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Emerging Markets

Global Financial Power profiles: Governance and Reform

The rise of the EM voice

Sri Mulyani Indrawati, finance minister, Indonesia

Indonesia’s finance minister has played a crucial role in restoring the country’s economy to a level unthinkable 10 years ago

When Sri Mulyani Indrawati, Indonesia’s finance minister, met Timothy Geithner, secretary to the US Treasury, at the September G-20 meetings the two clearly had a lot to talk about – not least, Indonesia’s success story over the past decade.

Ten years ago Indrawati was Indonesia’s representative at the IMF while Geithner, then assistant secretary for international affairs at the US Treasury, was responsible for directing the IMF’s policy on Indonesia.

In the decade since, Indonesia, the world’s most populated country, has gone from being an economic and political basket case, to becoming south-east Asia’s strongest – and newest – democracy, reasserting itself as a nation of geopolitical importance, while transforming its economy beyond recognition.

Much of that progress is down to Indrawati, who has played a crucial role in guiding back the country’s economy to a level unthinkable 10 years ago. Back then, the IMF’s infamous $43 billion rescue package signed in January 1998 by then-president Suharto, with IMF chief Michel Camdessus looming imperiously over him, helped push Indonesia into weeks of widespread street chaos that culminated in the end of the dictator’s 32-year rule.

Geithner, alongside his then-boss Lawrence Summers, drew on his experience dealing with Latin America’s debt crises to administer a brutal prescription to Asia in 1997. Paul Keating, Australian prime minister at the time, has argued that the Fund’s approach undermined its credibility. “Suharto’s government delivered 21 years of 7% compound growth. It takes a gigantic fool to mess that up. But the IMF messed it up,” he said. “The end result was the biggest fall in GDP in the 20th century. That dubious distinction went to Indonesia.”

The bitter medicine swallowed by much of the region has subsequently meant that Asia has done its level best to avoid ever having to return to the IMF – as the global financial crisis demonstrates – instead building up unprecedented foreign exchange reserves and, in the case of China, maybe stoking the ‘boom’ that bust America.

For Indonesia, Indrawati has arguably been the main architect of – and driving force behind – the domestic-focused economy that has seen Indonesia avoid recession.

In mid-September the World Bank raised its 2009 growth forecast for Indonesia’s GDP to 4.3% from 3.5%. The economy has fared better than neighbours including Thailand, Malaysia and Singapore, which slid into recession as exports collapsed amid the global slump.

“With the financial crisis in the US...we have a new environment where the global economy cannot be relied upon as a safety net,” she told Emerging Markets in an interview at the height of the global financial crisis last year.

She has also helped steer the economy back to safer waters, not least by taking a hard line on corruption. Her first major decisions were to fire the heads of the notorious tax and customs departments, and she has also moved against prominent business interests.

Indonesia’s pre-eminence in global capital markets is another of Indrawati’s achievements; the country has become Asia’s premier sovereign borrower, a fact that has reduced its debt servicing costs.

Indrawati is not one to gloat, but she means it when she says that the US is learning what Indonesia learnt – the social cost of a financial crisis makes for very difficult decisions. In the 12 years since Asia unravelled though, it is the IMF – and the US government – that has changed its views on how to deal with failing banks. —Nick Parsons

Ali Babacan, Deputy Prime Minister, Turkey

From economic basket case to poster child for prudent reform, Turkey has come a long way over the past decade

In its seven years in power, the AKP (Justice and Development Party) has set in motion an ambitious agenda of shrewd – and disciplined – emerging market reform.

It’s a story that has also thrust an economically emboldened nation into a more assertive role on the global stage – underscoring its geostrategic importance at the crossroads of East and West.

At the heart of this transformation is Ali Babacan. One of the founders of the AKP in 2001, Babacan was appointed economy minister in 2002, at the age of 35. With the twin anchors of an IMF programme and EU membership negotiations, Babacan pressed ahead with a bold plan of spending cuts and fiscal prudence.

The basic point Babacan makes is this: Turkey will continue to stick to its guns, no matter what, and irrespective of anyone else’s prescriptions: “Whether it’s the IMF, World Bank, EU or whatever, it doesn’t matter. Just look at what we have said and what we are doing,” he told Emerging Markets shortly after taking office.

Seven years later, the facts speak for themselves. Government debt to GDP ratio has fallen from 74% in 2002 to 39% in 2008. And Turkey has finally escaped the inflation trap that dogged it for so many decades; this year, inflation fell to under 10%. “It’s a phenomenal achievement,” says Mahmut Kaya, chief economist at Garanti Securities.

