Leadership change evokes positive reaction
Updated: 2012-11-16 08:06
By Paris, Ariel Tung in New York and Tan Yingzi in Washington DC (China Daily)

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A new generation of Chinese leaders has taken the helm, and observers overseas have spoken about the country's future direction and international relations, report Zhang Chunyan in London, Fu Jing in Brussels, Li Xiang in Paris, Ariel Tung in New York and Tan Yingzi in Washington DC.

After the Communist Party of China held its 18th National Congress and completed its leadership transition, members of the Standing Committee of the Political Bureau of the new CPC Central Committee met with Chinese and foreign media on Thursday.

The congress marks an important milestone in China's development, according to analysts. In the next 10 years, China's new leaders will face a range of opportunities and challenges, both at home and abroad, but they will continue the process of reform, inject new momentum and vitality into the country's economy, and lead China in playing a key role in the international community.

Reporters from home and abroad at a news conference for the 18th National Congress of the Communist Party of China in Beijing. Li Xin / Xinhua

The economy
Under the CPC's leadership, China has been a global success story, with its rapid growth lifting hundreds of millions out of poverty and buoying the world economy.

Jim O'Neill, chairman of Goldman Sachs Asset Management in London, said he is confident about China's economy. "I have no real reason to divert from what I have already assumed about this decade since 2010, that Chinese real GDP growth will average around 7 to 8 percent."

In O'Neill's view, the Chinese economy will grow at a much slower pace than of late, about 7 percent, less than the 10 percent it registered during the last 10 years, but China will continue to be the best investment among the BRICS countries.
O'Neill coined the term BRIC to describe the emerging economies of Brazil, Russia, India and China - South Africa didn't join the bloc until later.
"China is in the early stages of moving out of a long period where it was all about the quantity of growth, into an era where the focus will be on the quality of growth," he said.

However, all the experts noted that the world's second-largest economy will have to undertake many tasks in response to domestic and international economic developments.

At home, the new leadership will need to reshape the economy, address social concerns such as healthcare, education and corruption, and tackle a number of pressing environmental issues, said Stephen Phillips, CEO of the China-Britain Business Council, which helps British companies to invest in China and Chinese companies to establish business in Britain. He added that this will require continued reform on a number of fronts.

Pierre Picquart, a China watcher and professor of geopolitics at the University of Paris VIII, said China's new leaders will need to accelerate economic restructuring and reforms to sustain healthy economic growth.

"The new leadership needs to be pragmatic and creative in order to better facilitate the trend that China is transforming from a world factory to a world laboratory," he said.

Ensuring that developments are based on improved quality and performance is crucial, said Peter Ho, a professor of Chinese Economy and Development and co-director of the Modern East Asia Research Center at Leiden University in the Netherlands. Ho added it's clear that product and, perhaps even more important, food safety will be major challenges.

"China needs to do a couple of important things in order to see further development," he said. "First, it needs a strong, centralized leadership that can think deeply about banking reform, capital market reform," said Doug Guthrie, dean of the George Washington University School of Business and professor of International Business and Management.

"Second, it's really important that reforms are also tied to larger social issues related to the creation of a healthy market economy. It's not just about technicalities such as banking and currency reforms, but also about building a social safety net like healthcare, etc. These things really do relate to the economy in a fundamental way.

"Third, they have to build a consumer-oriented economy. There has been a lot of talk about this, but it will be crucial for China to build an economy centered around domestic consumption."

On the global stage, "China's new leaders will need to grapple with a continued, challenging overall economic environment and the tensions this may bring to trade and investment relationships as the global economy continues to adjust and rebalance," said Phillips from the China-Britain Business Council.

Nicola Casarini, research fellow at the European Union Institute for Security Studies in Paris, said China's new leaders will try to preserve a tranquil regional environment.


International relations
With regard to Sino-European relations, the observers did not expect to see many changes in economic and political relations, adding that they may evolve according to the way Europe deals with China.

They said European leaders will work with China's new leadership to address bilateral and global issues, as they did with the previous generation, but will require more knowledge about China and its new leaders.
Yao Shujie, head of the school of contemporary Chinese studies at Nottingham University in the United Kingdom, said that China and the European Union have developed close relations regarding economics and technological cooperation.
The EU has been China's largest trading partner for many years, and China is the EU's second-largest trade partner after the United States. The two economies have strong complementarities, he added.

