The China Syndrome

Why the Asian giant could be Obama's second-term foreign policy headache

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Illustration by Oliver Munday for TIME; Xi: Jason Lee / AFP / Getty Images

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For the past three decades, China has been run on the basis of a strategy laid out by Deng Xiaoping, the Communist Party leader who set China on its current course. Deng's strategy had three parts. First, he replaced Marxist dogma with economic liberalization--with an orientation toward exports. Second, he took a political system that had combined ruthless dictatorship with chaotic power contests and replaced it with an orderly process that selected engineers and other technocrats for fixed terms in office. And finally, he overturned Mao's revolutionary foreign policy with one that tacitly allied China with the U.S.

Currently, all three aspects of the Deng strategy are under stress. China's economic model has run its course and faces new challenges from rising labor costs and a shrinking cohort of young workers. Its political system is widely criticized within the country for corruption and lack of transparency. And its foreign policy is under strain from a nationalistic public, an assertive military and an intellectual elite that believes the world--and the U.S. in particular--is trying to contain China's natural rise to global power and influence.

China's next President, Xi Jinping, will have to be a different kind of leader. Hu Jintao made only two live state-of-the-nation speeches to his people in his 10 years in office. Xi cannot behave like a Mandarin Emperor. He will have to change China's economic strategy to ensure that the country keeps thriving. He will have to decide how to open up the political system enough to gain some legitimacy but not so much that the Communist Party loses its monopoly over power. And he will have to manage China's shifting relations with its neighbors not just in the East China Sea but throughout the region--and with the world's superpower--to preserve China's influence and prevent conflict. It makes President Obama's challenges look easy by comparison.

TO READ MORE BY FAREED ZAKARIA, GO TO time.com/zakaria

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