Richard Weitz

The general consensus of the experts was that China-U.S. relations have improved significantly during the past few years from the nadir of 2010, when the two countries openly clashed over U.S. military activities in China’s Exclusive Economic Zone (EEZ) and China’s newly assertive territorial claims in the South China Sea. But there were residual concerns about divisions regarding Japan, North Korea, Taiwan, and other issues. 

Whereas a few years ago Chinese policy makers might have seen the United States as a declining power that was withdrawing from the eastern Pacific, the Obama administration’s Asian Pivot and other developments have made clear that the United States plans to remain an Asian power for a long time. In fact, Chinese experts I met were divided over the Asian Pivot. Some saw the strategic rebalancing as designed to constrain and counter China’s rise. Others considered the shift a natural response to the changing global security environment, which is increasing the relative importance of Asia according to a number of metrics. 

Meanwhile, Chinese leaders have found an effective way to counter the Pivot by not behaving very aggressively and encouraging regional concerns that the Pivot was harming China-U.S. relations at everyone’s expense. Some Chinese suggested that the Pivot was driving Beijing and Moscow to cooperate against the United States. Indeed, many of the speakers from other Asian countries evinced alarm that deteriorating China-U.S. relations over the Pivot would negatively impact their interests. Their governments were reluctant to embrace the Pivot fully as long as it was seen as having an anti-Beijing thrust. 

I had the opportunity to deliver several lectures at Chinese universities. The Chinese students, as well as their professors, spent much time attacking Tokyo for stirring up its territorial dispute with China by nationalizing the disputed islands. Even more surprising was the vehemence of their alarm at the allegedly heightened threat of Japanese re-militarism fueled in part by U.S. indifference and U.S. efforts to expand Japan’s regional security roles. Chinese analysts stressed that their government leaders had to take into account the strong popular sentiments on this issue. Many of the South Korean students I met in Seoul shared these anti-Japanese sentiments, which are largely absent in the United States but could complicate U.S. Asian diplomacy in coming years. 

Some of the Japanese and U.S. speakers at the Asan Plenum attacked China for adopting a more assertive policy regarding territorial disputes in recent years, with one Japanese analyst complaining about China’s “territorialization” of its EEZ. The Chinese speakers resisted the view that China should remain primarily a land power and allow Japan and the United States to dominate the seas, explaining that their preoccupation with the small and often barren Pacific islands in the East and South China Seas by noting that their country had often been attacked from the sea, including by Japan and other Western countries. Some were upset by what they perceived as a change in Washington’s views towards China’s territorial conflicts, which they believed was encouraging Japan, the Philippines, Vietnam, and other countries to adopt a confrontational policy toward China. 

Chinese academics generally downplayed perceptions that the Xi administration has (yet) made major changes in China’s foreign policies. They argued that the new leadership had altered its discourse in some area, with Xi’s style differing from that of President Hu. In their view, Xi and other leaders more openly express annoyance at North Korea’s provocative behavior, but they also are blunter in criticizing U.S. policies they dislike, such as U.S. missile defense programs in Asia. 

Nonetheless, Chinese experts did not see any major changes in their country’s foreign policies. They considered significant alterations possible in the future, though they believed these would probably only occur in the context of a comprehensive and integrated revision in China’s foreign policies rather than on a piecemeal basis. These changes could aim to achieve major improvements in Beijing’s ties with Washington, though they could also represent a more comprehensive effort to counter the U.S. Asian Pivot, which could see China move closer toward Moscow and Tehran in resisting U.S. influence in Eurasia. In fact, China’s policies towards Russia and Iran, as well as North Korea, represent good signposts as to the overall orientation of China’s foreign policy. 

Looking ahead, analysts offered various suggestions on how best to improve China-U.S. relations. Some Chinese stressed the need to reduce distrust between China and the United States. At the Asan Plenum, Jia Qingguo of Peking University advocated slowly expanding the currently limited collaboration on selected issues to build trust that could lead to more extensive cooperation later. Conversely, American expert Douglas Paal called for a “regional reset” in U.S. policies that would entail launching a bold initiative with an approximate 15-year timeline to develop and execute a positive bilateral cooperation agenda to fill in the details of the “new type” of bilateral relationship, such as a mutual investment treaty, agreed cyber and space security norms, and a vision of how we would like the situations in the Korea Peninsula, South Asia, and other regional hotspots to develop. 

Addressing near-term challenges such as North Korea and Afghanistan is important, but having a vision of strategic partnership would be valuable for keeping policy makers in both countries focused on long-term opportunities as well as near-term challenges. 

Richard Weitz is a Senior Fellow and Director of the Center for Political-Military Analysis at the Hudson Institute. His current research includes regional security developments relating to Europe, Eurasia, and East Asia as well as U.S. foreign, defense, homeland security, and WMD nonproliferation policies.