However, Yao pointed out, there are still some stumbling blocks on bilateral relations, including the fact that the EU has not recognized China's market status and still has a number of trade restrictions relating to Chinese high-tech.
In the United States, Guthrie said he sees opportunities for the US and China to build a collaborative relationship. "It's bad when Mitt Romney and others talk about currency manipulation and being tough on China. I would like to see a more welcoming environment towards Chinese investment," he said.

One of the major challenges is to set aside political tensions, he noted. "We cannot accuse Chinese firms of spying on the US government. The Huawei case is absolutely absurd."

He admitted that US politicians have concerns about China's change of leadership and thinks of most of them are unfounded. "There are many US politicians who do not know anything about China. This creates an opportunity to talk about the threat that China poses. They just don't understand the situation in China," he said.

"I would rather see them engage with China, and to get to know Xi Jinping. I also would like to see Chinese politicians being more open to engagement with the West."

Orville Schell, the Arthur Ross Director of the Center on US-China Relations at Asia Society in New York, said: "My hope is that the relationship that General Secretary Xi has formed with Vice-President Biden will grow in closeness and serve as a significant point of close contact and interchange between the two countries to work out a new, more partnership-like relationship, something that is much needed.

"This personal connection could serve as a critical new mediating role between the two countries and should be welcomed and encouraged."

The environment
In President Hu Jintao's report to the 18th National Congress of the CPC, he addressed the environmental challenges facing China and spoke about the need to promote sustainable growth.

Guthrie from George Washington University said: "I think it's important that he's talking about this. The United States also went through environmental challenges for many years. Many US cities had very bad air pollution in the 1950s and 1960s. China is going through the same thing."

"China's growth has been spectacular. We want to see the government step in and make sure that Chinese citizens have access to clean air, food and water."

Derek Scissors, a research fellow in Asia Economic Policy at The Heritage Foundation in Washington DC, said he is interested in China's outbound investment.

"In 2002, it was very small. Now it is much larger and more dynamic. There are bumps in every road, but this is an important success story," he said.

In order to promote bilateral ties and provide mutual benefits, the analysts also suggested that Chinese and European leaders should increase investment.

Establishing an investment trend between China and Europe to improve market access for investors on both sides should be the top priority for the leaders of both sides, said Francois Godement, a China specialist and director of the Asia Center think tank in Paris.

"It is important for Europe to gain better access to China and for Chinese companies to be protected and to know how they can invest in Europe," he said. "That's probably where the change will be in the EU-China relations."

He noted that the trade imbalance will continue to be a problem that needs to be addressed by leaders on both sides, but concrete and effective measures are more valuable than "simply saying it should go down".

European nations should prepare a common position in the triangular relationship of Europe, the US and China, he said.
"If the European leaders don't coordinate and create a common position, they will not have any weight compared with the Americans and the Chinese in bargaining power," Godement said.

"I hope that the eurozone crisis will fade away soon and we can move on to other priorities, such as preparing a common policy for relations with countries like China, which is very important," he added.

Pierre Defraigne, executive director for the think-tank the Madariaga - College of Europe Foundation in Brussels, said investment should be at the top of the agenda, because it's really the most urgent and the most sensitive issue at the moment.
"Investment is the bridge we need to consolidate the economic partnership, and cross-regional investment really matters to the growing mutual interests," he stressed.

The experts all said that European leaders need to make their macroeconomic environment more attractive for international investment if they want to create jobs and maintain Europe's competitiveness over the long term.
However, there is a debate in Europe about the security and political implications of Chinese investment in sectors considered to be of strategic importance.

Ho noted that several things are necessary for Chinese investment in Europe to increase.

One of the most pressing issues is how the EU deals with its sovereign debt crisis, and whether the steps will be taken in a sufficiently effective and efficient manner to restore the confidence of consumers and producers in the EU market, Ho said.
Another major issue is whether the EU will be able to establish a more unified political system that will allow more effective and coordinated trade negotiations, Ho said, adding that coordination of EU-China trade needs to be improved, meaning that favorable investment policies will need to be handled at a transnational level.

Yao gave some guidelines for European leaders to attract China's investment, which include working closely with central and local governments and major companies, identifying key sectors, especially those that China has identified as strategic sectors such as high-technology manufacturing, environmental services, healthcare, aerospace technology, biotechnology and renewable energy.

As Yao put it, Europe needs to "be more open to China and respect China's values and foreign policies."


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