Babacan has also played a role in the clean-up of Turkey’s banking system, which was transformed in the early years of the decade from a crisis-prone mess to one of the world’s few banking systems that could comfortably ride out the credit crunch without state support.

He attributes Turkey’s economic success to the fact that “after a decade of weak coalition governments in the 1990s, we have had a single-party government with a clear idea of economic policy.”

In 2005, he was appointed chief negotiator with the EU over Turkey’s potential accession to the union. Progress has been slow, as the EU is still struggling to digest (and bail out) its new members in eastern and central Europe. It is also grappling with questions of whether such a large, young and Muslim-majority country like Turkey could fit into Europe.

The lure of EU accession has proved a powerful dynamic for reforms, Babacan says: “We’re in the process of reforming our law courts, to make them fairer and more independent. And in this area, we have useful benchmarks in the EU. The EU isn’t right about everything, but in the area of democracy and human rights, its norms are good.”

Babacan recently returned to the economy ministry after a stint at the ministry of foreign affairs. He faces a tough time now, as the government struggles to contain a 6% budget deficit while also bringing the country out of recession and back to growth.

He recently published a medium-term economic programme, and the government is set to introduce a fiscal rule in 2011. “This is the first time in Turkey’s history we have used such a rule,” he says.

Critics say Babacan is too controlled by his prime minister, Recep Tayyip Erdogan. “His loyalty to the prime minister is 100%. If Erdogan tells him to do something, he does it”, says one former government official.

But others say the relationship works both ways. “The prime minister values his decisions and listens to him,” says Tevfik Aksoy, a senior economist at Morgan Stanley in London. — Julian Evans

Alexei Kudrin, Deputy Prime Minister, Russian Federation

Long the lone voice of liberal economic reform in a government dominated by a statist centrism, Kudrin’s prudence has been vindicated

When Alexei Kudrin was appointed Russian finance minister in May 2000, the country’s finances were in disarray. The government was rated junk by all the rating agencies, having defaulted on its domestic debt in 1998. Its debt to GDP ratio was 90%. Inflation was around 40%. The central bank’s reserves were just $28 billion, and the government was begging for money from the IMF.

In the years that followed, Kudrin played a key role in Russia’s rehabilitation – and in the rise of Russia as a new economic and geopolitical power.

Kudrin, widely credited with highly effective management of Russia’s energy windfall, has long been a lonely voice of liberal economic reform in a government increasingly dominated by statist centrism. In an interview with Emerging Markets at the height of Russia’s boom, he admitted to being under “a great deal of political pressure” to loosen budget discipline. But, he vowed to carry the reformist torch and limit the impact on the economy of the “bureaucratism and corruption that result from the excessive influence of the state”.

Today, Russia may be nursing its wounds from its most severe economic shock in a decade, but its state debt to GDP ratio is 7.5% – the lowest in the G-20. Russia has been investment grade since late 2003, and since 2006 it has been a net creditor to other nations and to the IMF itself. The government has around $175 billion in two sovereign wealth funds, and the central bank has around $400 billion in reserves, albeit down from a record $597.5 billion in early August last year, just before the financial crisis.

Kudrin’s boldest move has been his defence of Russia’s Stabilization Fund, into which the government poured its billions of petro-dollars as the oil price rose from 1999 onwards. The fund may have been someone else’s idea – that boast belongs to Andrei Illarionov, former chief economic adviser to the president – but it is Kudrin who managed its creation, and who has bravely defended consistent attempts by bureaucrats, oligarchs, and spendthrifts to raid it. The only use he would allow for the fund, for many years, was to pay back the state’s debt – although the rules have been relaxed somewhat since then.

Kudrin has often expressed publicly his concern about Russia’s dependence on raw materials export revenues. “We are reducing our dependence on oil,” he told Emerging Markets. “The main means for achieving this are the Stabilization Fund and judicious government policy.”

Kudrin’s thrift has attracted much criticism from others, such as Kremlin economic adviser Arkady Dvorkovich, who wanted the government to spend more in the boom years. But the wisdom of Kudrin’s prudence is now apparent, as the government has the money to try and support its economy, which is forecast to contract by 8.5% this year.

“Kudrin has been validated,” says Jonathan Schiffer, senior sovereign analyst at Moody’s.

“The Stabilization Fund was an undoubted success. It is always a good idea to save,” Petr Aven, president of Alfa Bank said recently.

