China issue: Light at the end of the tunnel

I was in Hong Kong the other day and I read the remarks of former Australian Prime Minister Kevin Rudd that China’s next leader, Xi Jinping, is expected to usher in a new era of economic and political reforms, which has buoyed expectations of improved relations between China and its Asia Pacific neighbors including the United States. Rudd expressed optimism that Xi’s open mindedness will spur the economic giants US and China to engage in strategic cooperation to reach a common road map that could augur well for the future of Asia and the rest of the world.

While China has been a key driver of global economic growth, today it faces the weakest growth since it opened up its economy 30 years ago. Growth rate is predicted at 7 percent for 2013 compared to a high of 14 percent in the early 1990s, leading analysts to conclude that China needs to overhaul its existing growth model in view of falling exports, decreasing direct foreign investments, increasing lay-offs and declining consumer spending — all of which could lead to “domestic imbalance,” experts said.

There is also growing resentment fueled by the widening gap between the rich and the poor especially in the provinces where education, health, unemployment, hunger and other social problems are mounting. The upcoming political transition in 2013 when Xi Jinping formally takes over as new president will bring forth new economic challenges. Xi will have to appease anti-reform hardliners and party officials who have become used to power and the perks that go with it. Hostility from government controlled banks and institutions will also be a problem since they will resist anything or anyone that would change the favored status enjoyed by state-owned monopolies that have undermined private investments.

Criticisms for outgoing President Hu Jintao and Prime Minister Wen Jiabao are already mounting, with perception that Hu and Wen had “created more problems than achievements” in the 10 years they were in power. Although Xi has been rather noncommittal regarding the issue of an economic overhaul and changes in the political system, those who know him conclude that he is just waiting for the right time to introduce a more far-reaching reform agenda. In short, he will start cracking the whip once he has secured his position as president.

While China continues to be belligerent in its position regarding territorial disputes with the Philippines, Japan and its other Asian neighbors, there are good signs that Xi’s ascent to the highest position can do a lot to ease tensions. As Rudd remarked, he’s the kind of leader that the world can work with. Observers perceive Xi as a pragmatic and open minded leader, who believes that China “must seek progress and change while remaining steady,” even hinting that tax breaks and other incentives could be given to private businesses. Clearly, Xi’s eventual ascent is seen as the light at the end of the tunnel when it comes to our issues with China.

Mar Roxas scored significant points when he met with the Chinese vice president last week. Lets face it, a big factor that triggered Chinese displeasure were the scuttled projects that include the botched NBN-ZTE deal and the aborted North Rail project. The meeting between Mar and Xi was a good move towards the right direction in mending our “frayed ties.” Likewise, our offer to pay back the $500 million official development assistance is the right gesture. When all is said and done, it all boils down to money. Sadly, these self-proclaimed legal “know-it-alls” are asserting that we should not pay back the Chinese unless they can prove “good faith”! (What the...?) Here we go again! To this day, we are still paying for the bad image spawned by the Piatco-Fraport fiasco. Haven’t these “usual suspects” ever heard of “national interest”?

In my conversation with Chinese Ambassador Ma Keqing the other evening, she clearly wants to see strengthened economic relations between our two countries — something we should really work hard on to attain a peaceful resolution to the territorial disputes.

On the side, Jorge “Nene” Araneta (uncle of Mar) invited the Chinese Ambassador to watch the Ateneo-La Salle basketball game from the La Salle side, since US Ambassador Harry Thomas is expected to watch from the Ateneo side of the Smart Araneta Coliseum. That should make a nice touch to a different kind of “basketball diplomacy.”

Interestingly, Chinese Foreign Minister Yang Jiechi has called on China and the US to “keep the momentum of dialogue and cooperation” and work hard to “expand common interests,” saying a stable relationship is conducive to peace and economic development in the Asia Pacific region and the world.

Analysts have noted that even the escalating tension between China and Japan over the Senkaku/Diaoyu islands will eventually simmer down. Apparently, the aggressive posturing and heated rhetoric from both countries are driven by the elections in Japan and the impending leadership change in China. Besides, both countries probably realize the economic implications of elevating their word war to a more serious level.

The real issue in any dispute, we all would like to think, is purely economic in nature. In the case of Chinese Vice President Xi, he knows only too well that he will have his hands full tamping down growing public discontent at home, so hopefully he will be more pragmatic when it comes to international disputes.

Any leader whether in China, the US, Japan or even in the Philippines should remember what US President Bill Clinton said when he was campaigning for his first term: “It’s the economy, stupid!”

*      *      *

E-mail: [email protected]