Two leaders, two systems, two crises

So in the same week it is revealed to us who will be the next leaders of both superpowers: Barack Obama and Xi Jinping. The only difference is that we didn't know it would be Obama until after Tuesday's vote. By contrast, we knew it would be Xi long before the process that began in the Great Hall of the People in Beijing on Thursday, from which he will emerge as communist party leader, becoming the country's president next spring.

Two leaders, two systems, two crises

So in the same week it is revealed to us who will be the next leaders of both superpowers: Barack Obama and Xi Jinping. The only difference is that we didn't know it would be Obama until after Tuesday's vote. By contrast, we knew it would be Xi long before the process that began in the Great Hall of the People in Beijing on Thursday, from which he will emerge as communist party leader, becoming the country's president next spring.

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The coincidence prompts two questions: Which superpower is getting stronger? And which faces the deeper crisis of its economic and political system? Though this may sound contradictory, the answers are: China, and China.

Through its sheer size, developmental 'advantages of backwardness', entrepreneurial people, history of imperial statehood and manifest individual and collective hunger for 'wealth and power' (a proverbial phrase in Chinese), China will become relatively stronger and therefore, since all power is relative, the United States will become relatively weaker. But China also has the more profound systemic problems which, if not addressed, may both slow its rise and make it an unstable, unpredictable and even aggressive state. Over the last five years, starting already in the twilight of George W Bush, the US has gone through a great time of troubles. With no Schadenfreude at all, I predict that China will face its own time of troubles over the next five.

We all know about America's problems, which were comprehensively aired in the election campaign and referred to by Obama in an acceptance speech that at times sounded more like a civics lecture. Deficit and debt, gridlocked Congress, a tax code longer than the Bible, neglected infrastructure and schools, dependence on foreign oil, the stranglehold of money over politics: I don't underestimate the difficulty of tackling them.

But we all know about them - and that's the point. We don't know the full extent of China's problems because Chinese media are not allowed to report them properly. In official party-state deliberations, the issues are hidden behind ideological code-phrases. Now some of China's developmental challenges would exist even if it had the best political system in the world. It has gone through the biggest, fastest industrial revolution in human history. Its urban population has grown by some 480 million in 30 years, so that more than half its people now live in cities. It may be close to the so-called 'Lewis turning point', when the supply of cheap labour from the countryside begins to dry up. It must attend to its own domestic demand, for it cannot rely on the US being forever the consumer of last resort.

But many of its problems do result from its very peculiar system, which may be called Leninist Capitalism. Since the mechanics of America's electoral college have been explained to the point of exhaustion, let me just remind me you of the Chinese version. 2,270 delegates to the 18th national congress of the Chinese Communist Party, which started on Thursday, 'elect' some 370 members of the Central Committee, who in turn 'elect' some two dozen members of the Politburo, who in turn 'elect' a nine- or perhaps now only seven-member Standing Committee, which stands at the pinnacle of the party-state. All the key appointments will in fact have been decided in advance, in horsetrading and intrigue behind closed doors. Vladimir Ilyich Lenin would thoroughly approve.

Yet at the same time, the vast Chinese state has a staggering degree of barely controlled decentralisation and a no-holds-barred hybrid kind of capitalism, both of which would have the wax melting on Lenin's mummified brow. The result is dynamic but deformed economic development in which, for example, cities have run up mountains of bad debt with financial institutions ultimately controlled by the party-state. To call the allocation of capital in China 'sub-optimal' would be beneath understatement.

The nexus of money and politics may be at the heart of America's systemic blockage, but so it is of China's. In the former Soviet Union and Eastern Europe you see former communist party leaders who have become mega-rich practitioners of capitalism-in-one-family; in China, their counterparts have become mega-rich practitioners of capitalism-in-one-family, but remained communist party leaders. A Bloomberg investigation recently estimated the total private wealth of incoming president Xi's family at close to $1billion; a New York Times inquiry put that of outgoing premier Wen Jiabao's family at around $2.7 billion. Why, between the two families they could have funded Mitt Romney's entire election campaign.

In China, as anywhere else, a crisis can catalyse reform or revolution. Pray that it is reform. This increasingly urgent reform, if it happens, will not result in a Western-style liberal democracy any time soon, if ever. But even some communist party analysts acknowledge that, in China's own long-term national interest, the changes will need to go in the direction of more rule of law, accountability, social security and ecologically sustainable development.

Now here's the rub. We, in the rest of the world, have an existential interest in the success of both America's and China's reforms. The bellicose edge to confrontations in the Asia-Pacific region between China and American allies such as Japan is deeply worrying at such a relatively early stage of an emerging superpower rivalry. A recent Pew poll shows mutual distrust between the Chinese and American publics growing rapidly. Unhappy countries, unable to solve their own structural problems at home, are more likely to vent their anger abroad. We must want them both to succeed.

Timothy Garton Ash is Professor of European Studies at Oxford University, a Senior Fellow at the Hoover Institution, Stanford University, and the author, most recently, of Facts are Subversive: Political Writing from a Decade Without a Name