Source: International Herald Tribune

Jiang Zemin's surprise resignation of his chairmanship of China's Central Military Commission on Sunday marks a critical turning point in an otherwise murky and uncertain process of leadership succession in Beijing that began nearly two years ago. By giving up his position as the commander-in-chief of China's armed forces, his last official title, Jiang has at last transferred all his power to Hu Jintao, the incumbent Chinese president and general secretary of the Communist Party.

Although Jiang's resignation has been hailed as a milestone in a peaceful transfer of power in modern Chinese political history, he has broken no precedent. By stepping down as the military chief two years after quitting as the president and the general secretary, Jiang has merely upheld the informal rule set by Deng Xiaoping, the former paramount leader. Deng retained his position as the chairman of the military commission at the Communist Party's 13th Congress in October 1987 and turned over the chairmanship to Jiang in November 1989. Consequently, Deng's example has laid down an implicit term limit: A retiring supreme leader may keep the military commission chairmanship for two years, but not longer.

Before Jiang's resignation, most observers of Chinese politics worried that he might want to stay beyond the informal two-year limit. Such an act would have seriously disrupted the continuing leadership transition and fueled a power struggle. Fortunately, Jiang's resignation has considerably brightened the prospect of a smooth transfer of power.

Frankly, though, even as we credit Jiang with this wise move, his resignation came a bit too late. Had he quit the military post two years ago and turned over all his authority to Hu, Jiang would have earned himself a place in Chinese history as the first supreme leader who had voluntarily given up all his official power upon retirement. Instead, Jiang has paid a heavy price for overstaying as the supreme leader. He was viewed widely as unwilling to cede the stage to Hu and his reputation has suffered. From this perspective, his belated resignation on Sunday has merely salvaged his political legacy.

Domestically, Jiang's departure will undoubtedly enable Hu to accelerate the consolidation of his power and control the political agenda. But this does mean that the challenges that confront China's new leadership will become less daunting.

After his ascent to power in 1989, Jiang presided over an unprecedented economic boom. But the single-minded pursuit of economic growth has also caused huge imbalances in Chinese society. While coastal regions have prospered, rural and interior areas have been neglected. Socioeconomic inequality has reached alarming levels and earned China the dubious distinction as the most unequal society in Asia.

Investment in public health and education, crucial to sustaining China's long-term economic development, has also suffered. Today, China spends about a third less than India on education, even though China's per capita income is 50 percent higher than India's. Fewer than 10 percent of rural residents have any health insurance. According to the World Health Organization, the overall performance of China's health care system lags behind that of India, Indonesia and Bangladesh. Worsening environmental degradation, estimated to cost between 8 percent and 10 percent of gross domestic product a year, is another byproduct of the pro-growth policy of the Jiang era.

While realigning China's development policy to address the mounting social deficits will require Hu and his colleagues to channel more investment into neglected regions, the most difficult and sensitive challenge they will face is what to do about the stagnation of the political system that has persisted since the Tiananmen tragedy in 1989.

After the suppression of the prodemocracy movement 15 years ago, the Communist Party has made no substantive progress in reforming an increasingly ossified political system. The freedom of the press remains severely constricted. Official rhetoric notwithstanding, the party's control of the judiciary has undermined the development of a strong legal system.

Village elections, perhaps the most notable democratic experiment under Jiang's rule, have not brought real democracy to most parts of rural China. And the Chinese leadership has resisted extending this experiment to towns, where genuine democratic competition would make a real difference. Such political stagnation has made the Communist Party unaccountable, spawned pervasive official corruption and alienated the public.

With Jiang's exit, Beijing's new leaders have a historic opportunity to tackle these monumental tasks. China - and the world - will be greatly served if they succeed in rebalancing China's growth strategy and liberalizing its politics.