FIFTH GENERATION

China is anticipating new historical changes. At least this is what the results of the XVIII congress of the Chinese Communist Party (CCP) point at. The forum of the ruling political organization in China elected the "fifth generation" of leaders and during the March 2013 session of the National People's Congress the new high-ranking statesmen will be chosen from them.

"Socialism with Chinese 

characteristics"

Any change in modern China promised some changes outside the country. After all, China is the world leader in the last 30 years in terms of the rate of growth of industrial and financial capacities, as well as the owner of the second largest economy in the world, the largest exporter, a state with the largest foreign exchange reserves, the largest population and the army. Therefore, China's claims to global leadership, which seriously disturb other great powers, are not surprising.

However, the Congress of the CPC, of course, was not convened for narcissism and the next statement of facts showing the potential global impact of the biggest socialist state in the modern world map. The purpose of the Congress - to identify ways to overcome problems facing the country, is as extensive as the power of the Communist-controlled China. Despite the continuous growth in GDP, the Chinese miracle made possible thanks to the reforms of Deng Xiaoping, China is experiencing a period of acute social tensions and reduced rate of economic growth. And this is despite the fact that the rapidly developing China, on the one hand, has a tangible effect on the world markets, and on the other, is increasingly dependent on imports of strategic raw materials. According to statistics, China today requires 46% of the coal mined in the world, 25% of iron, zinc, steel, lead, copper and aluminium, 15% of the uranium and 10% of oil.

Moreover, cheap labour, government, and foreign investment, technological innovation, integration into the global market system, the mechanism of production and sale of products that have become fundamental to the success of China's economy and turned it over the last couple of decades in the world "production unit" - all these favourable factors are gradually losing their value because of the presently observed increase in the cost of labour, resources, transportation of goods.

Similarly significant problems are affecting the agriculture in China, where nearly half the population is employed. Most of the arable land in China is contaminated with chemicals, industrial and municipal waste. Faced with a shortage of fertile land in the country, the Chinese are actively buying or renting them abroad - in Africa, Central Asia, Russia, and even South America.

A serious threat to China is the growth of government corruption. Before the Congress of the CPC the Party Committee for Discipline Inspection said that "in view of the current world situation the party faces a stern test in the deepening of reform and opening up and development of a market economy. The party will take more preventative measures to combat corruption and bribery. Fighting it meets the political position taken by the CCP, and also has great significance for the people".

But the important thing is that the new reforms in China are motivated by the need for further development of the "socialism with Chinese characteristics". Despite the fact that about 70% of GDP is provided by private enterprises, Chinese socialism continues to run the show in China. Indeed, virtually all major industries and banks are under state control. This dramatically changed the state system of economic management (mandatory plans and coordination of large-scale industrial projects at the level of central and local authorities in the past), free economic zones play an important role in the development of the Chinese economy. At the same time the export of labour is rapidly growing: Chinese citizens can be found in 180 countries around the world, and in different parts of the world there are more than 10,000 Chinese companies. It is logical that Beijing's foreign trade expansion leads to it formulating the question of the redistribution of significant financial resources and commodities in world markets.

However, the implementation of new reforms that are so necessary today to Chinese society, the main dilemma that the CCP faces for the umpteenth time in its history, is a combination of socialist strategy with the capitalist elements in the economy, including at the level of global markets, where the laws of Western-style globalization operate.

Speaking at the opening of the XVIII Congress of the CPC, its General Secretary (now we can say - former Secretary General), Hu Jintao acknowledged that the country's leadership will continue on the path of building "socialism with Chinese characteristics", which is no easy task. "We must not hesitate to adhere to socialism with Chinese characteristics and promote its development in step with the times, always adding to its practical, theoretical, and national landmark features," he said. At the same time, Hu Jintao said that China remains "the world's largest developing country," which will long remain in the initial stage of socialism, and expressed confidence in the transformation of China by 2049, that is, for the 100th anniversary of the state, into a "rich, powerful, democratic, civilized and harmonious socialist modernized country."

The new generation of Chinese leaders, the nomination of whom was in fact the key objective of the XVIII Congress, will lead the country to the "modernized socialist state". Its follow-up General Secretary of the CPC elected Xi Jinping, Vice President of China. According to tradition it was the party secretary-general is chairman of the PRC, therefore, be expected, Xi Jinping will be approved in March of next year at a session of the NPC as head of state. It is believed that he is the successor of the line first President Liu Shaoqi, the ideological successor of which was an adept of "private initiative" in the socialist state, Deng Xiaoping - Patriarch of Chinese reforms. In the internal party struggle the supporters of Xi managed to trump both dogmatic "partisans" acting as successor of the "Great Helmsman" Mao Zedong, headed by the former head of state Jiang Zemin, and the group of the former General Secretary Hu Jintao, who is the leader of the so-called market economy "Komsomol".