On March 16, Dr. Bo Jiang, a citizen of China boarded a plane at Dulles International bound for Beijing. He was accosted and escorted off the plane by FBI agents, put in jail and charged with lying to the law enforcement officials and possible violations of Arms Export Control Act. 

About 7 weeks later, on May 3, the prosecution dropped all charges against Dr. Jiang. But before he was allowed to leave the US for Chengdu China he had to plead to a misdemeanor charge of “misuse of government equipment” in exchange for time already served in jail, so that the government did not have to admit that they made a mistake. 

In 1999, Dr. Lee, the then Los Alamos scientist, was accused of being a spy for China by the New York Times, fingered by then Energy Secretary Bill Richardson, thrown into solitary confinement for ten months. Lee was then released with an apology from the presiding judge for prosecutorial misconduct. 

In the most recent case, Congressman Frank Wolf (R-VA) was instrumental in the arrest of Jiang and he was quite proud of his role as the self-appointed spy catcher.  After Jiang’s arrest, the Congressman held a press conference on March 18 and issued a press release in praise of his own role in this affair.  

Wolf is a well-known, long time critic of Peoples’ Republic of China. On March 7, he held a press conference expressing alarm at security violations at NASA-Langley. According to him, anonymous whistleblowers had told him of a Chinese national with unauthorized access to NASA’s secrets. 

Wolf on March 7 already knew about Jiang but was setting the stage for the drama to come. He did say, “It is my understanding that this Chinese national is affiliated with an institution in China that has been designated as an ‘entity of concern’ by other U.S. government agencies.” 

At the March 18 conference, Wolf revealed that Jiang was “trying the leave the country on a one-way ticket.” At the airport, the federal agents had asked what electronic media he had with him. Jiang admitted that he had a cellphone, a memory stick, an external hard drive and a new computer. A search of his luggage found other media items not mentioned by Jiang and that discrepancy too became grounds for suspicion. 

At this point, Jiang could have explained that his work visa in the US was expiring and his contract was not being renewed. He bought a one-way ticket back to China because he wasn’t planning to come back. There was nothing sudden about his flight to Beijing. 

He could have pointed out that the work he did as a NASA contractor was unrelated to national security and he had no access to data and technology related to national security. 

But no one was interested in what the suspect had to say. Fortunately for Jiang, he then got a break. The court appointed Fernando Groene as his defense counsel.  An experienced former federal prosecutor, Gorene accepted the appointment because he was outraged by the injustice of Jiang’s case. 

“It’s all about a witch hunt,” he said to the media shortly after taking the case. The mills of justice ground on for a few more weeks before the prosecution confirmed that Jiang had been telling the truth, namely his computers contained no data or files that violated national security regulations. 

Groene was quick to praise the prosecution for being fair minded after seeing that they had no case. Of course, this did not mean that Jiang received an apology from Wolf, FBI or anyone representing the federal government. 

He experienced first hand the adage, “you can’t fight city hall.” Jiang had to accept a guilty plea to a misdemeanor charge for the time served—a misdemeanor of misusing government equipment that most federal employees would also have been found guilty of. 

There were, of course, no offers of compensation for his 7 weeks of incarceration or damages to his reputation, dignity and personal privacy. 

After the case was over and Jiang had gone back to China, attorney Groene gave additional color surrounding this case. 

NASA could hardly ignore the agitation from the Congressman with the power of funding oversight.  In response, NASA had earlier conducted an internal investigation of the allegations against Jiang and found no substantiation. This was duly reported back to Wolf but he would hear none of it. 

A dissatisfied Wolf then wrote letters on March 13 to the US Attorney’s office and FBI insisting that they investigate further, leading to the ensuing fiasco. 

Jiang’s implied sinister connection with an “entity of concern” alluded by Wolf was apparently the school in Chengdu Jiang attended for undergraduate training. Groene pointed out that the Chengdu school had a sister college relationship with the College of William & Mary and the president of William & Mary is none other than Robert Gates, former Secretary of Defense in Bush and Obama administrations. 

If anyone has violated federal regulations, Groene concluded, it was Congressman Wolf for disclosing confidential personal information on his website. 

Groene is a naturalized American citizen from Cuba. He is proud to be an American and grateful to be in the land of opportunities but he is concerned over the erosion of our civil liberties as exemplified by the arbitrary law enforcement action against Jiang. 

There are other conclusions to be drawn from this latest case of racial profiling against ethnic Chinese. 

