SPY EYES

With the unveiling of China’s new leadership, observers and journalists the world over are all contemplating the same question: Will the new group at the top of the Communist Party be able to engineer the reforms needed to tackle the plethora of challenges afflicting virtually every realm of policy and governance — domestic and international — in China?

The answer, unfortunately, is no. Those inside and outside of China anticipating a return to an ambitious reformist agenda that will further open and decentralize the economy; liberalize the polity; reduce social inequities and tackle pervasive corruption; and rectify strains in China’s relations with its neighbors in Asia, the European Union and the United States will be disappointed. China is in dire need of visionary and strong leadership — the complex challenges facing the nation have grown more acute during Hu Jintao’s presidency — but don’t expect it from the new team in Beijing.

First, the new leadership is not cohesive, and bureaucracies love leadership vacuums. The new Politburo and Standing Committee show many signs of continuing divisions over policy orientations and factional allegiances. While more potential reformers are discernible in the new group, they are likely to continue to be checked by an entrenched bloc of party conservatives and retired elders. Beijing’s political gridlock is similar to Washington’s, and Xi Jinping’s mandate for change is about as narrow as President Obama’s. In short, a “team of rivals” is not likely to produce forward movement in the Chinese Politburo.

The lack of consensus at the top has been the case for at least five years. All that the Chinese party-state has shown itself capable of is a combination of muddling through, hollow policy slogans (unfunded mandates) and money thrown at problem-plagued sectors (hoping that investment will produce return). But China’s key challenges — social inequity, environmental damage, rigidities of the educational system, lack of innovation, depressed consumer consumption, the demographics of aging and unbalanced sex ratios, labor mobility, lack of transparency and accountability, ineffective rule of law, poor provision of public goods, and weak “soft power” abroad — are all qualitative issues that do not lend themselves to state investment such as building high-speed rail or harbors.

Another obstacle is institutional. While leaders matter in the Chinese system, institutional interests count for far more. China may not be a democracy, but it has strong bureaucratic and interest-group politics. For the past five years real reform has been blunted by the “Iron Quadrangle”: mammoth state-owned enterprises, the internal security apparatus, the military and the conservative wing of the Communist Party. The coalition of these four power interest groups “captured” Hu, who was too weak and disinclined to stand up to them, and they stalled reforms.

This is the political landscape that Xi and the new Chinese leadership inherit. For his part, Xi, like Hu, remains a cipher: We do not know whether he is a closet reformer, a real reformer or another apparatchik-technocrat. His background suggests the last. At least he smiles and has a warmer public persona than the wooden Hu. Nonetheless, Xi & Co. will be trapped by these and other powerful vested interests that strangled the would-be reforms of Hu’s more progressive advisers and the acolytes of his predecessor, Jiang Zemin.

To break the Iron Quadrangle and launch the much-needed new reforms will require enormous vision and willpower on Xi’s part, an investment of huge institutional resources to buy them off, and time. It will be at least two years before Xi can consolidate his power and be in a position to tackle the powerful vested interests that run China today. And it is not clear that he is even so inclined.

Thus, when anticipating China’s future after the 18th Party Congress and the potential for reform under Xi Jinping, expect more of the same: authoritarian stagnation and gridlock at home, with increased abrasiveness abroad.

China shows off its Z-10 attack helicopter at the country’s biggest air show. Sarah Charlton reports.

China’s Communist Party is bringing their National People’s Congress to a close, a day before unveiling its leaders for the coming decade.

President Hu Jintao and premier Wan Jiabao are expected to step down in favour of the anointed successors, Vice President Xi Jinping and Li Keqiang in what would be only the second orderly transfer of power in 63 years.

The party’s 2,200-plus delegates filed into Beijing’s Great Hall of the People in the morning to select members of the Central Committee, a panel of a few hundred people that approves leadership positions and sets broad policy goals.

“I now announce that the 18th Chinese Communist Party Congress has come to a victorious conclusion,” Hu told delegates.

But the next lineup in China’s apex of power, the Politburo Standing Committee, will be announced only on Thursday.

Though congress and Central Committee delegates have some influence over leadership decisions, most of the lineup is decided among a core group of the most powerful party members and elders.

Al Jazeera’s Mike Hanna, reporting from Beijing, said: “The delegates have elected a committee which will elect a Politburo and the Standing Committee which is the apex of the power for the next decade.”

The voting concluded in the late morning, and the state Xinhua News Agency said in a report that Xi and premier-in-waiting Li had been voted onto the Central Committee.

All the other eight leading officials who have been tipped as possible members of the Standing Committee also made it on to the Central Committee, according to Xinhua.

That includes North Korean-trained economist Zhang Dejiang, financial guru Wang Qishan, minister of the party’s organisation department Li Yuanchao, Tianjin’s party boss Zhang Gaoli, and the conservative Liu Yunshan, who has kept domestic media on a tight leash.

Hu and senior leaders mostly in their late 60s are handing over power to Xi, 59, and colleagues of his generation over the next several months.

