Imagine a presidential election in which there's only one candidate, and he's said nothing about his intentions or policies. That's the reality in China right now.
With the media focused on the U.S. presidential election, we would do well to remember the other great political event of the year — coincidentally happening just two days later. The 18th National Congress of the ruling Communist Party of China (CPC) is scheduled to start on November 8th. And while we can expect the U.S. election to provide a choice for distinct policy alternatives and a clear result, the outcome of the Congress of China's Communist Party, which takes place every five years, will be far more murky. And that's dangerous — not just for the rising superpower, but also for the rest of the world — including foreign investors in mainland China, and the administration in Washington, whether it is headed by Obama or Romney.
We will know some things about the transition, starting with the names of the people (almost certainly all men) who will be in charge of the last major country run by a Communist Party, whose economic evolution has arguably been the most important global event since the end of the Cold War.
We will know if the long-awaited ascension of the "princeling," Xi Jinping, to become Party Leader and then State President will be confirmed. Right now, it looks as if only an unthinkable political earthquake could stop him — though a touch of mystery was added when he suddenly dropped out of sight without explanation for two weeks in September, for what may have been either health reasons or to focus on preparing for the Congress.
We will know where the putative next Prime Minister, Li Keqiang, a protégé of the outgoing leader, Hu Jintao, ranks in the Party hierarchy.
We will know if the membership of the top decision-making body, the Standing Committee of the Party Politburo, is being cut from the current unwieldy nine people to a more cohesive seven.
For those fascinated by such things, we will know if the Party still officially cleaves to Mao Zedong Thought or if it has decided to ditch that ideological obeisance to the Great Helmsman who brought his country to the brink of ruin, but whose face still looks out over Tiananmen Square and adorns banknotes.
But there's a lot we won't know — a lot that's murky at best, and many more questions and problems than answers and solutions.
For starters, we won't know how the transition process really took place, elevating the so-called Fifth Generation of Party leaders under Xi to run the world's second biggest economy. With all of the drama surrounding the fall of Bo Xilai, there has been an all-out effort to stress Party unity. And while so much attention has been diverted to the Bo case, policy-making remains opaque. This lack of transparency creates an inherent distrust of the process and the people behind it, both inside and outside of China.
We won't know where anyone stands on the real issues that China's leadership needs to address, because no one's willing to stick their neck out and talk about them. Only one prominent figure — Wang Yang, Party Secretary of Guangdong, the country's richest province — has broken ranks with some original thoughts about the need for reform, a reduced growth rate, a real move up the value chain, and much-needed social and environmental measures. But now the buzz in Beijing is that, by speaking out, Wang risks losing his chance of getting to the Standing Committee, and that the new appointments will be weighted towards safe establishment figures.
But playing it safe isn't the answer. Encouraging stability might seem like a positive. But it increases the risk that, after three decades of strong growth, China will be unable to find new ways to cope with the approaching end of its classic formula of cheap labour, cheap capital and of welcoming export markets that make up for the deficiencies in domestic demand by soaking up as many cheap goods as the mainland can churn out.
What's more, foreign companies that have invested in China have an equally uncertain outlook. China can now make many of the basic products for which it once needed foreign expertise. Western corporations report increasing prickliness from the Chinese authorities and a tougher approach by joint venture partners. Japanese companies that have made China a major manufacturing and assembly base have in turn been blindsided by the on-going confrontation over sovereignty in the East China Sea.
Meanwhile, China's leadership is failing to address pressing problems. There are still plenty of commentators abroad who see China as a nation run by an enlightened autocracy, operating according to long-term plans that are more strategic than the fumbling democracies of the West. But recent experience of short-term government policies which have sometimes ended up with counter-productive results — such as the inflation-boosting stimulus package introduced in 2008, which led to big non-performing bank loans and misallocation of capital — should give those commentators pause for thought. China has also failed to remedy the weaknesses of its agricultural industry, which results in recurrent soaring food inflation. Its safety record is poor. Wealth disparities are so great that the government has stopped publishing the figures. Corruption rots the system. There is a yawning trust deficit. The 'ism' that dominates China is neither Marxism nor Confucianism, but materialism.
And in the meantime, the world waits for China's leaders to show some real leadership. Li Keqiang, the next Premier, laid out a laundry list of major issues which need to be addressed — urgently, he said, and delivered it to the leadership two years ago. But little has been done, and the transition process has given little or no indication of when and how these issues will be addressed, or where key figures such as Xi Jinping stand. Does he see the need for structural reform or will he be content to muddle through? Will he put the Party first, as his predecessors have done, or does he realize that China's rapidly evolving society needs a fresh framework? Will he perpetuate the Legalist system stretching back more than two thousand years to the First Emperor, which uses the law as a political weapon, or will he allow some progress towards the independent rule of law? At this stage, just before the Congress convenes, we simply do not know — and it may well be that Xi does not know, either, and will only act — or not act — in response to the intricate power structure that has brought him to the summit.
And that is not a reassuring prospect. The world needs a strongly-growing China to redress the downturn in the West. The danger is that Xi and his colleagues will pursue safety-first policies which will stabilize China in the short-term, but will increase the medium-term risk that the economy will seize up in the absence of structural reform. The economic pain would be felt globally. What Xi does, or does not do, is as important for the world as who wins the U.S. presidential election, but it will be a lot less easy to read. We know what Obama or Romney say they would do if elected. We have no idea where Xi is heading. And given China's central role in the global economy, that's quite alarming.