Today, the government is spending hundreds of billions of roubles trying to support the banking system and large overly-indebted companies. Both the Reserve Fund and the National Welfare Fund (the two sovereign funds that the Stabilization Fund was split into last year) could be exhausted by 2010, Kudrin says, and the government will borrow heavily on the international debt markets.

Just as well, then, that Russia’s appeal as a sovereign credit is strong – not least thanks to Kudrin’s efforts. — Julian Evans

Mohammed bin Rashid Al Maktoum, Ruler of Dubai, Vice-President and Prime Minister, UAE

Dubai was the first city in the Middle East to take itself seriously as a global financial player, thanks to the foresight of its ruler. Though hit hard by the downturn, its achievements provide an invaluable lesson to other aspirant financial hubs

In a little over a decade, Sheikh Mohammed bin Rashid Al Maktoum has transformed his emirate from a sleepy trading port into one of the world’s most dynamic cities, its skyline a forest of cranes, its shoreline a mass of marinas and man-made archipelagos.

Dubai was the first city in the Middle East to take a full role in the global market, selling itself as an international trading and investment hub along the lines of Hong Kong or Singapore. While the global downturn has taken a heavy toll on the emirate, largely due to its dependence on international commerce, there is no doubting its achievements. Dubai is by far the most advanced city in the Arab world, and that success is due in great part to Sheikh Mohammed.

“For all the poor media coverage recently, Dubai has achieved a critical mass,” says Simon Williams, head of regional research for HSBC. “Its infrastructure is second to none in the Middle East. That would not have been possible if it hadn’t set its sights high.”

The mantra ‘build it and they will come’, used to great effect in Dubai’s marketing programmes, reflects Sheikh Mohammed’s personal philosophy. The first grand schemes to put Dubai on the map, such as the Palm Jumeirah, an artificial island reclaimed from the Gulf, came directly from the ruler’s office. Longer-term expatriates often recount stories of Sheikh Mohammed driving around his fiefdom in the 1990s and personally supervising public works.

Sheikh Mohammed’s attitude to rulership is a conscious break from tradition, and reflects his father’s concerns about Dubai’s dependence on oil. “My grandfather rode a camel; my father rode a camel; I drive a Mercedes,” the late ruler said. “My son drives a Land Rover; his son will drive a Land Rover; but his son will ride a camel.”

Appointed crown prince in 1995, Sheikh Mohammed’s mission was to break that dependence. Early real estate projects attracted business to the emirate, which were encouraged by tax incentives and purpose-built free zones such as the Dubai International Financial Centre and Dubai Media City.

Sheikh Mohammed then began to wield increasing clout as an investor abroad. His primary vehicle is Dubai Holding, an umbrella company with investments in a wide variety of foreign companies such as the Tussauds Group and DaimlerChrysler. Other such vehicles include Dubai World, a state-owned body set up in 2006 which owns companies such as international port operator DP World. In 2007 he established the Mohammed bin Rashid Al Maktoum Foundation, a $10 billion global charity with a focus on education.

In January 2006, following the death of his brother, he became ruler of Dubai, as well as vice-president and prime minister of the United Arab Emirates, the federation that includes Dubai. Since then Dubai’s growth has been frenetic. However, that came at a price. Following the downturn last year, the emirate’s indebtedness is conservatively estimated at around $80 billion.

The coming months will test Dubai’s ability to restructure its debts and Sheikh Mohammed’s model of governance. After years of praise, the savage backlash from the western press has been a surprise. Yet it is only a matter of time before his real achievement, the creation of a modern services-oriented city from the desert, is recognized for what it is. —Digby Lidstone

Hugo Chavez, President, Venezuela

Oil has been Chavez’s calling card for years, allowing him to finance his ‘21st-century socialism’ and provide billions of dollars in assistance throughout Latin America

Venezuelan president Hugo Chavez made back-to-back announcements in September that could once more redefine his presidency and influence in the region.

The first was that China had agreed to invest $16 billion in Venezuela to produce oil in the Orinoco Belt. This came just days after Venezuela reached a deal with a Russian consortium to spend $20 billion in the same area. The two deals would increase Venezuela’s oil production by nearly 900,000 barrels a day.

A combination of political savvy and a bloody-minded resolve to throw off foreign interference in Latin American affairs have won Chavez a huge following across the western hemisphere. The firebrand president has redrawn the geopolitical map of the region and galvanized a resurgent leftist nationalism among many Latin states and their marginalized populations.