Li, currently vice premier, already was tapped five years ago to be the country’s next premier, China’s top economic official.

The congress is a largely ceremonial gathering of representatives – mostly carefully selected from the national and provincial political and military elite who have met to endorse a work report delivered by Hu at the opening a week ago.

Top positions

The real deal-making for the top positions on the Standing Committee is done behind the scenes by the true power-holders.

Aside from appointing Central Committee members, delegates assembled inside the Great Hall of the People were tasked with selecting the membership of the party’s internal corruption watchdog, the Central Discipline Inspection Committee, and with voting on amendments to the party’s charter.

After the congress ends, the Central Committee meets on Thursday to select the next Politburo and from that, the Politburo Standing Committee, largely on the advice of influential leaders.

The leaders also will select new members of the party’s Central Military Commission, which oversees the 2.3 million member People’s Liberation Army.

It is unclear if Hu will relinquish his position at the head of the commission or hold on to it for a period after retirement, as past leaders have, to retain influence.

Hu will remain president until March.

China’s leadership transitions are always occasions for fractious backroom bargaining, but this one has been further complicated by scandals that have fed public cynicism that their leaders are more concerned with power and wealth than government.

In recent months, Bo Xilai, a senior politician seen as a rising star, was purged after his aide exposed that his wife murdered a British businessman.

An ally of Hu’s was sidelined after his son died in the crash of a Ferrari he shouldn’t have been able to afford.

Hu, in his speech at the opening of the Congress said the party had to better tackle corruption issues or risk fatal damage.

“If we fail to handle this issue well, it could prove fatal to the party, and even cause the collapse of the party and the fall of the state,” said Hu.

The political calendars of the United States and China follow different cycles, but once every two decades China’s leadership transition occurs simultaneously with the U.S. presidential election. So now, with President Obama’s re-election and Xi Jinping’s anointing as chief of the Chinese Communist Party, both countries have an opportunity to take stock of the bilateral relationship.

These two leaders may not want to say it out loud, but they would privately admit that U.S.-China relations are in trouble. While the value of the Chinese currency and trade disputes dominate headlines, the real cause of deteriorating ties is more profound and potentially dangerous. Mutual strategic distrust has escalated in the last two years and is creating a vicious cycle that, if not stopped quickly, could lead to a fierce rivalry harmful to both countries.

Washington and Beijing blame each other for the growing tensions. The Obama administration believes that China’s assertiveness on territorial disputes and its military modernization must be met with countermeasures. Chinese leaders have grown increasingly antagonistic to U.S. diplomatic support for Vietnam, the Philippines and Japan in their territorial disputes with China. Most important, Beijing resents the so-called Asia pivot, Washington’s plan to beef up U.S. naval assets in the Western Pacific.

Thus the top foreign-policy priority for both leaders is to reset the tenor of Sino-American relations. Of course, given the near-collapse in Sino-Japanese relations, Xi will have to devote considerable energy to defusing tensions with Tokyo. But he must be aware of two interlocking realities: that U.S.-China relations are far more critical to China’s long-term interests, and that repairing ties with Tokyo will be only the first, but vital, step in that direction.

There is little doubt that top Chinese leaders are acutely aware of the intrinsic importance of a stable relationship with the United States; such awareness has prevented crises in the past three decades from totally destroying relations. It is also highly likely that China’s new leaders will continue to pursue a pragmatic foreign policy and try to avoid confrontations with the United States.

However, maintaining a fragile status quo is becoming increasingly difficult. Several trends — changes in relative power in China’s favor, the one-sided focus on the military aspect of America’s Asia pivot, escalating territorial disputes that could drag in the United States and China’s military modernization — are exacerbating mutual distrust. Xi and his colleagues need to initiate a policy reset to signal to the second Obama administration that Beijing seeks to put ties on a more solid footing.

A reset could start with concrete measures to resolve territorial disputes with China’s neighbors, particularly Japan, Vietnam and the Philippines. Should Xi succeed, he would be able to demonstrate that China will abide by international law in resolving such issues. Success would remove the most dangerous underlying dynamic in the Sino-American strategic competition in East Asia.

A reset also needs to stabilize the deteriorating security relationship with the United States. This will be difficult because of the strategic distrust caused by the fundamental differences in the political systems of the two countries. Yet, China can still take substantive measures to reverse the adversarial dynamics. Making Sino-American military-to-military exchanges more meaningful and substantive is one. Agreeing on rules to avoid naval accidents is another. Initiating a bilateral dialogue on cybersecurity is absolutely critical in avoiding potentially calamitous incidents.

Granted, Beijing will continue to encounter skepticism from Washington. But if Xi takes the initiative, with concrete proposals, he should find the Obama administration receptive.

To shift American perceptions of his leadership, the third component of Xi’s reset is domestic reform, especially political reform. The conservative backsliding in China over the past decade is the deeper cause of the worsening U.S.-China relationship. Xi can reverse this dynamic, beginning with a more symbolic step, such as releasing Liu Xiaobo, the jailed Nobel Peace Prize laureate, under medical parole.