Obviously the US does not have enough scientists that can meet the requirements for security clearances and are thus qualified to do work involving national security. To get around this problem, Government agencies such as NASA have been parceling out work that are unrelated to national security to contractors who can hire scientists that do not hold security clearances. This was the case with Jiang, a Chinese citizen without permanent resident status. 

Such a separation obviously does not satisfy Congressman Wolf and his ilk and thus Bo Jiang becomes a cautionary tale for any ethnic Chinese scientists working in the US. 

Whether it’s in Silicon Valley, universities, government laboratories or major corporations, if you are ethnic Chinese, not only your conduct has to be absolutely law abiding, you also have to stay as far away as possible from being tainted by any hint of wrongdoing. Others might routinely “misuse” government equipment but not you if you’re Chinese. 

During the Wen Ho Lee era, John Deutsch was the then head of CIA. He was reprimanded for routinely downloading confidential files to his laptop and regularly taking it home–a clear case of violating government regulations and gross misuse of government equipment. But he was not ethnic Chinese and therefore he did not have to cop a plea nor spend a day in jail. 

Evil seldom arrives alone, as the saying goes, and thus the Ya’an earthquake caught us midstream in our effort to contain the H7N9 influenza virus. The new strain of bird flu has infected 108 people in several eastern, central and northern provinces or municipalities as of April 23, leaving 22 dead.

The Chinese government and people have been fighting on both fronts and have handled the crises more calmly than before. In the latest disaster, as in all previous crises, they moved swiftly to rescue and relieve.

Premier Li Keqiang flew to the quake-hit area hours after the quake took place; more than 8,000 troops of the People’s Liberation Army reached the area before the end of the day; and civilians across the country started to donate to those affected by the quake as soon as they learned the news. Two days after the quake, a Tibetan friend in Yushu of Qinghai Province told me that Buddhist monks in Yushu County, which also experienced an M7.1 quake in April 2010, pooled a total of 270,000 RMB to support those affected in Sichuan.

There is no doubt that devastating disasters like the Wenchuan and Ya’an earthquakes are destructive, yet they also serve as a bond for the nation to unite over. The people of Ya’an, and the whole nation, will once again transform the sorrow into strength and stand up from the disaster undaunted. But what is more important than remaining unbeaten by the disaster is that we always see something new in our fight against a catastrophe, and we always make progress in coping with such disasters.

The Wenchuan earthquake marked the first time in China that non-governmental human and material resources were involved in disaster rescue and relief on a large scale. Thousands of volunteers made history in China’s disaster management in 2008. It also marked the first time that the rescue and relief work was televised live around the clock.

While the unprecedented effort won extensive admiration at home and abroad, shortcomings and misconducts in both government and volunteer rescue work were exposed through media coverage.

For instance, people realized that volunteers’ initiatives, though commendable, could impede professional recue teams’ moves if poorly organized. As highways to the stricken areas were damaged or destroyed, transportation was compromised. Volunteers’ vehicles often worsened traffic congestions and impeded the mobility of professional rescuers. Unprofessional volunteers also consumed precious resources and supplies for the affected people.

People remembered this lesson. At the start of rescue work in Ya’an this year, many bloggers suggested that unprofessional volunteers withhold their attempted moves to go to the stricken area, in order to guarantee mobility for the army and professional rescue teams. This echoes the central government’s call to rationally execute aid to Ya’an.

BBS and microblogs also reminded people that they shouldn’t place phone calls to the quake-stricken areas in order to save the telecommunication resources for emergency responses. People concerned for the quake-affected areas are acting more considerately, like donating money and blood in their home cities. 

Such consciousness has helped improve the efficiency of the disaster relief and kept the rescue and relief work in good order. It also indicates a social maturity and progress.

Also improved has been media coverage of the disaster – five years ago, some journalists were criticized by netizens to get information at the expense of victims and families who had already suffered. “Media people have no right to consume the victims’ trauma,” one netizen observed.

And the media has learned. This time, we have seen more thoughtful and respectful reporting of the event, although the overall coverage still has room to be desired.

One is toughened in hardships to become successful, and so is a nation. The key point is that they must learn from the experiences, both positive and negative.

China is prone to disasters and calamities, and the Chinese nation has sustained its 5,000-year-old civilization and developed through such experiences. When a population becomes good at learning from these miseries, any destruction can be turned into a constructive force, and the nation becomes invincible.  

Xiong Lei is a guest professor of journalism at Renmin University of China.

Qin Xiaoying

The current Chinese generation’s knowledge and understanding of the American dream is neither abundant nor far-reaching. Younger generations have a sense of the American dream from Pretty Woman, a popular film starring Julia Roberts and Richard Gere. For the middle-aged, William Manchester’s The Glory and the Dream provides a four-decade insight into the American dream. And, for many older generations in China, their limited understanding of the American dream likely came from Martin Luther King’s famous I Have a Dream speech. 

