China Unbound

Sydney – The appointment of five provincial-level Chinese Communist Party chiefs in early December is a reminder that the ascension of China’s next generation of leaders, who will take power in 2012, may be the most significant development in Chinese politics since Deng Xiaoping’s reign begin in 1978. The upcoming generation of leaders will be the first with little or no personal memory of the turmoil and hardship endured during the Mao Zedong years. Forgetting that history might doom China to repeat the mistakes of the past; but, for better or worse, it might also ease constraints and set its leaders free.

All five appointees were born after the founding of the People’s Republic in 1949. Two of them, Hu Chunhua and Sun Zhengcai, are only 46 years old. This is in line with the Party’s recently announced policy that the next generation of leaders should have an average age of around 55 years, with up to four top positions filled by leaders not yet in their fifties. The Party’s aim is to ensure that it remains energetic and dynamic as China rises.

This seems a wise decision. Chinese leadership over the past decade and a half has been about fine-tuning and maintaining the momentum of Deng’s state-led development model, launched after the Tiananmen protests of 1989. In this respect, China’s third and fourth generation of leaders, under the technocrats Jiang Zemin and Hu Jintao, have been competent but unimaginative.

But the viability of Deng’s model is nearing its end, and China is now addicted to inefficient state-led fixed investment and unsustainable export-led growth, rather than domestic consumption, to generate jobs and growth. Progress on further structural reforms – such as currency and capital-account liberalization and weaning state-controlled industries off state capital – has been slow, and new initiatives have been piecemeal rather than comprehensive.