Two Scenarios for China’s Fifth-Generation Leadership: Part II

Two Scenarios for China’s Fifth-Generation Leadership: Part II

Editor’s note: This is the second of a two-part series that uses current trends in the Chinese political economy to forecast the outcomes and implications for China under the fifth generation of Communist Party leadership. Part I examined a best-case scenario. Part II examines a worst-case scenario.

SHANGHAI -- China’s fifth-generation leadership cadre will assume office later this year at a critical and perilous juncture in the country’s socio-economic development. They do so against a backdrop of weak global economic growth and growing geopolitical uncertainty in North Korea, Iran and multiple Central Asian states. Moreover, the U.S. is on a roll in Asia, garnering influence throughout the region, most notably in Hanoi, Yangon, Jakarta and Ulan Bator.

Though China’s continued rise has been a feature of geopolitical forecasting for the past decade, with so much now riding on the policy choices of the incoming leadership, the potential for a less-rosy scenario cannot be excluded. Faced with increasingly sluggish domestic growth -- real GDP growth in China slowed from 7.1 percent in 2010 to 3.8 percent in 2011 -- the fifth-generation leaders could mark their arrival in Zhongnanhai, the Communist Party’s headquarters, by launching another large-scale, credit-driven economic stimulus. In such a scenario, the government reverses policy trends on appreciation of the yuan in order to boost exports. U.S.-China relations, already likely to be febrile in the aftermath of a U.S. presidential campaign in which China is certain to play a prominent role in discussions of U.S. global power, quickly deteriorate to their lowest ebb since 1989.

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