Yet the petrodollars pumped into Venezuela in recent years and the new pledges of $36 billion have not translated into economic or social stability at home.

Venezuela has the highest inflation in the region, topping 17% this year, and GDP contracted by 1% in the first half. The president had predicted that Venezuela would buck the international financial crisis and grow. Most pressing is the persistent rise in unemployment.

The economic troubles are compounded by rampant crime, ageing and overused infrastructure and shortages of basic goods.

These statistics led Chavez to follow the news of the oil investments with the launch of another package to stimulate the economy while controlling inflation. He said the measures would include relaxing currency controls, issuing $4.6 billion in new internal debt and spending heavily through a public works programme.

Chavez said the package would get Venezuelans back to work, stimulate industry to lower the country’s dependence on imports and grow the economy.

Analysts do not expect Chavez to disappear, but an economic crisis at home could reduce his standing in Latin America. “I do not see countries pushing Chavez away, but there could be less interest,” says Michael Shifter, of Inter-American Dialogue.

Jorge Castaneda, Mexico’s former foreign minister, says Chavez does have leeway even if Venezuela’s economy shrinks. “His pull is immense with the small countries, because his money there goes a long way,” says Castaneda.

Evidence of this is the Venezuela-led trading block, Bolivarian Alternative for the Americas (Alba). Ecuador is the second largest economy in Alba, but its GDP is three times smaller than Venezuela’s.

Castaneda says Venezuela’s influence in Argentina, Brazil and Mexico is negligible, while Chavez tries to influence Chile, Colombia and Peru by establishing relations with small parties and civil society groups.

Last year’s precipitous drop in oil prices raised the spectre of a crippled Chavez, but with prices rebounding, the colourful former military officer’s largesse may continue for years to come. —Lucien Chauvin

Luiz Inacio Lula da Silva, President, Brazil

Lula da Silva has commanded international respect for Brazil, paving the way for the nation to engage with a rapidly changing global economy on terms that are increasingly its own

They used to call him “risky Lula” before he embraced pragmatic economic policies. Then he became “lucky Lula”, as Brazil’s economic fortunes revived on the back of the commodity boom a few years later.

But as Brazil appears to have emerged more quickly from the global recession than many other countries, now neither epithet applies. Brazil’s president, Luiz Inacio Lula da Silva and the Brazilian economy have moved into a different league, where flippant terms like risky and lucky are inappropriate.

Over the past years the former trade union leader has positioned Brazil away from being a junior partner in world affairs, into being a senior player behind the empowerment of the Bric nations – Brazil Russia, India and China – and the rise of the G–20.

Brazil is seeking to “play an actual part in the debate to find a way out of the crisis and a reform of the global financial governance,” says Lula.

“Brazil’s recent announcement that it would lend some of its foreign exchange reserves to the IMF – an organization regularly vilified in the past by the political leadership now running the country – is symbolic in many ways,” says Joydeep Mukherji, a New York-based Standard & Poor’s analyst. “In addition to being a political gesture of national pride, it is also a symbolic acceptance of the emerging global economy, and Brazil’s desire to engage with it on terms that are increasingly its own.”

When Brazil’s finance minister Guido Mantega insisted at last year’s IMF meeting in Washington that the G–20 should host presidential summits – rather than just meetings of ministers and central bank governors – the idea was met with scepticism.

But thanks to the support of other world leaders such as France’s president Nicolas Sarkozy, the G–20 has gradually gained greater political relevance than the G–8. “Things obviously happen more slowly than we would like them to happen,” Lula said after a recent meeting with Sarkozy. “But it has already become clear that the world would not survive another wave of speculation, such as the one what we are currently seeing.”

Lula, as Brazilian head of state, is campaigning for change and a banking system that creates accountability and criticizes “speculators’ greed, and the lack of controls and limits for these speculative transactions”. Next to the visiting UK prime minister, Gordon Brown, last year he lashed out at “white, blue-eyed bankers” who needed to be responsible for the financial mess they had created. His choice of words then was no accident. This September, he repeated the same diatribe against blue-eyed bankers who should “foot the bill” as they were responsible for the crisis.

