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Implications of the change in leadership in Beijing
03 December 2012

Soon after the once-in-a-decade change of leadership in Beijing, Observer Research Foundation hosted a delegation from China and organised a conference with the aim of finding answers to questions like: What are the priorities for the new leadership? What are the implications of the leadership change for China’s internal policies? Will this have an influence on China’s foreign policy? The conference, themed on ’The Implications of the Change in Leadership in the PRC: Internal and External Dimensions’, was organised on 28 November.

The Chinese delegation was led by Mr Li Junru, former Vice President, Central Party School of the CPC and Member of Standing Committee, National Committee, Chinese People’s Political Consultative Conference. Mr Li Junru made a presentation on the ’Current Political Situation in China and its Development after the Party Congress’. He identified several key features of the new leadership like the fact that most of the new leaders have grown up in the reform era, have rich experience in working at the local and national levels and have very deep engagements with the general public. He said that the CPC will continue with socialism with Chinese characteristics, build up a moderately free society, work for rural and urban income growth and sustainable development.

According to him, China wants to concentrate on harmonious internal development and wants peaceful relations with other countries. He dismissed allegations of a "China threat". In fact, China wants a new mode of development where the voice of China will help build a harmonious world with lasting peace and wants to build a new type of relations with other powers and countries.

Mr. Huang Huaguang, Director General, Research Office, International Department of the CPC (IDCPC), made a presentation on "China’s Foreign Policy and Related Principles". Mr. Huang Huaguang discussed five main questions related to China’s foreign policy: How does China see the world?; What kind of relations does it want with other nations?; What is the orientation of Chinese Foreign Policy; and How is China developing relations with other nations?

Mr. Huaguang said that all nations face the same challenges of climate change, energy security, food security, etc. The world is becoming multipolar and global institutions must be reformed to reflect this change. He added that China wants to work towards democratisation of the global order. He argued for reforms in the financial system so that globalisation can be universally beneficial. With regard to China’s foreign policy orientation, Mr Huaguang stated that China applies a ’win-win’ strategy in trade and economic relations because due to greater interdependence, while pursuing one’s interests, one also needs to accommodate others’ interests. China believes in resolving conflicts in a peaceful manner, is opposed to intervention in internal affairs of other countries through the use of force or threat of use of force and has no hegemonic designs. China wants to prioritise relations with its neighbours. China wants greater relations with India since both are the most populous, largest and fastest rising nations. Bilaterally, there is a need for India and China to have better strategic communications, enhance trade and encourage more people-to-people exchanges. In global fora, India and China should work towards building a new kind of International Relations.

The third speaker at the conference was Mr. Zhang Yansheng, Secretary General, Academic Committee, National Development & Reform Commission and Former Director, Institute for International Economics Research, who spoke on "China-India Trade Cooperation". He said that the key economic goal for China is to double its GDP and the Per Capita Income levels of its urban and rural populations from the 2010 levels by 2020. China wants its growth to be green, peaceful and inclusive.

Mr. Yansheng stated that there should be a clear relationship between government and the market and government and civil society. The government should be focused on provision of public goods and maintaining social stability. It should shift towards innovation-driven growth, away from the current export-import driven growth. This will require overcoming bottlenecks such as strengthening indigenous innovation. China should focus on developing its economy through an increase in national consumption so as to establish a consumption-driven economy in the long run. It should also develop the service sector. The idea should be to have integrated and holistic development in rural areas; urban development should lead to rural development.

On India-China trade, he pointed out that there has been a 68% growth in trade ties between the two since 1996. But there are many issues that need to be to tackled like China’s trade surplus vis-à-vis India and India’s anti-dumping lawsuits against China. India and China have not made enough mutual investments in each other’s economies; India has invested less than $100 million, while China has invested less than $500 million. So both countries should further open up markets for ’win-win cooperation’ and at an appropriate time, an FTA between India and China should be considered. There is a need to strengthen economic and strategic dialogue between India and China. They should explore new options like South-South cooperation for this.

In the question and answer that followed, Mr. Li Junru talked about the Sino-US relationship. He said that China and the US should not misjudge their relationship. While the US is worried about China’s defence and military development, it should realise that China is a country with vast territory and coastline and it is developing its capabilities only to defend themselves. China does not have aspirations to maintain the global order like the US. In response to another question, Mr. Huang Huaguang clarified that China’s military spending is only 1.5% of its GDP, which is less than that of many of its neighbours and that China will never seek expansionism or hegemony.

The conference, chaired by Dr. C. Raja Mohan, Distinguished Fellow and Head of Strategic Studies, ORF, was attended by members of the strategic community, media and ORF faculty.

(This report is prepared by Dr. Uma Purushothaman, Associate Fellow, Observer Research Foundation)