Background
2012 is a key year for China. In the fall, a once-in-a-decade leadership transition will take place at The 18th National Congress of the Communist Party of China. All but two members of the government’s top decision-making body, the Politburo Standing Committee, are expected to stand down, including President Hu Jintao and Premier Wen Jiabao. Nine new officials drawn from the Politburo will replace them. Unlike previous leadership transitions, approximately 70% of China’s military leadership posts plus the State Council will also turn over in the largest change in leadership in decades.

Speculation over who would form the new Politburo began well before 2012. In 2010 analysts identified Xi Jinping and Li Keqiang as the heirs apparent to Hu and Wen’s present positions in the Standing Committee, and who in 2013 might assume the roles of President and Premier. It remains unclear who the remaining seven members of the Standing Committee will be, but some of the top candidates include Vice Premiers Wang Qishan and Zhang Dejiang, Propaganda Department chief Liu Yunshan, and Guangdong party chief Wang Yang.

Before his political downfall the former Chongqing party chief Bo Xilai was also a strong contender for a Standing Committee position. However, his chances began to unravel following the Wang Lijun incident, in which Wang, Bo’s then-police chief, arrived at the United States consulate in Chengdu seeking political asylum. Following this, Bo was removed from his post as Chongqing party chief in March; in April he was then removed from all his party posts and his wife, Gu Kailai, placed under investigation for possibly murdering Neil Heywood, a British businessman and former associate.

Mainland China aside, 2012 also saw the election of Hong Kong’s next Chief Executive. The Election Committee, a 1,200-strong body comprised of the former British colony’s political and business elite, voted for Leung Chun-ying, a pro-Beijing senior official. The favorite, former Chief Secretary Henry Tang, had suffered recurring exposés during his bid, including accusations of infidelity and illegal construction at his private property.

Why is it relevant?

Following this leadership transition, no further changes to the Standing Committee are expected for another decade. This means that the newly promoted officials, whoever they may be, will be calling the shots for the next ten years for a country that already possesses the world’s largest population and which in approximately five years will surpass the United States to become the world’s largest economy.

The new Standing Committee’s policymaking will be closely scrutinized. Economically, many countries whether well developed (Japan, South Korea), fast developing (Brazil, India), or in the developing world (African nations such as Tanzania) already have China as their biggest trading partner. As China’s economy continues to grow, more countries will find their economies getting intertwined with China’s. Therefore, governments of such countries will be anxious to see whether China’s next generation of leadership can steer its economy with sure hands.

Politically, China’s next generation of leadership will have to make a decision on whether to maintain the Party’s current relentless grip on power, veer even further left towards socialist mantras, or to begin implementing the earliest stages of political reform. This is why the Bo Xilai case matters, as his removal from political life and subsequent fall from disgrace, signaled a victory for the pro-reform faction led by Mr. Wen. It remains to be seen which faction gets who into which position; whatever the result, it will determine what happens to the granted and ungranted freedoms of over one billion people.