China expert Rittenberg sees reform in China and is optimistic about continued economic growth.

Dont expect any radical changes, but Chinas new leadership team will enact reforms that will keep Chinas economy on the growth path. Thats the conclusion of Sidney Rittenberg, the 91-year-old scholar who lived in China from 1944-1979 (including 15 years in prison) and continues to make frequent trips to China as a consultant to many large corporations such as Microsoft.

Rittenberg said he knew the father of Chinas new president, Xi Jinping, as a friend. He said the father had promoted economic reform and was critical of the crackdown on Tiananmen Square demonstrators and that. Some of that rubbed off on the son.

Rittenberg spoke last night with Jim Fallows, national correspondent for The Atlantic, and author of China Airborne, at a forum sponsored by the Washington State China Relations Council.

Among the reforms Rittenberg expects Chinas new leadership to implement:

• Encourage state banks to lend to private sector enterprises. State banks now loan their money primarily to state enterprises. Chinese enterprises are frequently forced to borrow money from underground banks at rates as high as 35 percent a year.
• Shrink the growth in state investments and encourage the development of private capital markets with the goal of enabling more private firms to issue bonds and use that cash to finance growth.
• Shift from a focus on exports to a focus on the expansion of domestic markets.
• Begin to address the issue of water and air pollution.

On the negative side, Rittenberg is concerned about the Chinese leaderships increased use of nationalism to bolster its credibility. And while Chinas current leadership team was selected for being relatively free of corruption, Rittenberg was skeptical of how far the leaders would go in cracking down on corruption.

He also believes political reforms will not result in fundamental changes. While there are 100,000 strikes a year in China, he points out, those strikes are aimed at protesting actions by the central government, but rather are entreaties asking the central government to intervene to deal with the local bad guys.

In spite of issues like intellectual property theft and cybersecurity, Rittenberg sees U.S.-China relations as fundamentally strong. He says China see a good relationship with the U.S. as critical to the kind of stability it wants in the world. To the extent that Americas Asia tilt is perceived by China as being targeted at China, it is counterproductive, he says. He does not believe China has any hostile intentions toward foreign countries in spite of the occasionally harsh language it has aimed at countries like Japan.

Fallows points out that in spite of a great deal of talk about a Asia tilt, the United States has not shifted more of its forces to Asia. He argued that the tilt is more about ending the war in Afghanistan than it is about boosting Americas military presence in Asia.