November 5th, 2012
07:41 AM ET

3 challenges for China's next leaders

By Global Public Square staff

The most intriguing story this week might play out not in Washington, but thousands of miles away, in Beijing. Why? Well, consider this. We didn't know who the next occupant of the White House would be (now we do), but we have a pretty good estimate of his policies. On the other hand in China, we almost certainly know the identity of the next top leader, Xi Jinping. What we have no clue about is where he wants to take China.

Starting Thursday, Beijing will pick a new generation of rulers - hundreds of new faces. Until a few weeks ago, even the date of this transition was a secret. But come November 8, a new set of leaders will take on a huge backlog of problems. How these issues are dealt with will set the tone not just for China's 1.3 billion people, but for the entire global economy.

Let's look at those problems under three basic categories: economics, politics, and foreign policy.

On the first, we all know that China's growth-rate is slowing. In part, that's because it's now a middle income country and can't grow at 10 percent forever . It's not just the pace but the nature of the economy that is changing. We tend to think of China's growth as driven entirely by exports and state-investment. But look at the data from The Economist. Exports have steadily declined since 2005 as a share of growth in GDP. On the other hand, domestic consumption has risen steadily, accounting for more than half of China's overall growth. That means the internal Chinese economy needs to be reformed and opened up, to make it more productive. That's politically difficult.

One big policy that cries out for reform is the one-child rule. China is getting old. In 1980, the median age was 22. Now it is 35. By 2050, it will rise to 50. China's next leader will face not just an aging population, but one that is also completely imbalanced by gender: among children under 15, there are 117 boys for every 100 girls. That is a social tinderbox.

Another political development that struck me this year is the increasingly public display of anger. It is said there are more than a hundred protests in China every day. Many of these are demonstrations against the country's environmental pollution. But there is also an undercurrent of anger over what is seen as an increasingly corrupt ruling class. Just look at the two biggest stories out of China this year. Former Chongqing Governor Bo Xilai was a rising star one year ago; today he is under criminal investigation for alleged corruption. And just a few days ago, the New York Times ran a story detailing how Premier Wen Jiabao's family is worth nearly $3 billion. No matter how the Communist Party tries to hide or spin these stories, there is a palpable sense of public rage - and it will need to be addressed.

The irony is that Premier Wen himself  has been calling for reform-including political reform - for many months now. But China has essentially put the big decisions on hold this year. Until next week.

Finally: foreign policy challenges. We've witnessed an assertive and sometimes even belligerent China in the last two years. Look at the ongoing territorial dispute not only with Japan, but similar ones throughout the Pacific. Will that change? How will Beijing control a rise in nationalist pride and power? How will it ensure that the United States and China don't drift towards confrontation?

That's a challenge for leaders - in Beijing, and also in Washington.

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Topics: China • What in the World?

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