What’s next for China?

Ana Palacio, a former Spanish foreign minister and former Senior Vice President of the World Bank, is a member of the Spanish Council of State.

On a recent fact-finding trip to China, organized by the European Council on Foreign Relations, I began with the assumption that the country’s biggest challenge revolved around the need to promote domestic consumption in order to maintain rapid economic growth. By the end of the trip, what had emerged was a complex picture of Chinese assertiveness and uncertainty, poise and anxiety.

Although impending, the 18th Congress of the Chinese Communist Party (CCP) is shrouded in mystery. While the congress is presumably set for October, the exact dates remain unknown, as does much about the internal process and preparatory discussions.

For much of this year, there seemed to be one certainty in the coming leadership transition: the CCP’s new general secretary would be Xi Jinping, a man whose political vision could be elaborated in well under 30 seconds. But Xi’s mysterious vanishing act, in which he dropped from public view for almost two weeks in September – after abruptly canceling meetings with US Secretary of State Hillary Clinton and the prime minister of Singapore (rare occurrences for the protocol-fixated Chinese leadership) – has stirred more speculation. It has also fueled concerns about whether so secretive a leadership can effectively govern the world’s second-largest economy.

Despite its outward appearance of monolithic resolve, China is in a state of flux, flaunting its confidence while bulging with internal sources of insecurity. Its undeniable economic success – albeit closely tied to that of the global economy – stands in stark contrast to the heightened sense of crisis and insecurity that hovers in the background.

Two distinct quandaries confront China’s leaders: the first centers on the growing demands and dissatisfactions of Chinese society – from peasants and students to white-collar workers and pensioners; the second consists in the country’s conduct of foreign policy. Will the next CCP administration address these critical issues?

Internally, as China has moved from mass poverty to widening prosperity, economic growth – though a vital source of the CCP’s legitimacy – is no longer enough. Restlessness is pervasive: while statistics vary, depending on how government agencies define the term, it is estimated that there were roughly 180,000 “mass incidents” in China in 2011 alone. China’s rising urban middle class and its surprisingly well-organized rural communities are increasingly demanding less corrupt and more accountable government, cleaner air and water, safer food and drug supplies, and an independent, well-functioning judicial system.

Popular dissatisfaction partly reflects a phenomenon that invariably arose in numerous conversations with academics, intellectuals, and top officials: the murky frontier of legality currently reigning in China. The blurriness of the law creates a no-man’s land of ambiguity in which the authorities thrive: legal predictability is aspirational, while daily life for ordinary people requires navigating the shallow, shifting waters of what the powerful will tolerate.

At the same time, the rule of law plays a prominent role in Chinese political discourse. But, while nominally acknowledging its importance, officials creatively turn the concept on its head. Nowhere was this more apparent than in recent efforts to portray the purge of Chongqing’s former Party boss, Bo Xilai, as an example of the CCP “safeguarding the rule of law.”

And yet, formal pronouncements aside, if China’s leadership is to meet growing popular demands and quell rising discontent, it will have to commit itself to the rule of law in fact. Such a move would have far-reaching benefits for China’s global standing as well.

China’s recent emergence as a key international player (albeit a reluctant one) has exposed its leaders’ uncertainty about the country’s future global role, as well as raising questions about their readiness to bear the responsibilities that its stature implies. China still falters when it comes to building “soft power” or assuring interlocutors, near and far, that its “peaceful rise” will remain peaceful.

Indeed, China today is increasingly perceived to be undermining the international order, while promoting novel interpretations of concepts such as democracy, pluralism, and representation. For many, its behavior toward Syria – aligning itself with Russia to block international action – and in maritime territorial disputes with its neighbors exemplifies this tendency.

It is, therefore, little surprise that China’s policies are widely regarded as a reflection of former Chinese Premier Deng Xiaoping’s call for a strategy of “hiding our light and nurturing our strength.” But China’s ability to persuade others that its international behavior stems from its search for balance will depend on its leaders’ ability to embrace the rule of law – in substance rather than just in rhetoric – as a fundamental basis for the harmony that they publicly espouse.

So far, the survival of China’s political system has rested on the identification and deft handling of the most pressing issues of the day. Every Chinese leader since Mao Zedong’s death in 1976 has left an indelible mark. For Deng, it was the move toward a market economy, articulated through the “Four Modernizations.” His successor, Jiang Zemin, undertook internal reevaluation of the CCP and expansion of its base through the “Three Represents.” And the outgoing Hu Jintao’s objective was development, particularly in the country’s vast interior, unleashed through large-scale privatization.

Despite continuing uncertainty surrounding China’s coming political transition, it is expected that pragmatism – the common thread among its leaders after Mao – will carry over to the new ruling cohort. If so, it should impress upon them the notion that their best strategy, both internally and internationally, is to devote their considerable resources and energy to strengthening China’s rule-of-law institutions, even though such reforms will invariably curtail the CCP’s arbitrary power.

The opinions expressed here are those of the author, not necessarily those of the World Economic Forum. Published in collaboration with Project Syndicate.

Pictured: Construction workers walk at the financial district of Shanghai during lunch break.REUTERS/Carlos Barria