SOMETIME in early November this year, the world will witness a once in a decade event.

A shift in power will occur between the fourth generation leaders to the incoming fifth generation leaders of the world’s most populous nation, China.

The generational hand over will see China’s top positions being filled by new individuals across its political system, with the appointment of a new president and premier. It is widely tipped that there will be changes to seven of the nine members of the Standing Committee of the Politburo and seven of the 10 members of the Central Military Commission.

It is expected that China’s next top leaders will be Xi Jinping and Li Keqiang, both of whom have made a number of recent public appearances through high-level visits and meetings leading up to the handover. These appearances have been designed to enhance both politicians’ bilateral relationships with other international leaders.

Changes in the Chinese political structure can have significant impact on other economies, including Australia.

China has implemented various policies over the past two decades which has seen its economy continue to grow.

During the Jiang Zemin and Zhu Rongji era, a push towards liberalisation was witnessed in 2001 with China’s entry into the World Trade Organisation. Jiang has been accredited for his pro-business stance, which resulted in changes in 2004 to the country’s constitution for the protection of private ownership and wealth.

Current Chinese leaders President Hu Jintao and Premier Wen Jiabao have promoted ‘inclusive growth’ as a policy goal in order to give priority to human resources development, increase employment, improve the quality and competence of workers and expand social welfare programs to ensure sustainable development.

As China continues to be an important player in global affairs, understanding the dynamics of the transition of power, including the key characteristics and interests of the new leaders, will be a necessary foundation to future engagements with the powerful country.

In the China 2030 report by the World Bank and China’s Development Research Centre of the State Council, various recommendations were made regarding China’s growth policy. These include promoting competition and development of the private sector, lessening the dominance of state-owned enterprises and liberalising land, labour and capital markets.

So what could the new changes mean?

Xi and Li may be more committed to free market principles given that Li endorsed the China 2030 project (in a statement given by the President of the World Bank) and Xi has generally been supportive of the private sector.

Taking this into consideration, this year marks 40 years of diplomatic relations between Australia and China, during which time China has become Australia’s largest trading partner.

In terms of trade value, Australia has seen momentous growth from a total of $113 million to approximately $120 billion over this period. It is hoped that Australia continues to increasingly recognise the significant value of this relationship.

With the eminent change in leadership, it will be interesting to see how this will ultimately influence Australia’s economic landscape and for the greater part, the world economy.

These are indeed important times, not only for China, but also any Australian company that does business with China.

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