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Deciphering China

12/03/2012 12:04 pm 12:04:08 | Updated Feb 02, 2013

Recently China chose leaders who will command the country for the next ten years. I was in Beijing, opening the representative office of the CNA (National Confederation of Agriculture and Livestock of Brazil).

Although the succession of Chinese politics arrived with no near the drama and uncertainty that marked the American elections, my feeling is that China's new direction will lead to a much wider and deeper transformation than they have had on the horizon of American politics.

In the United States and Europe, the room for maneuver of its rulers has become very narrow. One might even say that their governments are limited to purely defensive actions, and it would not be incorrect to say that Americans and Europeans are abandoning a vision of the future. All they want right now is to rediscover the past life that has been lost in the crisis.

The pace and scale of China's growth in recent decades are the most impressive historical phenomena of today, with their real consequences.

We witnessed a radical shift in the axes of power by peaceful means. In the brief time of one generation, China has become the second largest economy in the world and the driving force upon which balances global economics.

Chinese growth has never been well understood. It always hovered on the uncertainty of its sustainability. The authoritarian regime seemed, to the world, incapable of the self-criticism necessary to make corrections in its course. But if there's one thing that the Chinese have been able to do is adapt to new situations.

Although the Chinese political regime is clearly authoritarian, with severe limitations to the free development of civil society, the periodic replacement of managers does shine on some kind of struggle of ideas in the wings of the Communist Party. And the closest observers say the country has moved toward a kind of collective leadership, depending less and less on the will of one man, as it did with the regime in the days of Mao. Government policies are more institutionalized and based on broader consensus.

The most reliable indications suggest that the ruling elites are in agreement with some course corrections imposed on by reality. The contribution of exports to growth, which has revolved around three percentage points in the last ten years, will not go beyond more than a percentage point in the next decade.

The continued growth will have to rely on the expansion of the internal market, which, in turn, depends on household consumption and government spending in social areas.

The intensity of this growth has to be reduced. Ten years into the current management leadership, Chinese GDP, measured in dollars, has simply quadrupled. For 2020, the announced goal of doubling the GDP in 2010, also accompanied the doubling of per capita income.

We anticipate that household consumption will grow much faster than the economy, which opens great opportunities for Brazilian agribusiness exports.

Also visible is that China seems now much more willing to project its economic power geopolitically. The country has clearly expressed the ambition to become the largest economy in the world and this will have consequences beyond the purely economic sphere.

Asia -- and the U.S. -- will feel the weight of this influence and some new conflicts could arise from it, with repercussions also in trade and investment policies.

Brazil, far away from the stage of these conflicts and this troubled agenda, can build a more profitable economic relationship with China, one that is more diverse and complex than the purely commercial relationship it shares today with the Chinese nation.

For this, it is strategically necessary that we are able to respond with great agility to the question: what do we want with the new China that is emerging?

* Senator Katia Abreu's (PSD-TO) and the main leader of the agriculture caucus in the Brazilian Congress. Trained in psychology, she chairs CNA (The National Confederation of Agriculture and Livestock).

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