Since the late January when the Chinese celebrated the Lunar New Year, China has entered the Year of the Dragon. In the Chinese culture, the dragon symbolizes strength, power, bravery, and of course, good luck. Indeed, China needs all these for the year of 2012.
A few major events or developments to look for in the coming months may reshape China’s, as well as the world's, path to future development.
The biggest event for China this year will be the change of guard in the central government. The Party Congress will likely take place in the mid-October and it will elect the national leaders for the next five years. In the past, succession struggles in China could have led to palace coup or domestic unrest. A decade ago, after it had undergone twenty years of reform, China experienced for the first time in its contemporary history a peaceful power transition from its third generation of leaders to the fourth generation. Since then, the Chinese government has become more a representative of a new rising middle class, property owners and entrepreneurial investors (see the December 2011 issue for more information) who are more interested in political stability. Ten years later, the fourth generation of Chinese leaders seems to be ready to hand over the power to their successors in the expectation of little political drama. Xi Jinping and Li Keqiang are expected to assume the pair of top positions of the fifth generation of Chinese leadership, with Mr. Xi as the new party secretary general and Mr. Li as the new premier.
Nevertheless, this does not necessarily guarantee continuity of the same policies or, more importantly, the same working relationship between the government and the business and between China and the rest of the world. A working relationship is built upon personal networks, knowledge and commitments and it follows individuals who have nourished such relationships, particularly in the Chinese culture.
Related to this biggest event, there will be considerable changes of local officials, before and after the Congress convenes. Some of them will get promoted within the local structure or to the central government; others will get retired as China tends to comply strictly with its informal retirement practice (see the February/March 2009 print issue for more information). Still others will unfortunately get sidelined.
In all the changes, it is important to understand the development of different factional groups. There have been two notable groups well positioned for good fortunes, one group includes the descendants of the former leaders or the “princelings;” the other includes those who have risen to power through the Youth League. Because of their respective backgrounds, Mr. Xi is expected to play the ultimate patron for the princelings, and Mr. Li for those associated with the Youth League.
Other than the expected political changes, the Chinese economy faces a shrinking world market. As China develops within its borders the biggest luxury market in the world, its rising middle class seems to demand more government attention. China needs strength, bravery and good luck to deal with all this.