beyondbrics

China is heading towards a change in its leadership and the stakes couldn’t be higher. An FT Special Report on China looks at the coming transition and the political and economic choices that China’s new leaders are going to have to make – at home and abroad.

As the special report notes, the positions of president and premier are the only ones that seem to have been settled – with Vice-President Xi Jinping likely to succeed President Hu Jintao and Vice-Premier Li Keqiang expected to replace Premier Wen Jiabao. But the other seven slots on the all-powerful nine-member standing committee of the Communist party politburo are still up for grabs.

Whoever does take over will be faced with some extremely difficult decisions. China is coming to the end of 30 years of rapid growth which was predicated upon what many economist now see as an increasingly defunct, export-led, economic model.

As global demand slows, repositioning China’s economy (by sparking private sector creativity, cutting through regulation and moving manufacturers up the value chain) while at the same time satisfying a public that is increasingly chaffing under party control, will be be no easy task.

The report argues that much of the party’s top-levels recognise that the old methods of governing are not as effective as they once were. In an age of increasing domestic prosperity where the internet is providing the information and the platform for dissent – a big overhaul of the political system is the only way to head off the threat of serious social upheaval.

However, while some party liberals advocate democratic re­forms, the power rests mostly with hardliners who argue for maintaining the status quo while fine-tuning the instruments of repression to secure the party’s grip on power.

Jonathan Fenby, director of China research at Trusted Sources, an emerging markets research service, told the special report: “In the approach to the leadership transition starting in October 2012, none of those in line for the top posts can afford to be painted as a reformist liberal or to be accused of wanting to set China on a path similar to that which led to the collapse of the Soviet Union.”