Following an eight-DAY public spectacle during which power within the Chinese Communist Party (CCP) was handed over, the fourth generation of Chinese leaders are ready to step down from their positions. Vice President Xi Jinping (習近平) has formally accepted his nomination as president and taken over the posts of CCP general secretary and Central Military Commission (CMC) chairman, while Vice Premier Li Keqiang (李克強) will take over as premier in March.
Xi and Li are taking over as the fifth generation of CCP leaders, putting them in charge of the Chinese political scene for the next decade. In the next few years, the system under Xi and Li is likely to be one that prioritizes domestic issues while emphasizing stability in China’s foreign and Taiwan policies.
With the fourth generation of leaders stepping aside, the new generation are set to take control. However, Xi has only been vice president for five years and vice chairman of the CMC for two years. He does not have particularly close relations with the other six members of the CCP’s Central Standing Committee, and the third and fourth generations of Chinese leaders are all still alive and well.
Since Xi needs time to consolidate his power, so he cannot be expected to propose any major reforms during this initial period. The incoming leaders will continue to lead in a collective way and build a collective consensus as a basis for deciding major policy issues.
With regard to economic policy, China will not make any drastic changes, but it will continue to face serious challenges. China’s 12th Five-Year Plan makes it plain that the nation’s model of economic growth can no longer be one that relies on exports and investment, and must shift toward internal consumption and demand as the main drivers of growth. The plan also states that China’s economic structure has to be adjusted from its current emphasis on manufacturing and toward a vigorous expansion of the service sector.
However, investment’s share of China’s GDP reached a new high of 49.2 percent last year, while the share represented by consumption stayed at a record low of 48.2 percent. Meanwhile, the service sector’s contribution to GDP remained at 43.3 percent.
Evidently, enacting reforms will be more easily said than done.
In the next few years, the Chinese government will pursue its main strategic goals of steady growth and structural adjustment. Maintaining social stability will also be an important task.
China will need to stop blindly chasing high economic growth rates, instead seeking to transform its economy and maintain sustainable development. China has set its target economic growth rate for the duration of the 12th Five-Year Plan at 7 percent, and it is likely to remain between 7 percent and 8 percent.
Unemployment and inflation, both of which have a strong influence on social stability, will therefore be important indicators for observing the direction of Chinese economic policy.
As for China’s policy toward Taiwan, Xi is set to pick up where Chinese President Hu Jintao (胡錦濤) left off, but some policies will be slightly adjusted:
First, the CCP was happy to see President Ma Ying-jeou (馬英九) of the Chinese Nationalist Party (KMT) re-elected in January. With Ma continuing in office, China can be expected to maintain current policies toward Taiwan.