U.S.-China Economic and Security Review Commission, “China’s New Leadership and Implications for the United States,” February 7, 2013

Thursday, February 7th, 2013
Room 2212 Rayburn House Office Building,
Independence Avenue and South Capitol Street,
Washington DC 20515

OPENING STATEMENT OF CHAIRMAN WILLIAM A. REINSCH, HEARING CO-CHAIR

CHAIRMAN REINSCH: Good morning, everybody. Welcome to the first hearing of the U.S.-China Commission's 2013 Annual Report cycle. Let me begin by welcoming the two new Commissioners, Katherine Tobin, who is right there, and Senator Jim Talent, who is right behind me, who have joined the Commission this year. I'm sure you'll be hearing from them later on in the question period.

Today we're going to examine the changes in China's political, economic, and security landscape following the Party Congress last November. We'll also discuss U.S. policy toward the region in light of the changes that occurred then. We have assembled a strong set of witnesses to address different aspects of China's leadership transition, and I want to thank
them for their participation in the hearing.

Last fall, the Chinese Communist Party's 18th Party Congress ushered in the "Fifth Generation" of political leaders. We'll begin today by assessing who was selected for the Politburo Standing Committee, who was not selected, and what these decisions suggest about the Party's policy, directions, and priorities.

Although Xi Jinping and Li Keqiang's appointments were long anticipated, other outcomes surprised outside observers. We look forward to hearing our witnesses' testimony today about how these officials' backgrounds, loyalties, patronage networks, and other factors may have affected the transition. More importantly, we're hoping to gain insight about what the new leadership team means for China's governance over the coming decade.

The second panel will assess the prospect for economic reform under China's new leaders. We know already that Xi and Li face internal and external challenges. Inside China, they must overcome growing economic inequality and other structural imbalances along with endemic corruption and entrenched local interests that will resist reforms. Their central dilemma is
the likelihood that any meaningful reforms will undercut Party control.

In addition, the global economy heavily affects China's economic performance. Our witnesses today will provide insight into how China's new leadership will attempt to meet these challenges, or whether the status quo will prevail as China's leaders seek to maintain their 7.5 percent economic growth target as well as the Party's position in power. This panel will lay
the foundation for forthcoming Commission hearings on China's economy and its financial sector.

Let me now yield to the co-Chair of today's hearing, Vice Chairman Shea, for his opening statement, and then I'll introduce the first panel.

Opening Remarks
William Reinsch, commissioner
Dennis Shea, commissioner

Panel I: China’s Political Transition
Christopher K. Johnson, Center for Strategic and International Studies
Cheng Li, Brookings Institution

Panel II: China’s Economic Transition
Eswar Prasad, Cornell University
Nicholas Borst, Peterson Institute for International Economics

Panel III: China’s Military Transition
James Mulvenon, Defense Group, Inc.
Roy D. Kamphausen, National Bureau of Asian Research

Panel IV: The U.S. “Rebalance” to Asia
Wallace Gregson, Jr., Center for the National Interest
David M. Lampton, Johns Hopkins University
Michael Auslin, American Enterprise Institute