China's Next Leaders Aim to Launch New Economic Era (+Video)

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Chinas parliament opened its annual meeting here on Tuesday amid high hopes that the new government it will choose will tackle long- awaited economic reforms and rampant official corruption.

But Xi Jinping, the ruling Communist Party leader who is due to be elected as Chinas president next week, and Li Keqiang, who will become prime minister, will face daunting obstacles as they seek to launch a new economic era at home and meet their citizens increasingly vocal demands for improved livelihoods.

Expectations are high that the new leaders are for real when they talk about clean government and reforms, says Wang Zhengxu, an analyst at Nottingham Universitys China Policy Institute, in Britain. But resistance from those who want to block reform will be very serious.

The 2,987 delegates to the National Peoples Congress will play a largely ceremonial role as they listen to speeches, reports, and deliberations over the next 12 days at the flag-bedecked Great Hall of the People on Tiananmen Square.

No National Peoples Congress vote has ever gone against a government proposal, and no candidate for high office put forward by the Communist Party has ever been turned down.

Though Mr. Xi and Mr. Li are shoo-ins for their new jobs, their elevation is not without significance. It marks the smooth culmination of a once-in-a-decade transfer of power only the second time in modern Chinese history that such an institutional transition has been achieved.

Reorienting the economy

Xi and Li will take the helm of a country that has enjoyed average annual gross domestic product growth of 10.5 percent for a decade, which has transformed the Chinese economy into the second largest in the world. But raw growth is not enough anymore and is anyway bound to slow down, says Kerry Brown, head of China Studies at Sydney University.

As the economy cools (in his opening speech to the Peoples Congress Tuesday, outgoing Prime Minister Wen Jiabao predicted 7.5 percent growth this year,) the new government will have to reorient it away from dependence on heavy state investment and exports and toward the more sustainable foundation of domestic consumption.

At the same time, Chinese economic reformers have been insisting for some time that for the sake of efficiency the government has to stop coddling the giant state-owned enterprises that enjoy monopolies over the commanding heights of the economy, and start giving private companies a greater chance to compete.

The rise of state capitalism has been strangling private enterprise, which is the real source of long-term economic growth, says Zhang Jian, who teaches politics at Peking University.

Cutting state-owned firms down to size, though, would be more than an economic challenge. The development in recent years of a crony capitalist system, in which senior Communist officials have used their political power to channel control over economic resources and great wealth to their relatives, means that reforming the state sector would directly challenge the interests of powerful political figures. …