SYDENY: The appointment of five provincial-level Chinese Communist Party chiefs in early December is a reminder that the ascension of China’s next generation of leaders, who will take power in 2012, may be the most significant development in Chinese politics since Deng Xiaoping’s reign began in 1978. The upcoming generation of leaders will be the first with little or no personal memory of the turmoil and hardship endured during the Mao Zedong years. Forgetting that history might doom China to repeat the mistakes of the past; but, for better or worse, it might also ease constraints and set its leaders free.

All five appointees were born after the founding of the People’s Republic in 1949. Two of them, Hu Chunhua and Sun Zhengcai, are only 46 years old. This is in line with the Party’s recently announced policy that the next generation

of leaders should have an

average age of around 55 years, with up to four top

positions filled by leaders not yet in their fifties. The Party’s aim is to ensure that it remains energetic and dynamic as China rises.

This seems a wise decision. Chinese leadership over the past decade and a half has been about fine-tuning and maintaining

the momentum of Deng’s state-led development model, launched after the Tiananmen protests of 1989. In this respect, China’s third and fourth generation of leaders, under the technocrats Jiang Zemin and Hu Jintao, have been competent but unimaginative.

But the viability of Deng’s model is nearing its end, and China is now addicted to inefficient state-led fixed investment and unsustainable export-led growth, rather than domestic consumption, to generate jobs and growth. Progress on further structural reforms — such as currency and capital-account liberalization and weaning state-controlled industries off state capital — has been slow, and new initiatives have been piecemeal rather than comprehensive.

Likewise, since the mid-1990’s, China’s foreign policy has been cautious rather than bold. Both Jiang and Hu have faithfully followed Deng’s dictum to “Hide capacity and nourish obscurity.” Although increasingly assertive in Africa and Latin America, China largely remains a free-rider under the American security umbrella.

The older generations see such caution as prudence, and that conservatism is reflected in China’s current leaders. The lack of big-picture reform attests to the older generations’ collective fear that fundamental structural changes will bring disruption and chaos, threatening the Party’s hold on power. They still remember the suffering of the Mao years, when China headed in the wrong direction — and tried to do too much too quickly — and they vividly recall how the Tiananmen protests brought the regime to its knees, and how urban labour unrest erupted when centrally managed state businesses were merged or closed down in the 1990’s.

Similarly, though China remains fundamentally dissatisfied with its southern land borders and its sea borders to the east and southeast, its current leaders fear that isolation would result from an assertive and

aggressive foreign policy.

All elites — young and old — see China as Asia’s natural leader and America as a recent interloper. But, for the third and fourth generation leaders, giving America and its allies and partners an excuse to “contain” China — and restrict its economic development — remains the great nightmare.

Without personal experience of China’s recent traumatic history, the next generation will be more confident and assertive. Schooled in economics, politics, and law, rather than engineering, they will seek to accelerate China’s rise and transformation, viewing caution as paralysis. Even now, emerging leaders argue that China is moving too slowly on economic reform and foreign-policy goals. For better or worse, they will not be restrained by the same fear of unintended consequences when it comes to change and experimentation.

Optimists hope that this might hasten economic liberalization, and perhaps even lead to moderate political reform, especially greater accountability for far-flung local officials. After all, it has been China’s young guns who consistently raise the issue of local corruption at Party summits.

But the foreign-policy consequences could be even greater. Having grown up in a China that is now accepted as a legitimate great power, the new generation of leaders will be more impatient about China resuming its place as the paramount power in Asia. While older statesmen take pride in how far China has come, younger Party figures and elites — especially those who have returned from American and other Western graduate schools — are frustrated by that China’s strategic position in Asia and status within global and regional institutions remain relatively weak, despite the country’s rising economic power.

For example, much of

the talk that China should take the lead in regional

institutions, and that Chinese ships should have a greater presence in vital sea lanes such as the Malacca Straits and even the Indian Ocean comes from the younger generation. The younger Party leaders are also more impatient when it comes to a timeframe for winning back Taiwan.

China is currently in a holding pattern. But that will end when the next generation of leaders assumes power in 2012. When their time comes, the world will be dealing with a much more unpredictable power than the one we know now.

Copyright: Project Syndicate, 2009.