Despite the hype surrounding it, the gathering of the country’s ruling elite in Beijing is likely to prize measured change over dramatic reform.

If there was a clearer idea of what makes China’s new elite leadership tick, then the Plenum of the Central Committee of the Communist Party that is about to be held in Beijing would not be such a big deal. But in a polity which privileges concealment over overt statement, it is viewed widely as the one chance for outsiders to see more clearly what the leadership aims to achieve. Expectations were raised by the October statement by one of the most staid members of the current Standing Committee of the Politburo, Yu Zhengsheng, that the plenum would presage a new era of reform.

In Chinese politics reform is a word that has a wholesome, positive air about it. But the question is where and when reform will happen and who will gain from it. The plenum is not like a party convention in the Western sense. It is not an eye-grabbing, media-dominating event that produces surprises. Comparing this year’s installment with the great Third Plenum of 1978 that heralded the repudiation of late Maoism and the embracing of the market, the non-state sector and foreign capital – all anathema before then – is misleading. The significance of the 1978 meeting was only obvious in hindsight. It took years for the scale of the radical transformation of the whole strategic direction of the Communist Party to be appreciated. That 2013 will prove a similar historic moment is unlikely, perhaps even impossible.

What is much more likely is that the highly tactical leadership now in charge will reaffirm its commitment to incremental reform. It will make some statements about the radical urbanization that China is about to undergo and say something about social welfare reform. China’s leaders will do what they have always done in plenums over the last three decades, namely set the broad parameters of politically permissible activity that provinces, ministries and other stakeholders will then need to implement.

This plenum will also have to produce something about the need to achieve greater egality and balance in the economy. It needs to answer some of the questions about how Premier Li Keqiang, in particular, intends to meet the goal of 'fast, sustainable growth' when a falling overall GDP figure looks likely. It needs to communicate to as broad a constituency as possible the arch-narrative of a world where the raw statement of growth on its own is no longer the be all and end all of government policy. It needs to say something about how the party is going to fulfill the increasingly complex aspirations of the Chinese people, aspirations that exceed purely having a materially good level of life and concern broader questions of well-being that vex the politics of all developed economies.

Observers will want to see some signs too of addressing the most sensitive issues. Yu Zhengsheng talked of economic reform. Reforming the economy is now a wholly uncontroversial mantra in China. However, it impacts on one enormously important issue that reaches beyond economics: whether wealth, prosperity and development benefit the few or are accessible to the many – in other words, good, old-fashioned questions of economic and social justice. At the heart of this lies the question of how state-owned enterprises have become vehicles of profit not just for the party state, but also for tightly knit networks of vested interests. Reforms that lap at the doors of these entities also creep into the space of powerful political players, who will resist any attempt to cut down their wealth, and who have the power to resist.

China’s new leadership is proving more confident than was expected and displays a high sense of historic mission. President Xi Jinping speaks increasingly like a politician who believes it is almost his historic destiny to sit at the centre of the leadership of a renascent 'rich, strong country'. The ultimate question for the plenum is not what outside observers make of it but what the vastly complex mixture of groups in China does. For them, a sign that the leadership is willing to take on some of the entrenched vested interests that penetrate the operations of some state-owned sectors to the core is critical.

This is likely to be couched in the language of more support for the market, which is the key channel in any attack on vested interests – through widening access to wealth and economic benefits, and support for the non-state sector and entrepreneurs. It is hard to see how deeper reform can occur without these two crucial elements. And it is through these that the attitude of China’s leadership to political and legal reforms – far more complex issues that, almost certainly, will not be addressed at the plenum but will lurk in the background − will become clearer. The leadership thinks it is too early to tackle these issues directly, but this plenum will still be part of the process for it to come up with ideas for how to transform not just China’s economy, but its polity too.

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The ruling by an arbitral tribunal of five members based in The Hague was simple and devastating. It declares that ‘China’s claims to historic rights… with respect to the maritime areas of the South China Sea encompassed by the relevant part of the “nine-dash line” are contrary to the [The UN] Convention [on the Law of the Sea, UNCLOS]’. This is a result that Southeast Asia’s maritime countries have long sought. The way is now clear to resolve all the disputes in the region, if the participants choose to do so.

For decades, countries around the South China Sea lived under the shadow of a quasi-territorial claim that no one really understood. What did the U-shaped, nine-dashed line marked on Chinese maps actually mean? In 2009, the Chinese government attached a copy of the map to an official submission to the UN Commission on the Limits of the Continental Shelf and the region became alarmed. For the first time, it seemed that China was serious about asserting a claim to all the land and water inside the line.

On Tuesday that claim was dismissed as entirely incompatible with international law. Moreover, the Arbitral Tribunal ruled that not one of the Spratly Islands qualifies as an ‘island’. This ruling is at least as significant: it means none of the features in the archipelago are entitled to an exclusive economic zone. Theoretically it should now be simple to resolve all the maritime disputes in the southern part of the South China Sea. The Philippines, Malaysia, Brunei, Indonesia and the Philippines can, in principle, draw lines up to 200 nautical miles out from their coasts and agree compromises where they overlap. China is now irrelevant to this process because its nearest coastline is simply too far away.

All the 50 or so features in the Spratly Islands that are naturally above water at high tide would be granted a 12-nautical-mile territorial sea. The resulting settlement would resemble a Swiss cheese: large areas of exclusive economic zone measured from national coastlines punctuated by a few dozen ‘bubbles’ of disputed territory. This would not resolve the disputes about which country is the rightful owner of those ‘bubbles’ but it would settle the maritime disputes in the sea around them.

Of course, there are still wrinkles. Not least is the Philippines claim to the Malaysian province of Sabah in northern Borneo. This means that, for the time being, those two countries can’t settle the maritime boundary between them. They could, nonetheless, agree how far it projects offshore.

The bigger problem will be China’s attitude. Its response to the tribunal’s ruling has been angry but curiously misdirected. State media have focused their ire on questions of territorial sovereignty – even though the tribunal was barred from even considering this subject. China’s territorial claims to the rocks of the Spratly Islands are entirely unaffected by Tuesday’s ruling. There must be separate processes to resolve those questions.

China has many interests in the South China Sea – including defence, trade routes, fisheries and hydrocarbons – so it’s not surprising that it pursues whatever approach it thinks practical in order to protect them. However, the whole purpose of the UN Convention on the Law of the Sea was to create an international order that defended the rights of countries to exploit the resources off their own coasts without threat from other states further away. China was a full participant in the negotiations between 1973 and 1982 that created UNCLOS and, at that time, was a strong defender of the rights of coastal countries.

While it may feel that it has lost out from this week’s ruling, China has much to gain from a strong community of regional order in the South China Sea. Most Southeast Asian countries remain alarmed by China’s intentions − which is why, in the past few years, they have been strengthening their ties with the United States and increasing military spending. China’s wider interests would benefit from a de-escalation of this tension. Reassuring its neighbours would give them less reason to rely on the US.

Putting a new maritime order in place, based upon UNCLOS and commitments between China and the Association of Southeast Asian Nations, would be a major step towards this. It would also bring many associated benefits – not least cooperation to protect the region’s fish stocks, which are facing disastrous collapse. The first step is accepting the implications of Tuesday’s ruling.

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