The American dream and its influence in the world is an objective reality. Since the founding of the United States of America, with unique natural resources and geographical environment, creative transplantation of progressive European ideas of equality and liberty and a powerful union of individualist values, many people have made or are making their dreams come true. Even in today’s information age, successful entrepreneurs like Steve Jobs of Apple and Bill Gates of Microsoft have offered great examples of how one can achieve the American dream. Therefore, it begs the question:  How is the Chinese dream, as proposed by President Xi Jinping, different from the American dream? 

Xi’s Chinese dream incorporates a dream that has been cherished by the Chinese people for over a century. The desire to do better and break out of the protracted state of poverty and weakness has become China’s national dream. In other words, the so-called Chinese dream actually represents a desire to be free of suffering and misfortune. 

Such a mentality first appeared 170 years ago out of the Opium Wars. When Japan launched massive aggression, it soon developed into a strong awareness to save the nation and ensure its survival. For a civilization of several millennia and with high self-esteem, the bullying and humiliation suffered in the 19^th and 20^th centuries has become an internal wound suffered by the whole nation. In this way, the Chinese dream is first of all a collective concept where a rich country and strong army are paramount. Such a collective appeal and vision is quite different from the individualist values of the American dream. 

As the Chinese dream is distinctly collective and involves the nation as a whole, it naturally embodies bolder and clearer moves in diplomatic and military fields as well as in overall national strength. The dream may be disaggregated into a diplomatic dream, a strong army dream and a (growing) national strength dream. In his frequent diplomatic activities this year, Xi stressed again and again that China and the world were interrelated and interdependent, demonstrating an apparent hope for changing the irrational international economic order. His warning against disturbance in regional situations and world peace out of “selfish interest” shows China’s increasing sense of responsibility in international affairs and can be seen as an expression of the diplomatic dream. Furthermore, the announcement that over 40 military exercises of various kinds will be held this year is the most direct proof of the military or strong army dream. 

Some people may wonder whether the endeavor to realize the Chinese dream with a strong collective characteristic of the whole nation would turn into a threat to the outside world. This may be an unarticulated doubt haunting many Western analysts and media. However, Xi has actually given his answer to it. According to him, the Chinese dream can only be realized by seeking China’s own path. Where is this path? It has been trodden with over 30 years of reform and opening up, through profound lessons from the past 170 years and on the basis of the five millennia of Chinese civilization. Just as a person’s DNA does not change over a lifespan, the nation’s code of survival does not easily alter. For China, a country that has traditionally found self-restraint a virtue and never engaged in expansion or pursued hegemony, the historical trajectory cannot be changed. 

The Chinese dream is neither Bismarck’s blood and iron policy, nor the Yamato nation’s greater East Asia co-prosperity sphere, nor “the sun never sets on the British Empire” type. The dream for a reinvigorated stronger nation is ultimately a dream in pursuit of happiness. In this sense, the Chinese dream and the American dream indeed have similar objectives achieved by different paths.

Qin Xiaoying is a Research Scholar with the China Foundation for International and Strategic Studies.

First, and key to its development, China must establish itself through the increase of both soft and hard power. China does pay the price for its development, such as serious environmental pollution, income inequality and unsound industrial structure. China has the world’s second-largest economy, yet its per capita GDP still ranks around 100th in the world, far less than one tenth that of the United States. More importantly, China has no tradition of expansion and will not repeat the way major powers could lord it over small ones. Therefore, China’s development will rely on upgrading its hard power on politics, economics, national defense and increasing its soft power on culture, art, and media. 

Second, China must grow by dissolving US economic restrictions. The growth is there all the time, although China has no intention of challenging the US and the current international system. The growth of China, which is vast and fast, imperceptibly had already become a challenge and pressure to the world. In this narrative, China suffering restrictions is natural. If China wants to continue developing, it has to co-exist peacefully and coordinate development together with the United States. 

Third, China can grow stronger by comforting neighboring countries. For China, its regional situation is the biggest present challenge. In fact, China has always been surrounded and even hurt by unstable surroundings, including the Korean Peninsula to the East and South China Sea. China could face a deterioration of regional ties if it cannot calm neighboring countries and establish a peaceful, cooperative situation. If arguments in East and South Asia keep escalating into even greater conflicts, it will jeopardize Sino-US relations, especially considering the US’s high-profile attention and intervention into Asia-Pacific affairs, which creates a dilemma for Beijing and Washington. 

Fourth, China must move forward by playing an active role, and even making sacrifices, in global affairs. While developing itself, China must break with traditional thinking and actively join the global governance. At the same time, China must handle more pressure, duty and responsibility. China could enhance coordination and cooperation with the US in non-traditional security aspects such as ocean development, maritime security, climate change, use of outer space, and international and regional hotspots. A good way to reflect on the significance of Chinese development and influence the Sino-US relationship is to provide more public products with a variety of approvals to the world.   

