At the apex lies the party itself. The party is credited with ending China's century of national humiliation at the hands of foreigners from the Opium Wars of the 1840s through to the end of Japanese occupation in 1945. The party is also credited with overseeing China's economic transformation to becoming an increasingly market economy, albeit managed by a Leninist party. But the party is also in the midst of its own fundamental identity crisis. Marxism as an ideology is now dead. And so the two remaining pillars of ideological legitimacy for the party are its ability to marshal the forces of Chinese nationalism as China assumes its proper place in the councils of the region and the world; and continued economic growth to raise living standards further and to bring the rest of the Chinese people out of poverty. If either of these pillars crumble, then legitimacy of the party also begins to crumble. For Xi Jinping's leadership, the challenge will be the continued reform of the economy to make sure that economic growth holds up. China's old growth model (based on high levels of savings and government investment, low wages and manufacturing for export) has reached its use-by-date. The delicate task of Xi's administration will be to implement the new growth model (based on high levels of consumption, higher levels of savings based on more generous safety nets and an expanded role for the private sector as well as the rapid growth of the services sector concentrated in China's rapid urbanisation process). Xi Jinping's second job, as head of the People's Liberation Army, carries a further set of formidable challenges.

The PLA is a powerful institution whose ultimate responsibility is to the party as well as to defend the interests of the state. For Western analysts, it remains one of the most opaque institutions in terms of its precise impact on the political process. At a minimum, we should assume the PLA will continue to advocate a conservative position on what China describes as its "core national interests" including Taiwan, Tibet, Xinjiang and China's multiple offshore island claims in both the South China Sea and the East China Sea. The pace of China's military and naval modernisation program will continue. Only last month China unveiled its first aircraft carrier - itself a symbol of China's expanding force projection capabilities. These capabilities will increasingly challenge the United States and China's immediate neighbours. Against these concerns, we should remember that throughout its imperial history, when China was indisputably the superpower of Asia and a great power in the world, it exhibited very little, if any, record of foreign invasion or territorial occupation.

As for Xi Jinping's third job as president of the People's Republic, a fundamental insight into China's future is to understand that as both an ancient civilisation and as a modern power China seeks to be respected within the international community. This is a deep, enduring national sensibility that transcends the ideological, political and military dimensions of contemporary Chinese power. The Chinese people, whatever their political views may be, both at home and abroad, have a deep and legitimate pride in their achievements and understandably they want this to be recognised and respected around the world. In this sense, Xi Jinping as president will represent the Chinese nation - not just the party, the PLA or for that matter, the government. And on this, the tricky bit is how to obtain and sustain universal respect in the absence of undergoing China's next transformation - that of democratisation in one form or another. And on this task, the jury is still out.

It's been my privilege to have spent quite a bit of time with Xi Jinping when he visited Australia in 2010. I believe him to a be a man comfortable with the mantle of leadership. I believe his first term will focus overwhelmingly on the task of further economic reform. And if that succeeds, he may well embrace the task of political reform during his second term. Loading He is, therefore, I believe a leader that both Australia and the United States can do business with. And we in Australia should now be working with our American friends on how to develop a new strategic road map for US-China relations over the next five years. And this should include how together we can build a stable, rules-based security order of East Asia out of the emerging machinery of the East Asian Summit.

Kevin Rudd is the former prime minister and the member for Griffith.