China and U.S. face mirror-image leadership challenges

November 6, 2012

By a twist of fate, the world’s two most powerful countries will select their new leaders in the same week. On the surface, they are almost perfect mirrors of each other.

While the U.S. election promises a nail-biting finish, the results are likely to be predictable. In Beijing, the next leader – Xi Jinping – was ordained several years ago to be appointed General Secretary of the Chinese Communist Party at the Party Congress this week.

In the economic realm, the two countries’ trajectories are at odds. While Washington is suffering from an austerity crisis, China is coming to grips with a crisis of affluence. In the U.S., as Thomas Byrne Edsdall argues in his book The Age of Austerity, “The two major political parties are enmeshed in a death struggle to protect the benefits and goods that flow to their respective bases, each attempting to expropriate the resources of the other.”

In China, leaders have the resources to stimulate another decade of double-digit growth. However, they know their economic model, based on cheap exports and domestic investment, is unsustainable in the long run. They know they need to end artificially low interest rates and build a social safety net to encourage Chinese citizens to consume more. The problem is that they do not know how to rebalance the economy without harming the interests of the crony capitalists who support it or the middle class that has benefited from China’s rise. China’s pursuit of affluence could become a trap from which it may struggle to escape.

While both nations are focused on their global standing, they have opposing problems in the foreign policy realm. In Washington, neither President Barack Obama nor Governor Mitt Romney dares talk about the decline of American prominence in the global economy, but they grapple with the challenges of reconciling America’s will for power with the war-weariness of its citizens.

China, on the other hand, is struggling to manage a surge in its global influence. For more than a generation, Beijing’s foreign policy has been based on the idea of eschewing leadership in exchange for an invisible rise ‑ “hiding brightness and nourishing obscurity,” as Deng Xiaoping put it. But it is hard to downplay your influence when you have the second-largest economy in the world, double-digit rises in military spending and companies spread across the globe. It is even harder when you have hundreds of millions of nationalist citizens who want an assertive foreign policy to match China’s rising heft. As a result, it is proving impossible to avoid other Asian states joining hands with the United States in an anti-China coalition.

American politics has been defined by a crisis of disunity. The extreme partisanship of the Beltway has made the country practically ungovernable. Since Obama was elected in 2008, the Republicans have been more interested in dragging him down than in passing any legislation. The Democrats may be less unified and ideological, but they would surely stop a Republican president from implementing many of the ideas in the Tea Party imagination. Whoever wins the election, it is hard to imagine much change.

China, on the other hand, suffers from the opposite problem. Since the Tiananmen Square massacre in 1989, its elites have been so afraid of unrest that they have tried to suppress any hint of dissent. But today the country is becoming ever more complex and conflicted about where it should go.

When a battle of ideas burst out last year between the charismatic leftist governor of Chongqing, Bo Xilai, and his more liberal counterpart, Wang Yang, in Guangdong, party elders moved quickly to calm things down. (Bo was expelled from the party; Wang has become more quiescent). A big question is whether this push for control at the highest levels and at the grass roots will stop China from making the radical decisions it needs, and in the process fuel a potentially violent backlash. Professor Sun Liping, of Tsinghua University, thinks it will: “The ultimate outcome of the massive stability preservation project”, he is quoted as saying in my new book, “China 3.0,” “is in fact the intensification of social tensions”. Sun, one of China’s leading sociologists, was also the Ph.D. supervisor of one Xi Jinping – the future president of China.

Although they look like opposites, the United States and China suffer from the same problems: They are introspective, self-destructive and interdependent. China’s ying is often the cause of America’s yang. Its bond buying fuels America’s consumption; its surge in power threatens American leadership; and the decisiveness of its closed political system in the financial crisis caused leading Americans to question the sustainability of America’s open society. The big question facing the world this week is whether either leadership transition will bring relief from the multiple crises the two nations face.

Unfortunately for the world’s most powerful nations, the answer will depend on events on the other side of the Pacific. America and China are fated to sink or swim together.