In an interview with the Global Times on March 7, Zbigniew Brzezinskif said China has developed to a stage where it has to consider global effects. It is a reality no matter good or bad. Under such a background, China should try its best to become a major country that does not let US worry, does not cause neighbors’ anxiety and does not make the world alarmed. As a rising power, this is the only realistic choice and path for China during its growing pains. 

Chen Yonglong is Director of the US Center of the China Foundation for International Studies.

Xue Junying is a Researcher at the US Center of the China Foundation for International Studies.

Stephen S. Roach

There were no surprises in the basic thrust of the strategy – a structural shift in China’s investment- and export-led growth model toward a more balanced consumer-based and services-led economy. The transformation reflects both necessity and design.

It is necessary because persistently weak global growth is unlikely to provide the solid external demand for Chinese exports that it once did. But it is also essential, because China’s new leadership seems determined to come to grips with a vast array of internal imbalances that threaten the environment, promote destabilizing income inequality, and exacerbate regional disparities.

The strategic shift is also a deliberate effort by Chinese policymakers to avoid the dreaded “middle-income trap” – a mid-stage slowdown that has ensnared most emerging economies when per capita income nears the $17,000 threshold (in constant international prices). Developing economies that maintain their old growth models for too long fall into it, and China probably will hit the threshold in 3-5 years.

Three insights from this year’s China Development Forum deepened my confidence that a major structural transformation is now at hand that will enable China to avoid the middle-income trap. First, a well-articulated urbanization strategy has emerged as a key pillar of consumer-led rebalancing. This was emphasized by China’s new senior leaders – Executive Vice Premier Zhang Gaoli and Premier Li Keqiang – in the Forum’s opening and closing remarks, and considerable detail was provided in many of the working sessions.

Urbanization is a building block for consumption, because it provides powerful leverage to Chinese households’ purchasing power. Urban workers’ per capita income is more than three times higher than that of their counterparts in the countryside.

The urban share of the Chinese population reached 52.6% in 2012 – up nearly three-fold from 18% in 1980, and is expected to rise toward 70% by 2030. If ongoing urbanization can be coupled with job creation – a distinct possibility in light of China’s emphasis on developing its embryonic labor-intensive services sector – the outlook for household-income growth is quite encouraging.

The pace of urbanization should dispel Western doubts stemming from concerns over so-called ghost cities and chronic over-investment. According to research by McKinsey & Company, with the annual influx of new urban residents totaling 15-20 million, China will need more than 220 large cities (at least one million people) by 2030, up from 125 in 2010. Moreover, because urbanization is a capital-intensive endeavor and China’s capital stock per worker – a key driver of productivity growth – is still only 13% of the levels in the United States and Japan, China has good reason to remain a high-investment economy for years to come.

What is new today is the focus on urbanization’s negative externalities – especially the thorny issues of land confiscation and environmental degradation. A well-developed “eco-city” framework was presented at this year’s Forum to counter both concerns, and features incentives promoting a new urbanization model that stresses compact land usage, mixed modes of local transportation, lighter building materials, and non-carbon energy sources.

The second insight from the 2013 China Development Forum is the new government’s focus on strengthening the social safety net as a pillar of a modern consumer society. In particular, owing to the hukou (China’s antiquated household registration system), access to public services and benefits is not portable. As a result, migrant workers – an underclass numbering roughly 160 million – remain shut out of government-supported health care, education, and social security.

Holes in the social safety net have led to high and rising levels of precautionary saving – driving a wedge between increases in labor income and any impetus to discretionary purchasing power. Significantly, there were strong hints from senior Chinese leaders at the Forum that hukou reform is now under active consideration.

While that would be welcome, such efforts need to be accompanied by an expansion of benefits. China’s retirement system has only about $430 billion of assets under management (national and local government social security and private-sector pensions). I pressed newly appointed Finance Minister Lou Jiwei on this point, suggesting that China deploy some of its excess foreign-exchange reserves to fund such an effort – the same tactic used to provide a $200 billion start-up injection for the China Investment Corporation, the sovereign wealth fund that he ran for the previous five and a half years. Unfortunately, he did not favor this suggestion.

The final – and possibly most important – insight that I took away from the Forum concerned the quality of China’s new leaders. From President Xi Jinping and Premier Li Keqiang on down, China’s new leadership team is quite sophisticated in terms of analytics, risk assessment, scenario modeling, and devising innovative solutions to tough problems. Moreover, under the organizational umbrella of the National Development and Reform Commission (NDRC) – the latter-day version of the old central planning apparatus – China has marshaled considerable resources into the formulation of a comprehensive and well-thought-out economic strategy.

