What’s really at stake at the CCP Congress?

International media are understandably focused on the Chinese CommunistParty’s 19th National Congress, a carefully choreographed event thatwill reveal who’s “in” and who’s “out” with Chinese President XiJinping.But while it is important to know who Xi’s favourites are, I do not findthe theatre and intrigue of the event to be as interesting as it ismade out to be. Far more important is whether China’s leadership isacting in accordance with what the CCP has promised the country’s 1.3bnpeople.Just before the last congress, in 2012, Xi’s two-week absence frompublic view raised concerns. In the unlikely event that the same thinghappened again this year, alarm bells would have rung. Moreover, if theagenda that Xi presents for the next five years suggests that he and therest of the CCP leadership are losing credibility and struggling tomaintain the party’s economic and social contract with the people, the19th Congress will be very relevant. But I doubt we should worry toomuch.More pertinent questions come to mind – two in particular. First, willthe modest rise of the Chinese consumer continue to fuel 6-7% annualgrowth? And, second, will the somewhat undefined Belt and RoadInitiative (BRI) – continue to be a major priority for China’sleadership?As for the first question, despite the slower growth trend this year,China will still add around $1tn or more to its nominal GDP, giving it a$12tn economy by the end of this year – nearly double the economy’ssize in 2010. To be sure, $12tn is just two-thirds the size of the USeconomy; but the $1tn added this year is more than all but the top 15economies in the world. It is larger than the entire GDP of Indonesia orTurkey, and almost as large as the Mexican economy.According to official data, private consumption in China accounts forjust 39.2% of GDP. This is very low by the standards of most high-incomeeconomies, but it has increased from 35.5% of GDP in 2010. When thatincrease is translated into hard numbers, it amounts to an additional$2.58tn since 2010 – an increment that is larger than the entire Indianeconomy. The growth of Chinese consumption is easily the most importantfactor in global consumption growth today.If Chinese consumption growth were to continue on its modest upwardtrajectory until 2020, it would account for just over 41.5% of GDP,which is to say, almost another $2tn. And yet there is some anecdotalevidence to suggest that Chinese consumption growth might actually beaccelerating faster.So, the real question for China watchers around the world is whetheranything that happens at the 19th Congress will affect this trend. Ifthe trend continues or accelerates, Chinese consumption could start toapproach half that of the United States, which would be an extremelyencouraging sign that the world economy is undergoing a badly neededrebalancing.As for the second question, I suspect that China will stay the course onthe BRI, especially given the growing concerns about trade elsewhere inthe world. While we don’t yet know the precise dynamics of this grandproject, it is safe to assume that linking China, Europe, and everywherein between through better infrastructure will have a significantpositive impact on world trade.To be clear, I do not think that the BRI is as important as the Chineseconsumer to the world economy. But in terms of trade, specifically, itsimpact could be enormous. The BRI stands to have a direct effect on asmany as 65 countries, including Russia and India, which along with Chinaconstitute three of the four Bric countries (the other one is Brazil).And nine of the 11 most populous emerging countries after China liewithin the BRI’s broad geographical scope.Most of these countries have not yet matched China’s success inunlocking their economic potential. Many of them devote more resourcesto domestic infighting or conflict with one another than toparticipating in international trade. But with BRI, cross-border tradecould increase, and some of the feuds could be laid to rest, benefitingthe region’s citizens.Indeed, far more interesting than the BRI’s infrastructure projects areits geopolitical implications. The BRI could subtly but significantlyimprove relationships between China and its neighbours, and between theneighbours themselves.China’s relationship with India and other countries on the Indiansubcontinent is of particular importance. When Xi held a regionalconference to promote the BRI in May, Indian Prime Minister NarendraModi did not attend, much to Chinese leaders’ chagrin. But then, at aBrics summit in September, China and India seemed to achieve asignificant diplomatic breakthrough over a territorial dispute. If thisturns out to be the beginning of a limited Sino-Indian rapprochement,and if other rivals in the region follow suit, then the BRI could end upbeing a landmark policy indeed.So, when you are reading your favourite newspaper’s analysis of theCCP’s 19th National Congress, don’t be too distracted by the courtintrigue. The two questions that really matter are whether China’sconsumer-led growth will stall; and whether the BRI will be abandoned.Neither would be good for the global economy. But, fortunately, neitherseems likely. – Project Syndicate* Jim O’Neill, a former chairman of Goldman Sachs Asset Management and aformer UK Treasury Minister, is Honorary Professor of Economics atManchester University and former Chairman of the British government’sReview on Antimicrobial Resistance.