The view from the head of the world's biggest private-equity investor in the People's Republic
So far, the consensus on
this week's leadership transition in China has been moving within a fairly modest range on the sober-to-cynical spectrum. Here, e.g., via, Quartz's Naomi Rovnick, are some of main takes now trending on the web:
- The new leadership means bad news for political and economic reform.
- It has a reactionary disposition toward lifting social controls.
- It will likely not push through necessary economic reforms that challenge the dominance of state-owned enterprises.
- This is because the new leaders come from a faction of the Party that's financially enmeshed with state enterprises.
- The new leaders may also be too consensus-minded / gridlocked to get anything done.
Elizabeth Economy also has some notes of caution -- specifically three:
- While "democracy" will become a new Communist Party buzzword, it will not be a Communist Party agenda item; to the contrary.
- Beijing's new leadership, remaining addicted to a high GDP growth rate, is not apt to take on tough reforms any time soon.
- China is ready to to assert itself globally as a major military power.
Speaking with James Fallows at the Washington Ideas Forum today, however, David Rubenstein, co-founder of private-equity firm the Carlyle Group -- the biggest private-equity investor in the People's Republic -- offered some counterpoint.
Yes, the installation of Xi Jinping as the Communist Party's new general secretary seems to represent a win for the party's conservative faction, headed by former president Jiang Zemin, over reformers allied with outgoing leader Hu Jintao. But the liberalization of the Chinese system is inevitable, Rubenstein says, and the new leadership in Beijing sees this basic reality written on the wall as clearly as anyone. It's a process that's getting more and more pervasively coded into the social and economic life of a country that, despite all it's cultural differences with the West, has better general free-market economic literacy than the United States and more entrepreneurs per capita than any other country in the world. Particularly given the increasing reach and porousness of the internet, and more fundamentally the transformative power of the global economy, "it's impossible to take 1.3 billion people and keep them closed off from the rest of the world."
But Rubenstein thinks we shouldn't underestimate Xi's particular style of leadership, either. Xi is someone both who understands that China is heading into an inescapably more liberal future and who is willing to take his own initiatives, not just read from the script that the party faction behind his ascension would hand him. We're accustomed to looking at the People's Republic of China today the way we looked at the Union of Soviet Socialist Republics during the Cold War: as a system, first and foremost, whose fate will accordingly be determined by systematic political shifts and not individual leaders. So we can be skeptical about the importance of Xi's individual leadership. But let's remember how many Western analysts took the same read on the significance of Gorbachev when he became general secretary of the Communist Party in Moscow back in 1985.