But, in the end, it takes more than strong policy and analytical skills to deal with tough economic challenges. We have seen unfortunate examples of that repeatedly in the West in recent years, and there are no guarantees that China’s newly installed leaders will avoid comparable pitfalls.

Vision and strategy are vital for realizing the “China Dream,” as the country’s new leaders are now calling it. But it will take courage and sheer determination to tackle what is perhaps the biggest obstacle of all – resistance from deeply entrenched local and provincial power blocs. On this critical front, strong words must be accompanied by bold action. 

Stephen S. Roach was Chairman of Morgan Stanley Asia and the firm’s Chief Economist, and currently is a senior fellow at Yale University’s Jackson Institute of Global Affairs and a senior lecturer at Yale’s School of Management. His most recent book is The Next Asia.

© Project Syndicate 1995–2013

That, in turn, means a two-phase political transition, economic and financial reforms in the mainland, and recalibration in the region. 

Two-phase political transition           

In November 2012, Western observers paid great attention to the failure of reformers Li Yuanchao and Wang Yang to make it to the politburo’s standing committee. They saw it as a sign that “conservatives” had won. In reality, China is moving toward liberal reforms, but such changes require tough hands and consensus leaders. 

If Beijing had selected a reformist leadership (or a conservative leadership) that did not enjoy the support of the party as a whole, that would have divided the Party and the country. Instead, the Party opted for a de facto two-phase transition. The new Standing Committee comprises aging leaders that must retire after the next five years. During the National People’s Congress (NPC), both Li Yuanchao and Wang Yang took a step closer to the apex of power, along with a set of new-generation leaders. 

Since the late 1990s, the vice-presidency has been a powerful position, the seat for an anointed successor. Since Li is not in the Standing Committee, his responsibilities will be more limited, but he will have a high-profile foreign policy post and he will play a key role in Hong Kong and Macau affairs. 

Like Li, Wang Yang was passed over for promotion last year. He made his name in Guangdong, where he pushed for social and political reform. During the NPC, he became the youngest of the four vice-premiers who will assist Li Keqiang. 

“We need to combine the dividends of reform, the potential of domestic demand and the vitality of creativity,” Li says, “so that these together will form new drivers of economic growth.” These objectives are predicated on economic and financial reforms and, thus, the return of Shanghai. 

Financial reforms and Shanghai           

Meeting with Shanghai’s delegation during the NPC, Xi Jinping urged Shanghai to push for bold liberalization and serve as a pacesetter in the impending reforms. It was the new leadership’s green light for accelerated reforms. 

From the early 1990s to the early 2000s, Shanghai’s fortunes were boosted by a slate of new leaders, particularly president Jiang Zemin and his tough, hands-on Premier Zhu Rongji. In turn, local authorities initiated massive projects, even without the blessing of the central government. 

During the Hu Jintao-Wen Jiabao era, efforts to accelerate economic reforms were more subdued due to the central government’s focus on balanced development. While Shanghai’s leaders supported the Hu-Wen goals, they saw reforms and growth as the prime instrument to bridge the divide. Nevertheless, the groundwork was laid for a new era of reforms in the Hu-Wen era. 

As Shanghai’s party chief Chen Liangyu was dismissed for corruption in late 2006, Xi Jinping replaced Chen as party secretary in 2007. In turn, he was followed by Yu Zhengsheng, who is also in the Politburo’s Standing Committee. Like other reformers, Xi and Yu have welcomed greater scrutiny of public officials and the intensified anti-corruption struggle. 

In March 2009, China’s State Council approved Shanghai’s plans to forge one of the world’s leading financial and shipping centers by 2020. Along with other major trading cities, Shanghai received the nod from the central government to use the renminbi in overseas trade settlements. 

Financial reforms were initiated a year ago, while the internationalization of the renminbi has accelerated so fast that a convertible RMB could be less than a decade away. 

Just two months ago, Yang Xion, the newly-elected mayor of Shanghai, officially unveiled the megacity’s plan to develop the mainland’s first free-trade zone, which is characterized as an effort to create a “mini-Hong Kong.” 

Before the NPC, China’s securities regulator announced that, starting on April 1, China shall allow the residents of Hong Kong, Taiwan and Macau to open domestic accounts in the mainland. Yet another move to support Shanghai’s Composite Index, which remains far from its potential. 

These goals require a stable international environment. Consequently, in foreign policy, the tone of the new leadership is illustrated by the recalibration in Asia. 

