation, but I did reflect a bit on the intriguing question it contained.  I concluded that the opportunities presented by the impending leadership transition at the Eighteenth Party Congress are far greater for China than for the U.S., but if the new Chinese leadership elected at the congress seizes those opportunities, there could be positive consequences for the United States and for the Sino-American relationship as well as for China itself.


The most important question posed by China’s leadership transition is whether the country’s new leaders, presumably headed by Xi Jinping and Li Keqiang, will be prepared to boldly and successfully address the key challenges facing their country at home and abroad.  The domestic challenges are numerous, but the most important ones are an economic model that overemphasizes state-directed investment and exports as engines of growth, enterprise, depresses household consumption, privileges large state-owned enterprises, restricts  credit to private entrepreneurs, and offers limited outlets for the investment of household savings.  Economically, this model has produced a property bubble, a weak banking system, and the chronic risk of inflation.  Politically, China remains vulnerable to popular unrest and, as a result, maintains tight control over the press, social media, and non-governmental organizations.

The issue is whether the new leadership will have the desire and the power to deal with these challenges.  At least one leader who will retire at the Party Congress, Premier Wen Jiabao, has forcefully advocated limited political reform and has repeatedly warned of the unsustainability of China’s imbalanced economic model.  But it is not yet clear that his views will be shared by a majority of the incoming leadership.  The dismissal of Bo Xilai, the populist leader of Chongqing, is a positive development for proponents of economic and political reform, but Bo’s are not isolated views in the Party, and it remains to be seen whether the positions he espoused will be championed by other incoming members of the Politburo and, if so, what share of power they will hold.

Internationally, the steady increase in Chinese military power, Beijing’s increasingly muscular assertion of territorial claims in the East China and South China Seas, and the lack of transparency about its military budgets and foreign policy objectives have led to a growing willingness among neighboring states to engage in at least a “soft balancing of China, as well as a more open American hedging against the risks posed by China’s rise..  Some unethical Chinese economic activities in the Third World, Beijing’s failure to support or fully honor international sanctions regimes against countries like Iran, Syria, and North Korea, and its reluctance to more fuller open its economy to imports and incoming investment, have posed serious reputational risks to China and have limited China’s efforts to develop its soft power. As in domestic affairs, the upcoming Party Congress presents the opportunity to select a new generation of leaders who are prepared to address these international issues, but whether the Party ‘s new collective leadership will tilt in that direction is as yet unknown.
If China’s new leaders are more oriented to political and economic reform at home, and more conciliatory and cooperative abroad, that will indeed present opportunities for the United States. Indeed, it will present opportunities for both countries to forge a closer and more stable relationship. But, in the first instance, the opportunities are China’s –