Contents -- Introduction -- I -- II -- Part I. The Challenges of Governance -- Survey Chapter -- Responding to Challenges and Problems of Governance WANG Zhengxu & LYE Liang Fook China's leadership is grappling with mounting socio-economic problems and rising expectations. Besides various policy measures to cope with these challenges, the Party and government have attempted to re-invent themselves ideologically and organisationally. -- China Under Jiang and Zhu -- Hu Jintao: Searching for a New Development Model -- Building the Party: Educative Campaign and Fighting Corruption -- Coping with Social Discontent -- Looking to the Future -- Topical Chapters -- The Dynamics of Elite Politics in China BO Zhiyue Elite politics is increasingly being institutionalised. The dynamic interactions between political institutionalisation and factional politics have continued to influence leadership line-ups. -- Political Institutionalisation -- Factional Dynamics -- Institutionalisation and Factional Dynamics -- How Did the Hu-Wen Leadership Consolidate Its Power? LAI Hongyi Hu Jintao and Wen Jiabao have surprised many with their rapid consolidation of power. Their success results from the ongoing institutionalisation of leadership succession, as well as Hu's effective political skills in building a political coalition to establish his authority. -- The Chinese Communist Party in Rapid Transformation ZHENG Yongnian & TOK Sow Keat The CCP has introduced organisational and ideological reforms, allowed limited elections at grass-roots levels and more space for selected social groups to maintain its dominant hold on politics.

The Party and the Media: Control versus Change LYE Liang Fook The Department of Propaganda of the Party has to balance control with the changing demands of society. It is under increasing pressure to adjust the old way of managing and controlling information based on fiat and fear. -- China's Propaganda Machinery -- Media Channels: Diversity and Proliferation -- Vocalness Versus Control -- Reform or Obsolescence -- Political Reforms First, Democracy Later? WANG Zhengxu Political democratisation in China is driven by the people's higher expectations and greater awareness of their rights and the Party's desire to deliver good governance. As opposed to a big-bang approach, China's democratisation is likely to be a gradual and fitful process. -- One-Party "Democracy" -- The Increasingly Assertive Society -- In Search of Good Governance -- Towards Rule of Law -- Growing Democracy under a One-Party Regime? -- The Struggle against Corruption YANG Dali To contain corruption, China has introduced institutional reforms, including completing market transitions, public sector management reforms, greater political accountability and stricter institutional restraints. The reforms have led to a modest reduction in corruption cases. -- Institutional Reforms for Anti-Corruption -- Completing Market Transitions -- Public Sector Management Reforms -- Greater Political Accountability -- Stricter Institutional Restraints -- International Norms and Obligations -- Reforms and Results -- Managing China's Civil Servants Kjeld Erik BRODSGAARD Contrary to popular belief, the number of civil servants in China is actually quite small. Improving the quality of personnel and governing capacity are important to preserve one-Party rule.

Can Beijing Still Dictate Local Politics? TAN Qingshan Beijing is facing a big challenge in reining in local governments without jeopardising economic growth. The key issue is whether they can deliver the outcome that Beijing wants. -- Towards the Rule of Law ZOU Keyuan The Party appears determined to promote rule of law to meet the demands of a market-oriented economy, the obligations of being a WTO member and the need to improve the administration and management of a more complex Chinese society. -- Implementing Law-Based Administration -- Administrative Transparency -- Judicial Remedies -- An Unfinished Task -- The Party and the Gun: Civil-Military Relations LI Nan The relationship between the civilian leadership and People's Liberation Army (PLA) has undergone a fundamental change over the years. The political leadership has focussed more on governance issue while the PLA has concentrated on military-technical tasks. -- The PLA in Transformation YOU Ji China's national defence strategy seeks a transformation of the People's Liberation Army (PLA) through mechanisation and informatisation. The real issue is whether the PLA can achieve a balanced transformation between these two objectives. -- The PLA's New Path to Modernisation -- The Generation Leap Strategy -- Informatisation and War Preparation -- A Crucial Decade -- Hong Kong and Macau under One Country, Two Systems CHOU Kwok Ping A decade of "One Country Two Systems" has produced different outcomes in terms of Hong Kong's and Macau's respective political relations with Beijing. These can be attributed to the different legacies of colonial rule and influences of democratic forces in these two localities.

Chen Shui-bian: Taiwan's Lame Duck President John F. COPPER The corruption and embezzlement charges involving Chen Shui-bian's close aides, son-in-law and wife have dented his image and credibility. However, Chen has cleverly exploited the local identity movement to bolster public support for his party. -- What to Expect from the 17th Party Congress WANG Zhengxu The 17th Party Congress will most likely witness adjustments to the central leadership and comprehensive endorsement of the "scientific development" concept and creation of a "harmonious society". While references may also be made to the need for political reforms, they are likely to stop short of concrete plans. -- Harmonious Society: The Party's New Focus -- Personnel: Mid-Term Adjustments -- Political Reform: Beyond the Congress -- Part II. Growth and Structural Changes -- Survey Chapter -- China's Major Economic Challenge: Sustaining High Growth Whilst Fixing Its Growth Problems John WONG The Chinese economy has become a significant force in the global economy. It has been argued that the current global economic boom is basically the combined effects of US consumption and Chinese production. -- Significant International Impact -- Is High Growth Sustainable? -- Fixing Many Growth Problems -- Not Just High Growth, But Better Growth and Its Sustainability -- Topical Chapters -- China's Twin Surpluses YU Yongding China is the only country in history which has run the twin surpluses for 15 years since 1990. The underdevelopment of China's financial market is one of the most important contributing factors to China's persistent twin surpluses. -- Causes of Twin Surpluses -- Why Are China's Twin Surpluses Unsustainable -- Policy Remedies for China.

Explaining High Productivity Growth WU Yanrui Whether productivity growth has played a role in China's recent growth can be investigated by examining the source of growth. Economists conventionally attribute the rate of GDP growth to the combined growth in labour and capital inputs. -- Factors Affecting Productivity Growth -- Productivity Growth at the Industry Level -- Productivity in China's Economic Growth -- The 11th Five-Year Programme Sarah Y. TONG The 11th Five-Year Programme outlines Hu and Wen's vision for the country's economic development and tackles growing economic and social problems following China's recent rapid economic expansion. -- China's Drive to Become a Technological Power QUAN Xiaohong When China embarked on market-oriented economic reforms, its science and technology system was subjected to far-reaching challenges for its lack of efficiency, R&D weaknesses, poor technical skills and outdated focus on defence and other heavy technologies. -- Banking Reforms to Meet WTO Obligations Sarah Y. TONG & ZHENG Yi China's banking reform has lessened the vulnerability of China's banks to external shocks. However, this does not mean that most of China's banks are now sufficiently robust to stand up to major international challenges. -- Reforming State-Owned Enterprises Sarah Y. TONG China's reform of state-owned enterprises (SOEs) has been quite successful in reorienting firms to be more responsive to market competition. -- Rise of China's Auto Industry YANG Mu & TENG Siow Song Many new auto players, including foreign companies have entered the Chinese market after China's WTO accession. By 2005, China was the world's second largest auto market (equalling Japan), with auto sales of over five million units. -- Chinese Domestic Brands (Private and State-Owned) -- Foreign Brands -- Government Industrial Policies.

The Political Economy of Urban and Regional Development CHIEN Shiuh-shen China's economic transition over the past three decades was characterised by dramatic but imbalanced urbanisation, serious territorial competition and uneven regional development.