Recalibration in Asia 

In part, Beijing’s recalibration is a response to the Obama administration’s pivot to Asia. It also reflects China’s rising strategic weight, the structural crises of the major advanced economies, and the shift of economic momentum to Asia. 

The tone of the new administration’s foreign policy is reflected by a slate of new appointments, especially those of senior diplomats Yang Jiechi, Wang Yi, and Cui Tiankai. As these leaders and their capable teams move ahead, China’s foreign policy leadership will become more international, more professional and more open to new ideas. 

After five years as foreign minister, Yang is now State Councilor. In this new role, the former ambassador to the U.S. shall focus more on grand strategies, in Asia and globally. When he left his post as foreign minister, he warned Tokyo to return to talks over territorial disputes or risk seeing tensions escalate. While Yang welcomes U.S. cooperation, he has urged Washington to respect China’s core interests. 

After Yang, the Foreign Ministry will be led by Wang Yi, former ambassador to Japan (2004-7) and an expert on Taiwan. Thanks to Wang’s navigation, Sino-Japanese economic ties were sustained, despite tensions in the Koizumi era. Wang also paved the way for Shinzo Abe, Koizumi’s successor and Japan’s current prime minister, to visit Beijing and ease tensions half a decade ago. Furthermore, Wang has participated in the Six-Party Talks on North Korea’s nuclear program since its start in 2003. 

Finally, Cui Tiankai, current vice foreign minister in charge of North American affairs who previously succeeded Wang as ambassador to Tokyo 2007-9), is a U.S. expert and China’s ambassador to Washington. In the past, Cui has suggested that China and the U.S. have a “trust deficit.” 

Despite the stated U.S. concern over the “increasing power of the People’s Liberation Army,” General Chang Wanquan, who succeeded the retiring General Liang Guanglie, will be the only general in Premier Li’s new cabinet. 

In the past, Chinese foreign ministers have been U.S. or Russia experts. Now, the emphasis is shifting back to the Asia-Pacific. 

Equal partners 

In the next few months, Xi is likely to develop his signature policy platform. At the broadest level, these policies are likely to focus on structural reforms economically, continued inner-party democratization politically, an intensified struggle against corruption internally, and China’s rising global clout internationally. 

If China’s growth model is to shift from investment and exports toward consumption, accelerated financial reforms are vital to support rising Chinese GDP per capita. 

Like Beijing’s new foreign policy architects, China’s new economic and financial tsars are pragmatic, able and willing to think creatively about complex problems, but they will be firm and decisive when talking about China’s core interests. 

In his inaugural address, Xi Jinping spoke about the “Chinese Dream”, in which the mainland will restore its role as the largest economy worldwide. China is no longer a junior partner, as some in Washington would still like to think. It is increasingly an equal partner with the United States, which it will surpass in economic power within a decade, as the Obama administration knows well. 

Dr. Dan Steinbock is Research Director of International Business at India China and America Institute (USA) and Visiting Fellow at Shanghai Institutes for International Studies (China) and the EU Center (Singapore).

However, as China becomes richer and society more diversified, we the people are not as homogeneous as we used to be. We have become differentiated people, with some more affluent while others vulnerable, and some with more say than others. Although we still embrace the concept that the people are the masters of the People’s Republic of China, the people as a political term seemed to fade away in our political language for quite some time. 

That is why I was touched while listening to Xi Jinping’s televised address at the closure of the First Session of the 12^th National People’s Congress on March 17. In his first speech on his mission and vision as the new president of the republic, Xi once again reached out to us the people to deliver the Chinese dream of national rejuvenation. 

“The Chinese dream, after all, is the dream of the people,” Xi said to some 3,000 deputies, to the country’s top legislature and through TV to the millions watching the event. “All Chinese people deserve equal opportunities to enjoy a prosperous life, see their dreams come true and benefit together from the country’s development.” 

Of course there is still a distance from the realization of what Xi put out in words and we should not be naive or overjoyed at just a speech, however aspiring it sounds. Yet we cannot deny Xi’s sincerity to involve all the Chinese people into the drive to realize the Chinese dream and rejuvenate the nation. This is a departure from the concept of governing by relying on a few elites that has prevailed in China for quite some time. This is also a positive intention which could transform the vision of Chinese dream into the people’s shared desire and action.

In our exploration of China’s modernization, we tried different roads and means. As the country was at a low stage of development and poverty-stricken, we followed the planning economy to concentrate the national resources on our reconstruction. At one time, it worked to inspire the people’s tremendous enthusiasm and we accomplished the initial industrialization in a short period of time. While we managed to feed and clothe the world’s most populous nation, the people in general were not rich. For example, I once felt that traveling abroad was an unreachable dream. 