PHOTO: Paramilitary policemen hold their fists in front of a flag of Communist Party of China as they attend an oath-taking rally to ensure the safety of the upcoming 18th National Congress of the Communist Party of China (CPC), at a military base in Hangzhou, Zhejiang province November 5, 2012. REUTERS/China Daily


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We need to put the US and China into a global context. Nobody is big enough to cope with global change on their own. This is also true for China. Their difficult challenge is to develop a capacity to cooperate and to contribute to the accountability of the global system.
The global system will not be sustainable unless it is based on a common moral framework. China will see one day that a good global system is their national interest. Rather soon China, as an emerging economy, will be facing a situation where the number of emerging problems will negatively affect its capacity to offer a better quality of life for its population. Cooperating globally can be a solution. Leaders must realize it and only then will they follow this path. Political pressure coming from below will be a catalyst.
Also, once we get out of the crisis, interest rates will grow and this will affect emerging economies. China, today a bright spot on the growth map, will not be able to sustain its own growth without growth in Europe and in the US. The globalization of value chains will continue to facilitate entry of other economies, which will be challenging China’s adjustment capacities. Capital and labour must be supplemented by resource efficiency concerns. The normative nature of state capitalism can lead to a structural misallocation of resources. Its current economic model does not address inequalities. The future one must include measures addressing sustainability and inclusiveness.
Let me now comment briefly on the China-US relationship. In my comments to your latest piece on China I also highlighted the country’s relationship with the US in the context of the American elections. In the run-up to the elections, Mitt Romney had stated that he would call China a currency manipulator and would take measures against the country’s predatory pricing. Since Mr Obama was re-elected, we will never know whether Mr Romney would have delivered on these promises. Now however, it would be interesting to look into what Mr Obama will bring to the US-China relationship in the coming four years and what change we will see relative to his first term in office. Looking at the flipside of the coin, perhaps one of your future pieces could also consider Chinese foreign policy.
China may have its concerns regarding a second Obama term, particularly after Obama called the country an “adversary.” Adding fuel to the fire, the Intelligence Committee of America’s House of Representatives recently called Chinese telecommunications company Huawei, a security threat.
Following Obama’s re-election news, Chinese state-run news agency Xinhua expressed its hopes that the China-US relationship would improve in Obama’s second term. The agency then went on to criticize Obama’s actions on trade and currency issues, as well as on territorial disputes. Despite the negative tendency of these remarks, Chinese public opinion is itself divided on the US and its leader for the coming term. While some remain sceptical of their American counterparts, others are rather resigned. The Economist recently referred to a post on a Chinese website stating that “Win or not has nothing to do with China; they will all be against China, containing our development.” The sentiment is certainly mixed, and policy actions on both the American as well as the Chinese sides will generate an interesting debate over the coming years.

In your piece, you also remark on the austerity that the US has to face and on the “crisis of affluence” in which China finds itself at the moment. Both the slow and stumbling growth in the US, as well the economic prosperity recorded in China, have one important common denominator. They are both measured in monetary terms and thus fail to account for deeper layers of wellbeing and inequality. I raised this point before in your previous piece on Chinese inequality. By disregarding inequalities of opportunity and not looking into alternative measures of life satisfaction, we risk missing out on important layers to the story. Hence you could argue that this is yet another commonality which the two countries share. In both China, as well as in the US, policymakers will at some point need to look into the type of growth that they have enjoyed up to now and decide whether a different kind of growth should be pursued in the future.
While China and the US share a number of similar challenges, I would nonetheless like to end this comment with an important difference between the two. In the same piece referred to above, the Economist perceptively spotted another post in Chinese media, which was released after the American elections result and before the opening of the Chinese Communist Party’s 18th congress. And this comment probably serves as a reminder of the inherent difference which will always divide the two: “So when will we, in our Great Mother Country, be able to elect our own leaders?”

Posted by danuta_huebner | Report as abusive

M.Leonard in his presentation of a 150 pages report is badly downsizing the colonialist ambition of China.1) he fails in higlighting the data of the presence of Chinese people outside of the borders 2) he doesn’t take in account the fight against the global warming as a matter of settlement for the Chinese policy.

Posted by meleze | Report as abusive