Transition in China

We should be watching the leadership transition in China as carefully as we followed the US elections.

While we went our usual US-centric merry way, looking across the Pacific rather than toward our neighbors in Asia, we were slowly left behind in economic development by other Southeast Asian nations, and China grew prosperous on the back of robust exports and the region’s largest foreign direct investments.

With prosperity, China found the resources to increase its defense capability and enforce its territorial claims way beyond its shores. Boosting its capability to win friends and influence global affairs, China also became a major source of aid for other developing countries, although it still refuses to play by the rules of the international donor community.

This year, while critics of the Aquino administration bewailed the Philippines’ $1-billion commitment to the International Monetary Fund’s global firewall amid the European debt crisis, China committed $43 billion (other BRIC members Brazil, Russia and India pledged $10 billion each).

Our ties with the Chinese, which go back farther than our relations with the West, have evolved alongside the dizzying changes in modern China. Right now the ties are frayed, and should be better considering our long-standing friendship.

Much will depend on the policies that will be pursued upon the completion of the leadership transition, which started Nov. 8 and will last until March next year, when Hu Jintao is replaced as president by current vice president and incoming Communist Party leader Xi Jinping.

Developments in China could affect not only livelihoods in our fishing communities facing the West Philippine Sea but also the level of our defense spending and certain investment policies, if we want to be competitive in the region.

Around the planet, countries are looking east. The Europeans are pursuing greater cooperation with the Association of Southeast Asian Nations and East Asian countries. Several South American nations are doing the same. This year, Switzerland joined the Asia-Europe Summit for the first time. Australia is portraying itself as an Asian nation while UK-centric New Zealand is pursuing stronger ties with ASEAN and Northeast Asia.

The Chinese dragon looms large in the region. Its once-in-a-decade leadership change could determine whether the country will be increasingly seen in the next 10 years as a security threat or a force for peace and responsible member of the global community.

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In the past 10 years, during which the United States was focused on neutralizing al-Qaeda and Osama bin Laden, China scooted past Japan to become the world’s second largest economy.

It achieved average annual GDP growth of 10.7 percent. Annual per capita GDP rose from $1,135 in 2002 to the current $5,432.

The 30 years since Deng Xiaoping opened the Chinese economy saw the emergence of the saying that God created the Earth; everything else is made in China. It’s not entirely a joke, especially for those whose enterprises were crushed by the Chinese manufacturing juggernaut, among them Filipino garment makers.

In 2008, China debuted on the world stage with the spectacular Beijing Olympics, following it up with the Shanghai World Expo in 2010.

Last month, the Chinese deployed their first aircraft carrier – a refurbished Soviet-era vessel – and sent a female astronaut into space, becoming only the third country to do so.

At the opening of the 18th National Congress of the Communist Party of China last week, Hu Jintao told his compatriots, “We should attach great importance to maritime, space and cyberspace security.”

A report last week said the Chinese are about two years away from deploying submarines that can launch nuclear weapons. How will this affect security in the West Philippine Sea?

Hu has espoused China’s “peaceful rise.” In his speech last week, he reiterated that China is committed to “peaceful settlement of international disputes and hotspot issues, opposes the wanton use of force or threat to use it... opposes hegemonies and power politics in all their forms and will never seek hegemony or engage in expansion.”

With recent developments in the West Philippine Sea, that statement is greeted with skepticism in our country.

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Hu espoused “scientific development” under his watch, which aims for a more sustainable, coordinated and equitable development trajectory, with emphasis on rural poverty alleviation.

His goal is to have a “moderately prosperous society” by 2020, with GDP and per capita income doubled from 2010 levels, when the economy grew by 10.3 percent.

Considering the rapidly slowing Chinese economy, those might be ambitious targets. In the third quarter this year, Chinese GDP grew 7.4 percent, down from the 7.6 percent in the second quarter, and the lowest since early 2009.

Rising labor and other production costs and roadblocks in doing business are starting to drive away investors from China. This is compounded by the slowdown in China’s major export markets in Europe and tepid growth in the US. The Shanghai composite has also been down for three straight years.

Growing income gaps are another problem. The failure of the benefits of economic growth to trickle down to the masses is not unique to the Philippines. Critics of Hu’s 10 years in power say the nation became richer and the people poorer under his watch.

Social unrest over economic hardships is compounded by crackdowns on civil liberties.

Chinese society has opened up significantly in the past 30 years. Beijing has made an effort to improve the world’s understanding of China. Chinese journalists, bloggers and other citizens have increasingly enjoyed some degree of freedom of expression.

But China is still the world’s largest prison for journalists. And it’s still the only country in the world where I find certain emails to me blocked along with certain sites. Google reported that its search engine was blocked with the start of the National Congress.

Hu, in his speech, said China must “draw on the political achievements of other societies. However, we will never copy a Western political system.”

That includes Western concepts of universal human rights – a matter that has been largely set aside by democracies in their economic dealings with China.

What is closely watched is China’s projection of its military power, starting in its own backyard.

The leadership transition should provide a clearer picture of where China is headed in turbulent waters. The transition bears watching as closely as US politics.