In early November the 18th National Congress of the Communist Party of China (CPC) decided about the new leadership both of the party and the country. It is an event that happens every five years and the decisions taken are therefore, of considerable importance for the country with the world’s largest population and with the world’s second largest economy. As had been expected since some time, Xi Jinping has taken the mantle from Hu Jintao, who since 2002, had presided over the fourth leadership generation of the People’s Republic of China. At present, Xi Jinping is secretary general of the CPC and chairman of the Central Military Commission. Early in spring 2013, he will also succeed Hu Jintao in the post of the president of the country.
It is time to make an assessment of what Hu Jintao has achieved in his ten years at the top of the CPC and at the helm of the country. Looking at the economic development of China we can speak of remarkable success. In 2002, when Hu Jintao became secretary general of the CPC, China had a GDP of $1.5 trillion. It ranked sixth amongst the major economic powers in the world. Today China is number two with a GDP of $7.3 trillion. In 2002, the per capita GDP amounted to $1.135; today it is $5.445. Ten years ago, 38 per cent of the Chinese population lived in cities. Today, this rate is 50 per cent. In the same period, the number of internet users climbed from 45 million to 600 million. We could add many more facts and the picture of tremendous progress would be further enhanced.
Why then, are there voices in China who speak of a “lost decade”? Why are there so many commentators who stress the huge challenges that lay ahead for the new leadership? Without any doubt, Hu Jintao and his crew, namely prime minister Wen Jiabao, can be proud and satisfied about their achievements at the economic front. The main unease or even dissatisfaction comes from the political side of things. Here China has stagnated. While the country has made tremendous strides in its economic, infrastructural and social modernisation, it is stuck in the rut of a political system that has long passed its expiry date. In principle, the People’s Republic is still governed by a Leninist one party state, that had been established in 1949 at a time when China was a poor, backward country with huge scars caused by foreign occupation and a bloody civil war.
In 2002, there had been high hopes that the new generation of leaders would be bold enough to make substantial political reforms. However, nothing significant happened and ten years later, there is again speculation as to whether the new leaders, namely secretary general Xi Jinping, would bite the bullet of far-reaching political reform. Now, as then, this is idle speculation. Certainly, the new crew can take over a country that is economically in much better shape than in 2002. There has been a substantial growth of personal wealth -- not only at the top but also amongst the middle classes that comprise today a substantial part of China’s urban population.
Nevertheless, in the economy, too, not everything is sunshine and roses. This year, China’s economic growth has been negatively affected by the euro crisis and by a lacklustre growth of the American economy. Furthermore, uncertainty about the change of leadership had a dampening effect on economic growth. However, there are more serious structural problems that have to be tackled by the new leaders. Most pressing are the issues of an overdependence on capital goods investment and on exports as well as an escalating wealth gap, both between different regions and between different social groups. In fact, the power struggle that reached its climax earlier this year with the arrest of the high-flying Bo Xilai, has to be seen on the background of starkly different approaches how to tackle the structural deficiencies of the Chinese economy. For the time being, it looks as if the technocrats come out of the party congress stronger than the Maoist forces, which are critical of what they call a “neo-liberal” course.
One of the positive legacies of Hu Jintao is the fact that his successors have better tools at their disposition to deal with economic challenges than had been available when he himself took over the reins of power. In order to make the country less vulnerable to the whims of the global economy, Beijing has been pressing since some time to stimulate domestic consumption. It has been only partially successful, mainly because the common man and woman are reluctant to spend if they are insecure about their material status in old age. The new leadership has to speedily improve the quality of social security. This requires redistributive measures and these again will conflict with differing interests. In order to resolve such disputes peacefully, the country needs political reforms. On this crucial front, that determines the future of the system, the new leaders are under more pressure of expectations than their predecessors ten years ago.
(The writer is the Far East correspondent of Swiss daily Neue Zurcher Zeitung)