Then China tried the road of market economy, which emphasized more on individual efforts and encouraged some people to get rich before others. We managed to become the world’s second largest economy in three decades, and many people entered the middle class. A large number of people like me, who do not belong to the top rich, can now afford to travel abroad at least once a year. But we also have many new social problems, like social disparity and polarization, as we have never seen before. Some from so-called vulnerable groups seemed to be excluded in the nation’s modernization drive.     

Since the Chinese dream is the people’s dream, no one should be left behind in its delivery. We the people should include every individual of society, regardless of his or her income, education, ethnicity, sex or social ranking. If some groups of people are reduced to a vulnerable status and have to bear the country’s growing pains all the time, the Chinese dream will be empty talk and doomed. 

China’s 1.3 billion people are its richest resource, if well mobilized. After all, the people, and the people only, are the motivating force of history. When the 1.3 billion Chinese converge in their pursuit of individual dreams into that of the Chinese dream, our national rejuvenation is at hand. 

In this context, it is good to see China’s new leaders value the people as a whole. In fact, it is the power of the people that forms the foundation of their confidence in everything. And their integration with the people, the people in grassroots in particular, is the only way to get the people of our 56 ethnic groups into one to push for the realization of the Chinese dream. 

Xiong Lei is a guest professor of journalism at Renmin University of China. 

Minxin Pei

On the whole, the new economic team may lift hopes for financial sector reforms. Mr. Zhou Xiaochuan has been a strong advocate for more exchange rate flexibility and liberalization of interest rates. Mr. Wang Yang, the new vice-premier whose portfolio likely includes the financial sector and foreign trade, has a reputation of a reformer (although he has yet to establish a solid record). The appointment of Mr. Lou as the new finance minister raises the possibility that the new leadership team could implement much-needed reforms in China’s dysfunctional fiscal system (which channels the bulk of the revenues to Beijing and forces local governments to rely excessively on land sales to generate income). Mr. Lou, a dynamic and experienced technocrat who played an important role in the fiscal reform of the mid-1990s, will be among the most qualified to push for a dramatic transformation of China’s fiscal system. 

The much-publicized re-organization of the State Council (the cabinet), however, sends mixed signals. On the one hand, the elimination of the railway ministry, the only bureaucracy that owns and operates vast economic assets, may qualify as a step forward. The merger of the national family-planning commission and the ministry of health should also be welcomed, mainly because this reform implies the end of the disastrous one-child policy. Although official spokespersons have consistently denied that the government will abandon such a policy, the disappearance of the national family-planning commission as an independent bureaucracy and a strong advocate for the continuation of a draconian policy suggests that the new leadership will greatly relax this policy, if not abolishing it altogether, in the coming years. 

On the other hand, those hoping that the new leadership will make a bold reform statement will likely be disappointed. There was no indication that the new leadership will take on the powerful state-owned enterprises (SOEs). The National Development and Reform Commission (NDRC), perhaps China’s most powerful economic bureaucracy charged with planning industrial policy, approving investments, setting prices, and formulating regulations, remains intact. Before the NPC, advocates of reform urged the new leadership to split the NDRC and re-establish an independent commission of economic reform. Such a step would have underscored the new leadership’s commitment to economic reform and reduced the power of the NDRC (which is viewed as ideologically conservative and biased in favor of SOEs). However, such a proposal was not adopted. 

If the message on the front of economic reform is rather mixed, the signal on political reform sent by the new leadership is quite clear. Mr. Yu Zhengsheng, a member of the new seven-member Politburo Standing Committee (the Communist Party’s top decision-making group) and the new head of the Chinese People’s Political Consultative Council (a top advisory institution), announced in his inauguration speech that China “would never copy the Western political system,” implying a rejection of democracy. This statement merely reiterates the Communist Party’s long-standing principle. However, since its formal installation last November, China’s new leadership has taken pains to avoid using such strong language to dash hopes of political reform – even though they have also been careful not to raise any expectations of such reforms. From this perspective, Mr. Yu’s pledge can only dampen optimisms for greater political openness under the new leadership. 

Based on the ambiguous messages sent by the NPC, outside observers can only conclude that China’s new leaders have a long way to go before they can convince both the Chinese public and the international community that they are committed to a bold course of economic and political reforms (the two sets of reforms are intricately linked because without changing the system of governance it would be hard to make the economy more market-oriented and growth more inclusive). 

Fortunately, Beijing has another opportunity to do so. In the fall, the ruling Communist Party will convene a plenum of the new Central Committee. Traditionally, Chinese leaders announce important policy objectives and initiatives at such a gathering. If the new leadership gets an incomplete for the outcomes from the NPC, it should strive for a much better grade in the fall. 

Minxin Pei is a professor of government at Claremont McKenna College and a non-resident senior fellow at the German Marshall Fund of the United States.