Welcome the Reformist…?

Two important events occurred during the month of November.  The first is the United States Presidential election, an event that has worldwide implications and for better or worse signals the continuation of U.S. foreign policy from the previous four years.  The second event is of a rarer variety that remains a mystery for many throughout the world – the leadership transition of the Chinese Communist Party (CCP).  A once a decade event that arose as a means to alleviate pressures brought on by inter-party factionalism, the CCP leadership transition is a massive affair that takes power from a known quality (in this case Hu Jintao) and gives it to someone unknown (new leader Xi Jinping).

Analysts the world over offered interpretations of how Mr. Xi would lead China prior to him taking power.  Some argued that he would empower the People’s Liberation Army, an institution with which he has long standing ties.  Others see him as a reformer committed to furthering political and economic changes that stalled during the early 2000s.  What type of leader Mr. Xi will be remains unknown, but he did provide a very telling indication of his intent by visiting China’s south.  Specifically, Mr. Xi went to Shenzhen, the site of China’s first Special Economic Zone (SEZ) that transformed a town just across the border with Hong Kong into a city of over 7 million.  It was Shenzhen that featured prominently in Deng Xiaoping’s 1992 Southern Tour, the late leader’s effort to combat hardliners in Beijing and push forward reform in China’s provinces.  Going to Shenzhen and partially recreating Deng’s 1992 trip is being interpreted by a great many (including this author) that Xi Jinping intends on changing political and economic standard operating procedure.

If Mr. Xi is a reformer, then what type of reform should be expected?  The biggest internal problems China is facing right now include: government corruption, insufficient domestic consumer demand, inefficient state owned enterprises, rising labor costs, and high disparities between rich and poor.  In short, China’s economy remains strong, but its benefits have not been equally distributed and the nation cannot maintain growth by continuing to rely on exports.  Mr. Xi, to combat these problems, must oversee the transition of China’s economy.  This means that the CCP’s corruption must be reined in, or at least hidden more effectively.  It will be necessary for factories to move from light manufacturing towards high tech production.  Most importantly, China must further its involvement within the international system.  Investing in the developing economies of South and Central Asia, Africa, Latin America, and the Middle East will increasingly be essential.

Going forward it seems likely that China will be an increasing source of economic investment for developing economies.  Similarly, it is a safe bet that China’s military will expand to address larger strategic concerns.  Finally, China’s transition requires substantial energy resources, making countries with large deposits of fossil fuels necessary partners.  Regardless of the population’s wishes, China will increasingly be drawn into international affairs.  The next ten years are certain to feature a China more willing to exert its strength abroad.  The question is whether this development will enhance or diminish international security.

Please note that the views expressed in this piece do not represent the official policy or position of the National Defense University, the Department of Defense, or the U.S. government.


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