Dr. BONG Youngshik of the Asan Institute for Policy Studies discusses the major challenges that the new leaders of the Chinese Communist Party (CCP) will face in the immediate aftermath of leadership transition. He also examines how changes in the domestic politics of China will affect its external behavior. In particular, he investigates the new leadership`s policy orientations toward China`s territorial and historical issues with neighboring countries as a litmus test of the leadership`s dilemma in keeping the right balance between China`s exposure to globalization and the rising tide of nationalism.