Forty years ago, an event occurred that few Americans know anything about. What happened Dec. 18, 1978, nonetheless would prove as geopolitically significant for the 21st century as the fall of the Berlin Wall was for the last century. This was the day Deng Xiaoping — who had recently emerged as China’s new leader in the aftermath of the death of Chairman Mao Zedong — opened a top leadership meeting that would put China on a new course, and unalterably change the contours of global geopolitics.

Deng laid out the foundations for China’s success

This meeting — known officially as the Third Plenary Session of the 11th Central Committee of the Communist Party of China — brought to an end decades of suffering by the Chinese people under Mao’s mismanagement and disastrous campaigns. Under Deng’s leadership, China abandoned the ideological strictures of the past and embraced policies founded on practicality and experience under the rubric of “reform and opening.” These policies unleashed the creative and entrepreneurial potential of the Chinese people and allowed China to break out of its self-imposed isolation.

Part and parcel with these new policies was the near-simultaneous opening of diplomatic relations with the United States — the culmination of diplomacy initiated by President Richard M. Nixon and Secretary of State Henry Kissinger. Deng understood that China needed to develop, which would require a stable external environment that was conducive to international trade and investment. He therefore did away with Maoist support for a global anti-capitalist revolution and set aside maritime disputes with China’s neighbors, preferring instead to gradually integrate China into much of the U.S.-led liberal international order.

As a result of “reform and opening” and greater engagement with the international community, China has enjoyed a remarkable period of economic and social development unprecedented in human history. As World Bank President Jim Kim noted in November, “China has increased its per capita income 25-fold, and more than 800 million Chinese people lifted themselves out of poverty as a result — more than 70 percent of the total poverty reduction in the world.” China today is one of the largest economies of the world — by some measures, it is the world’s largest economy, with tremendous global political power and a rapidly improving military.

What happens now?

The question today is not if China will rise to become a great power, but rather how China will use its newfound power.

In 2018, just as China is reaping the long-term benefits of Deng’s policies, Beijing appears to be turning away from some of the very policies that made the country so successful. In a speech marking the 40th anniversary of reform and opening, Chinese President Xi Jinping made it clear that he would continue to tighten Chinese Communist Party (CCP) controls over the economy and society — even as he lavished praise on Deng and highlighted the successes of reform and opening. Under Xi’s leadership, China has also cast aside Deng’s eschewal of cults of personality, as new campaigns in Beijing have sought to elevate Xi’s stature and extend his ability to lead China indefinitely.

Yet in other areas of domestic politics, Xi continues to hew to Deng’s line — especially when it comes to the need to maintain the CCP’s absolute grip on power. For all his reforms, Deng was always at heart a Leninist and strongly believed that China needed the CCP to provide leadership and prevent instability. Xi has inherited this strong sense of Leninism, and in his praise of Deng emphasized that China needs the party to uphold its sovereignty and weather future uncertainty.

Internationally, as other analysts have argued, China has neither universally embraced nor rejected the established liberal international order that had been so essential in facilitating China’s rise. Instead, Beijing has decided to rebuff some aspects of the established order and accept others — in accordance with how it understands China’s interests. Xi has even sought to portray himself as the protector of the established order in the face of President Trump’s revisionism — a message that many at Davos were happy to hear but not reflected in China’s own policies.

Xi has also reversed many of Deng’s decisions to set aside China’s maritime disputes and cultivate a stable external environment, choosing instead to more assertively pursue China’s claims and accept the resulting turbulence and risk. In both the East and South China Seas, Xi has overseen a vigorous expansion of Chinese ambitions and a greater willingness to tolerate friction with China’s neighbors. In the South China Sea, China continues to construct military outposts on artificial islands it built within the Paracel and Spratly islands.

As China’s economy slows and its leaders consider the implications of a more confrontational approach toward China’s neighbors and toward the United States, these issues are roiling in debates among some of China’s elites. Deng Xiaoping’s son, Deng Pufang, reportedly called for a return to his father’s fundamental priorities: addressing China’s domestic economy and keeping China’s external environment stable.

These issues matter for the U.S. and the broader Indo-Pacific

China’s internal orientation will have a direct impact on its approach to international affairs. If Xi continues to press his ambitions in the East and South China Seas and continues to expand CCP control over the Chinese economy, the world may see a new China: one that is not only ambitious and assertive but is more willing to accept risk in its external environment and explicitly challenge U.S. power in Asia.

As these issues reverberate across Beijing, it’s important to recognize that China’s future course is not inevitable and that its politics, though often obscure to outside observers, remain highly consequential. Even though many in the United States have grown increasingly skeptical about the utility of engagement with China, it’s equally important to acknowledge that we remain ignorant of China’s domestic politics at our peril.

Abraham M. Denmark directs the Asia Program at the Woodrow Wilson International Center for Scholars, where he is also a Senior Fellow at the Kissinger Institute on China and the United States. He previously served as Deputy Assistant Secretary of Defense for East Asia.