“The world cannot forget what happened last year. If [the global economy] did not collapse, it is because states came back to centre stage and played an extraordinary role,” Lula says. “The idea according to which the market was the solution to everything has failed: the market may solve one part of the problem, but the state must show the way.” —Thierry Ogier

Vladimir Putin, Prime Minister, Russian Federation

Putin remains the man behind Russia’s resurgence as a force to be reckoned with – both at home and abroad

Like Banquo’s ghost, Vladimir Vladimirovich Putin never quite seems to depart the scene. The 57-year-old’s route to the top in Russia was long and winding, including a stint as a KGB officer in the former East Germany, and culminating in two terms from May 2000 as the country’s president. Unwilling to leave the corridors of power, after stepping down in 2008 Putin simply settled into the prime minister’s seat – and last month dropped his heaviest hint yet that he plans to return to his former post.

Perhaps more than any foreign leader outside the Middle East, the Leningrad-born Putin vexes western nations. Within Russia his popularity rating, as projected by the Moscow-based Levada Centre, never dipped below 60%; he stepped down as president with his rating in the high 80s.

Putin managed to get under the skin of the Americans, and to claw back much that Russians crave most: respect. When Putin took over as acting president on the final day of 1999, Russia was in trouble. The ailing former president, Boris Yeltsin, once a force for good on both the political and economic stage, had placed the country in the hands of a group of ultra-wealthy oligarchs – chancers who had ‘bought’ vast parcels of state assets during the privatizations of the early 1990s.

Putin entered power determined to make those chancers walk in line. Some were drawn into his orbit – notably Roman Abramovich, owner of Chelsea football club. Others were allowed to perish, such as Mikhail Khodorkovsky, the former head of energy firm Yukos.

Having established himself as the man in charge, Putin set out to spruce up the ailing economy. In 2001, he slashed income tax to 15%. Next he renationalized key assets creating a clutch of flagship energy and commodity giants from Gazprom to Norilsk Nickel.

Those measures and others like them transformed a malnourished country. Aided by an energy boom, Russia’s economic fortunes revived and thrived, turning a yawning fiscal deficit into a massive surplus. In the 1990s Russia’s economy contracted each year bar 1997; under Putin’s presidency, GDP expanded every single year. Employment numbers rose; wealth was created; Russian firms sold shares overseas; foreign direct investment rose from $2 billion in 2000 to $30 billion in 2007, according to the Federal Statistics Service.

By 2007 even America was describing Russia as a returning superpower. Yet reform has not been all positive. FDI dipped to $27 billion last year, and multinational corporates are increasingly distrustful of an arbitrary and often foreigner-hostile regulatory framework.

Global firms from BP to Norway’s Telenor have fallen foul of the Kremlin in recent years. Sweden’s Ikea chose to scrap investment plans entirely. In the World Bank’s latest report charting the ease of doing business globally, the Russian Federation ranked 120th out of 183 nations, behind Bangladesh, Swaziland and Kosovo.

Putin is still seen as Russia’s most powerful person. But the current president, Dmitry Medvedev, a Putin protege, is creating his own power base, surrounding himself with trusted aides and allies from the more liberal, technocratic wing of the Kremlin.

Medvedev also sees Russia’s future in nuanced terms: as an inclusive part of the global economy; a would-be member of the World Trade Organization; a rounded nation less reliant on energy prices. Putin, by all accounts, sees Russia’s future through a more isolationist prism, as a carbon-based superpower with a few rogue friends in the Middle East and South Asia.

If oil prices stay fairly low, Medvedev could become the man in charge: an erstwhile protege and prince finally making the grade as Russia’s first technocratic king. But that’s a long way off yet. —Elliot Wilson

Manmohan Singh, Prime Minister, India

He has secured his place in history as the architect of one of world’s most ambitious experiments: transforming India’s eco-nomy. Buoyed by those results, the prime minister is now taking his efforts to the world stage

When Manmohan Singh rode into the G–20 summit in Pittsburgh last month and declared that trade protectionism and a “premature withdrawal of stimulus” threaten to strangle the global economic recovery, leaders across the world took note.

Amid a spat about the US imposition of environmental controls on Chinese goods, Singh contended that western economies are seeking a back-door route to protectionism in a year when trade volumes are falling for the first time in 25 years.

Boosted by a May re-election, Singh is not fighting for his political life unlike many of his G–20 counterparts. India is set to expand by an eye-watering 5.4% this year while developed economies contract 3.3%.

And Singh certainly has the credibility to lecture the developed world on economic policy – especially reining in soaring government debt while taking steps to rebalance their economies and introduce new financial regulation. He has gone through that ordeal himself.