"Wait for the opportune moment"

The arrival of the fifth generation in the Chinese leadership, to ensure the further movement of the country to "socialism with Chinese characteristics", undoubtedly, will be directed at ensuring the global ambitions of China. The Congress of the Chinese Communists confirmed that Beijing is not going to continue to submit to the outside pressure, and the basis for this will be "to intensify the development of the armed forces to secure victory in local wars". It is obvious that the main task of China in the international arena is the satisfaction of their geo-economic interests, and in this regard Beijing pins high hopes on the Chinese currency yuan.

Back in 2009, China adopted a program of liberalizing the foreign exchange market, allow companies to use the yuan for trade outside the country. Since the spring of this year, Beijing increasingly creates the conditions for the import of oil exclusively for the Chinese currency. Promoting the use of the yuan in transactions with raw materials not only provides support for Chinese manufacturers of products with high added value, but also allows China to increase its influence in certain commodity regions.

True, the yuan is still not a freely convertible currency, which maintains its low exchange rate and prevents its transformation into an international reserve currency. However, there is no doubt that the yuan has actually started its development as such. This is indicated, in particular, the conclusion of an agreement with Japan to buy government bonds in the amount of China's 65 billion yuan ($ 10.3 billion), accounting for 0.77% of the total foreign exchange reserves of Japan.

However, even though the official Beijing would like to see the yuan a reserve currency alternative to the dollar, it does not attempt to do so in the near future. China's communist leadership does not fancy this idea because it would mean giving up the tight control over money printed in China. Moreover, the current level of printed yuan still cannot meet the global demand. If the currency of the PRC will become fully convertible, it will further increase the demand for it, and thus make the yuan more expensive and vulnerable to external factors.

So the US dollar will continue to maintain its leadership position for at least the next 15-20 years. However, in the case of confirmation of experts' forecasts, according to which the Chinese economy in the coming decades will be the largest in the world, overtaking the US, the Chinese yuan may supplement the US dollar as a reserve currency in world trade.

Not surprisingly, the Chinese topics quite clearly featured in the recently concluded presidential race in the United States. One of the presidential candidates, Mitt Romney, a Republican, even promised to run an open trade war with China. Undoubtedly, it was the voice of the military-industrial complex, behind which looms the shadow of "Rockefeller-style" financiers seeking to overcome the economic crisis through the war, that would allow to increase the consumption of the defence industry production, as well as to get rid of the debt and equity "bubbles".

The re-election is Barack Obama suggests that the top of the American elite decided to come out of the global crisis on the "recipe" of the Rothschild-style bankers controlling "all the gold of the world", and therefore interested in revaluing the world's wealth, from "paper" dollars to the ounces of precious metal in bank accounts.

However, without any reference to the outcome of the US presidential elections the Chinese leadership recognizes that both powers - the U.S. and China - are in a severe economic competition. For America and its newly elected leader Barack Obama the only way not to lose this confrontation is, apparently, in the repetition of the same Chinese experience, i.e. thorough market penetration of its competitor (as when China entered the US market). But will China's rulers, who do not hide that they pursue world hegemony, allow it to Americans?

Deng left his successors a lot of practical advice, one of which reads, "just observe, defend our interests, calmly cope with the current affairs, hide our capabilities and wait for better days". The Congress of the Chinese Communists showed that the CCP believes in the near onset of an "opportune moment" that could raise the country to the top of the global politics and economics.

China hopes to achieve global hegemony, primarily by economic means, through "soft power", that facilitates the access of the Asian powerhouse to the world's resources and technologies. However, given that the current policy of China in the international arena is largely determined by its needs in the supply of strategic raw materials needed to maintain the growing living standards of its people, that is one fifth of humanity, the rest of the world has the right to ask a number of questions. Such as will the global supremacy of China become a threat to the international community, and will the followers of the teachings of Confucius, the works of Mao Zedong and Deng Xiaoping's pragmatic philosophy be able to find the best ways to accommodate the interests of China without a clear conflict with the needs and aspirations of other peoples of the world ?