China's new leaders took centre stage yesterday with outgoing Communist Party chief Jiang Zemin presiding from behind the scenes. By exploiting the same clauses inserted into the party constitution in the 1980s to enable Deng Xiaoping to remain de facto chief after relinquishing his other posts, Mr Jiang will, like Mr Deng, stay on as chairman of the Central Military Commission, even though he is no longer party secretary or a member of the Central Committee. Mr Jiang's residual influence is a blot on an otherwise well-orchestrated succession process that has seen the old guard stepping down to give way to a new generation. It is a reminder that power in China still comes out of the barrel of the gun and resides ultimately in one person through a process known as democratic centralism. It also shows the party has not fundamentally resolved the issue of succession. The unprecedented orderly transfer of power has been achieved by Mr Jiang out-manoeuvring his opponents and putting his proteges in place. That shows the party still has a long way to go before establishing a truly democratic, transparent and bottom-up process of choosing its leader. Yet, credit must be given to Mr Jiang for successfully managing the first stage of transforming China's planned economy to one largely based on market forces during his 13-year reign. If his staying on for a short period enables his team to find their feet, that may be no bad thing. The challenges facing the new leadership are no less daunting than those of their predecessors. China's next stage of development will see a wide range of its domestic industries, from agriculture to banking, having to face foreign competition following admission to the World Trade Organisation. As the forces of globalisation pound the mainland, continual reform and privatisation of state-owned enterprises will see further rises in the number of displaced workers, who will have to fend for themselves in the absence of adequate social security. The development of private enterprise will be crucial in sustaining economic growth and thus ensuring enough jobs are created to prevent social tensions from boiling over. For that to happen, further strengthening of the rule of law will be critical to stamp out graft and create a level playing field, thereby preventing official rip-offs while allowing private businesses to flourish. In pushing through reforms, the departing leaders were able to bank on the tacit support of a population with long memories of hardship caused by endless political struggles. They could do so by delivering an ever-rising standard of living. By contrast, members of the younger generation that the new leadership will have to deal with will harbour far more diverse desires than just having enough to eat and wear. They will want to have a greater say in running the country - and not necessarily through the Communist Party if it refuses to give a hearing to what it considers non-conformist views. Externally, managing China's growing political and economic clout on the world stage will be a taxing issue. Many countries will find it in their interests to portray China as a bully, unless the new leaders remain measured in exercising their country's influence in handling foreign relations. As a monolithic body that professes to represent the interests of the people, the Communist Party must engage in a constant process of regeneration by ensuring a continuous infusion of new talent, which brings with it different skills and perspectives. The adoption of the Theory of the Three Representatives is a step in that direction. The new leadership would be doing the country a great service if it were to realise that it should maintain its legitimacy by harnessing dissenting voices to rectify its faults, instead of suppressing them. A prosperous, open and pluralistic China adept at managing the momentous changes it is destined to experience is of utmost importance to itself and the world.