In 1991, Singh, then finance minister, faced a balance-of-payments crisis. Foreign exchange reserves had sunk to a mere $1 billion, just enough to pay for a couple of weeks’ imports. Bold steps had to be taken to stem the crisis, Singh told the newly elected prime minister Narasimha Rao.

In the next five years, Singh launched the most dramatic changes in economic policy since the early years of newly independent India. He abolished stifling controls and regulations on industry, lowered tariffs, simplified the tax system, opened the economy for private investment and deregulated interest rates.

The economy turned around, inflation fell, and foreign exchange reserves rose. “People tend to forget that India’s position today, with surging capital inflows and huge forex reserves, is a dramatic change from the situation the country faced in 1991,” says Bimal Jalan, a former Indian central bank governor.

Unexpectedly thrust into power in 2004, Singh has, nevertheless, pursued a moderate pace of liberalization as prime minister. “There is no contradiction between our commitment to social justice and equity, and our determination to build a more efficient and open economy,” he said in a previous interview with Emerging Markets. “In fact, one will enable the other.” Singh emphasizes the need to put in place social safety nets that “take care of the losers and give them the required support to find new sources of employment and income generation”.

Since 2004, his government has launched a huge national rural employment guarantee programme, an ambitious plan to overhaul urban and rural infrastructure, and pursued affirmative action to help India’s minorities and lower caste citizens.

Growth, says Singh, is “a necessary condition of improving the human condition, but it is not a sufficient condition. It must be backed by credible measures to see that the fruits of growth accrue to the largest number of people, that the costs of growth are not borne excessively by those least equipped to bear those costs.”

While crafting the growth model for a population of 1.2 billion people, Singh in his second term is also redoubling his efforts on foreign policy. The Indian premier, together with the leaders of Brazil, Russia and India, is aggressively pushing reform of the international financial institutions to reflect the changing world order. —Sid Verma

Hu Jintao, President, People’s Republic of China

Hu Jintao’s tenure in office has coincided with China’s global economic ascendancy. But the coming years will be harder as the nation needs its people to buy more, rather than relying on rising exports

For a man who has spent most of his adult life navigating the murky byways of Chinese politics, Hu Jintao has remained a shadowy figure. China’s political and military chief came to power in November 2002, succeeding Jiang Zemin as the general secretary of the Communist Party. The following year he became Chinese president, a position he retains until 2012.

Piercing the diffident persona is difficult. People talk of his ‘modest’ mien, but he is also highly intelligent and well attuned to the slow, accretive process of building power bases within China’s vast bureaucracy.

Hu’s nature is ultra-conservative, his watchword is caution – perhaps unsurprising for a man who came of age during the country’s disastrous Cultural Revolution. The Financial Times once described Hu as a man worryingly dependent on a small group of advisers, who reads the People’s Daily, the Communist party’s political mouthpiece, and little else.

Yet such superficial sketches skate over the difficulties of running a nation of 1.3 billion people. Hu is arguably the world’s second most powerful human being after US president Barack Obama.

This is a remarkable reversal of fortunes for one of the world’s historically great powers. Deng Xiaoping, the man who single-handedly yanked China out of the mire the country was in in the late 1970s, famously handpicked Hu as a possible future Chinese president in the 1980s.

While Deng encouraged his impoverished country folk to believe that getting rich was ‘glorious’, Hu’s catchphrase, drummed into citizens at every level of daily life, cautions the importance of creating a ‘harmonious society’ that benefits everyone.

Under Hu’s leadership life has become freer for most Chinese citizens than at any point in the country’s history, though true universal suffrage remains a pipe dream. The economy has grown at upwards of 10% in every year except 2008, driven for the most part by booming exports.

Hu has shown a hard-line approach to liberalization of the media and what is permissible on the internet. Most recently the government tried to require all computers to be installed with a web filter known as Green Dam Youth Escort. For the moment, opposition to this has resulted in a postponement about its implementation.

Hu’s tenure in office has coincided with China’s global economic ascendancy and the country’s first true global showpiece, the 2008 Beijing Summer Games. Even the embarrassment of the 2003 Sars virus provided Hu with an opportunity early in his first term to act tough and firm up his power base.

His second term expires in 2012, and he is likely to be succeeded by his hand-picked successor Xi Jinping.

China under Hu has seen a nation enriched while avoiding any major external conflicts. The coming years will be harder. China needs its people to buy more, rather than relying on rising exports. As the country gains in power and wealth in an economically troubled world, remaining invisible will become harder for Asia’s emerging superpower. —Elliot Wilson

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