Video: How 'Leninist Political Tactics' are Constraining China's Economic Reforms

(L to R) Evan Medeiros, Kevin Rudd, and Daniel H. Rosen speak at Asia Society New York. (Ellen Wallop/Asia Society)

This week’s summit between Chinese President Xi Jinping and his American counterpart Barack Obama, says Asia Society Policy Institute President Kevin Rudd, occurs “at a critical time when China’s rise both as a global economic power and as a political power — and prospectively in terms of its military capabilities — make the dynamics of this relationship different than they have been for decades previously.” But experts say the state visit could be marred by a mismatch in perceptions of China’s economic outlook.

“Probably the most portentous issue hanging over the summit at this moment are some very fundamental questions about China’s state of economic affairs today,” said Daniel H. Rosen, a China-focused economic analyst and founding partner at the Rhodium Group.

“The behavior of China in engaging with [the United States] — the incumbent economic leader — on how to reshape, strengthen, and adjust international economic norms is going to be something of a contest of ideas,” Rosen said.

Speaking at an event hosted by the Asia Society Policy Institute in New York on Wednesday, Rosen suggested that Xi has sent signals through media interviews and other conversations that his message to Obama and the U.S. will be one of economic strength — that the odds are in favor of China outperforming economically and of the United States just “muddling through” going forward.

“I think what stands out though at the moment is that there are questions of confidence arising about the Chinese side of that equation,” Rosen said, pointing to this summer’s “ham-fisted” Chinese government interventions aimed at propping up the stock market. “China did stumble quite badly in terms of its basic understanding of what it means to optimize capital markets,” he said.

At the same event, Eurasia Group Asia Managing Director Evan Medeiros, a former Senior Director for Asian Affairs at the White House’s National Security Council who helped organize several Sino-U.S. presidential summits, said that Chinese leaders have a clear sense of the market reforms they plan to undertake in order to transform their country’s economy. “They know where they have to go,” Medeiros said. “The new question, and an area of profound uncertainty, is: Are they able to do it? … Do they have the space to pull off reforms that are increasingly difficult and costly?”

In the above video clip, Rosen and Medeiros discuss how China’s government is “constipated” by Xi’s anti-corruption campaign and how the increasing use of “Leninist political tactics” on economic matters are raising “real questions and real flags about the political environment in China and the extent to which it’s going to constrain or enable economic reforms.”