Now The Hard Part Begins: The China Challenge (Page 3 of 3)

On the economic front, however, Xi’s room for maneuver is smaller.  While he may continue to expand some promising experiments on financial liberalization, significant reforms that will hurt the state-owned enterprises, local governments, central bureaucracy and families of the elites are certain to encounter fierce opposition.  Xi may choose not to pick a fight he cannot expect to win easily.

Political reform – at least of the kind that will introduce more democracy and civil liberties – is extremely unlikely.   The risks for Xi are simply too high.  The two Politburo members perceived to be reformers – Li Yuanchao and Wang Yang – failed to make it into the standing committee mainly because they are seen as likely champions of political reform.   Xi is obviously aware of what happened to the two top leaders, Hu Yaobang and Zhao Ziyang, who advocated political reform during the 1980s (Both lost their jobs).

Compared with the constraints he faces on the domestic policy front, foreign policy actually may be an area over which Xi will gain control more quickly and decisively.  Given the urgency of the escalating Sino-Japanese tensions over the Senkaku/Diaoyu Islands, Xi will have to act fast to  avoid a foreign policy crisis.  Of course, Xi’s long-term foreign policy objective is stabilizing Beijing’s relations with Washington since the underlying competitive dynamics are driving the two countries further apart.  But this goal will be elusive unless and until he fixes Sino-Japanese ties.

Whether Xi can pull this off is anybody’s guess.  He will have to invest some political capital and take real risks in moderating China’s positions and stopping the now routine patrols of the waters close to the disputed islands (such patrols are designed to contest Japan’s sovereignty claims, but may trigger a tough response from Tokyo that leads to further escalations).  Japan’s political establishment will also have to cooperate by not taking actions that make it impossible for Xi to make symbolic concessions.

So the bottom line in evaluating China’s new leadership in general, and Xi in particular:  he and his colleagues will have to walk the walk. His predecessors have done enough talking already.

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