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China Briefings

Reports on China issued by Samsung Economic Research Institute

Economic Performances and Challenges of China’s Leadership

Economic Performances and Challenges of China’s Leadership

OM Jung-Myung

Jan. 31, 2013

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In November 2012, the fifth generation of leaders who will lead China for the coming decade was elected at the 18th Party Congress. Amid criticism that the fourth generation exacerbated the income disparity that emerged in the wake of the power transition, the fifth generation is expected to first solidify their status as they will need a stronger political stance to silence the opposition against reform in order to address the disparity.

The third generation resolved economic issues which had built up since the 1978 movement for reform and opening with industrial restructuring and establishing the “investment-exports” growth strategy. The fourth generation completed the reform movement and laid the foundations for rapid growth. However, this generation has been criticized for widening the economic disparity and crippling private companies, pushing China back in achieving a market economy. The fifth generation announced a shift to a growth powered by domestic demand and pursuit of urbanization, social security and sophistication of the industrial structure.

The fifth generation of leaders has the burden of facing numerous challenges as it has to deal with the opposition with vested interests from within the party and secure a budget to increase welfare. Once the new growth model led by domestic demand is established, many changes will ensue. China will see a rise of consumer markets across the nation with spending and preference being differentiated by area. The same will apply for industrial growth.

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