Challenges facing Xi

The 18th National Congress of the Communist Party of China began in Beijing yesterday to pick a new leadership for the next 10 years. Vice President Xi Jinping will almost certainly inherit Hu Jintao’s titles of president of the People’s Republic of China and General Secretary of the Communist Party. The world’s eyes are fixed on the first Chinese power shift in 10 years, coming immediately after Barack Obama’s re-election in the United States.

China’s unparalleled economic achievement over the past decade - an average annual growth rate of 10.8 percent - has elevated the country to the status of the second largest economy in the world, surpassing Japan. Its per capita GDP also surged to $5,432 from $1,135. Now China is the biggest exporting country with the largest foreign reserves.

With the world economy entering a long-term period of economic malaise, China’s growth model of exports based on low wages reveals a fundamental flaw. State capitalism based on government-owned companies continues to deepen the distortion of available resources, exacerbating corruption and social instability from an ever-widening income gap. With income growth sparking demands for political reform, Beijing confronts the gargantuan task of addressing rampant corruption and economic polarization by finding a new growth engine for domestic consumption. That’s the biggest challenge the Xi Jinping leadership has ahead of it.

Xi’s biggest external challenge will come in relations with America. With China’s extraordinary rise and Asia’s ever-growing weight on the world stage - as seen by Obama’s recent “pivot” toward Asia - the U.S. is beefing up efforts to hold China in check. As its clout gets stronger, China seems to be in a monumental transition from a peaceful to an aggressive rise as exemplified by its intransigent stance on the Diaoyu/Senkaku Islands in the East China Sea. One can hardly rule out the possibility of a full-fledged skirmish over the islets between the aggrieved parties.

Korea’s next president must take responsibility for protecting our national interests in such a daunting age. Given our peculiar geopolitical situation, he or she should demonstrate highly strategic thinking and adroitly use our existing ties with the United States while maintaining and developing our strategic partnership with China to address the thorny North Korea issues.

Because deterioration of Sino-U.S. relations will only hurt us, the new president must play a critical role as a mediator in mitigating the coming conflict between America and China.