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Asia’s Giants Under New Management

BALI – More than one-third of the world’s population lives in just three countries: China, India, and Indonesia. With all three undergoing significant political transitions – whether electing a new leader or experiencing a recently installed leader’s first key decisions – this is a decisive moment in shaping the global economy’s future. If Narendra Modi and Joko “Jokowi” Widodo win the upcoming elections in India and Indonesia, respectively, they will join Chinese President Xi Jinping in spurring regional economic growth – likely causing Asia’s rise to global economic preeminence to occur faster than the world ever imagined.

In the year since Xi assumed the Chinese presidency, he has centralized power to a remarkable degree. Not only has he positioned himself as General Secretary of the Chinese Communist Party and Chairman of the Central Military Commission; he has also neutralized potential rivals, including former Chongqing party boss Bo Xilai and former security chief Zhou Yongkang.

Consolidating power in a country as large and messy as China is extremely difficult, making Xi’s accomplishment remarkable, to say the least. After all, it took Xi’s predecessor, Hu Jintao, far longer to achieve a similar degree of authority. But it is only a first step. Xi is now attempting to use this power to push through the difficult reforms that Hu and his prime minister, Wen Jiabao, have been widely criticized for neglecting.

Despite the pressure to make up for lost time, Xi knows that he must be pragmatic in his reform efforts. First, he must build a national consensus capable of overcoming the powerful vested interests that oppose changes – including the dissolution of monopolies, improved market regulation, increased transparency, and tax reform – that would level the economic playing field.