As a seaside resort, with its Soviet-style hotels and drab canteens, Beidaihe, near Beijing, is nothing to write home about.

And, yet, it is here that China's Communist ruling elite gather every five years to discuss strategy and choose the next leadership.

This year's gathering is of importance to those who expect China to play a greater role on issues such as boosting the global economy, helping transition in Syria, and stopping Iran's nuclear programme.

The gathering is of interest for two reasons.

First, the ruling elite is expected to sort out ideological disputes that could wreck the Communist Party's 18th quintennial congress scheduled for next month.

Secondly, with old leaders bowing off, the party will approve a new leadership line up until 2022.

The Chinese Communist Party is no stranger to schisms.

In 1948, 1962, 1977 and 1989, it was torn by colliding ideological currents and bitter personal rivalries. And that is not taking into account larger convulsions such as the Great Leap Forward and the Great Proletarian Cultural Revolution.

The current clash is between what Sinologists label as the Guangdong and the Chongqing factions.

The Guangdong faction espouses the vision of China as a modern nation with a market economy and a Communist political system.

It was in Guangdong, that Deng Xiaoping's pragmatic politics found its strongest echo in the 1980s and 1990s. What is known as the Chinese model started in Guangdong before spreading first to Shanghai and then to the rest of the nation.

The Guangdong faction hopes to succeed where Mikhail Gorbachev failed in the Soviet Union, implementing Perestroika (restructuring) while preserving Communist rule. President Hu Jintao and, more specifically, Prime Minister Wen Jiabao have been ardent advocates of economic liberalisation combined with tight political control.

In economic terms, their success is impressive.

In two decades domestic gross product (GDP) has increased fourfold. Hundreds of millions have come out of poverty while over 200 million have attained living standards enjoyed by Western middle classes. Today, China has the world's second largest foreign currency reserves and is one of the top five foreign investors in United States and Europe. It has become the world's manufacturing park, emerging as one of top four exporting nations and, by some accounts, the third largest global economy. More importantly, perhaps, for four decades, that is to say since Deng's reforms, China has experienced no large-scale famine.

The Guangdong school has also kept China out of costly adventures. Between 1949, when the People's Republic was established, until the early-1970s China was compass point for armed insurgencies across the globe, getting involved in wars in Malaya, Korea, Vietnam, The Sultanate of Oman, Angola and Mozambique among others. It also fought wars against Russia, losing much territory, and against India where it gained land.

The Guangdong faction, in conjunction with the Shanghai faction, is now trying to prolong its hold on power by promising political reforms of unspecified extent.

The Beidaihe gathering is expected to hand over power to the fifth generation of the Communist Party. A new president and a new prime minister will be designated along with changes in two key organs of the party, the Politburo and its Standing Committee. Fourteen of the 25 members of the Politburo will retire along with seven of the nine members of the Standing Committee.

Thus, China is poised for the biggest generational shake-up in its recent history.

The new leadership line-up consists of men and women born after the establishment of the People's Republic.

Known as "princelings", these are children of veteran party cadres and products of privileges reserved for the Nomenclature. Their standard-bearer is 50-year old Xi Jinping, slated to become President of the Republic and Secretary General of the party.

Xi Jinping is the son of Xi Zhongxuan, one of the founders of the Communist Party and a victim of Mao Zedong's Cultural Revolution. The elder Xi spent 16 years in Mao's prisons before being released by Deng Xiaoping and appointed Governor of Guangdong.

The Chongqing faction is heir to the ideas of the notorious Gang of Four who tried to prolong the Cultural revolution in the 1970s. Members of this faction claim that the market economy has deepened inequalities and divested the party of its revolutionary spirit. The faction has tried to keep Mao's cult alive by distributing old party pamphlets and CDs of old revolutionary songs. Under its charismatic leader Bo Xilai, the faction tried to turn Chongqing into a model of redistribution of the fruits of economic growth.

However, last March Beijing decided to sack Bo Xilai as party chief in Chongqing and arresting his wife on charges of murdering a British businessman.

With Bo gone, the Chongqing faction is unlikely to agree on a new leader in time for the coming congress. However, it is certain to be present at the congress in some strength, claiming a share in the new leadership. Although not a heavyweight, the leftist firebrand Wang Lijun could still hope to ride a wave of nostalgia for " the good old revolutionary days."

My guess is that those who expect China to assume a global leadership position will be disappointed. This is not because China lacks the wherewithal; it does. The reason is that with economic growth slowing down and social tension rising throughout the nation while the party is deeply split, the last thing the leadership might want is involvement in other people's problems.

Still, China could play an important supporting role, tipping the balance on several issues. In our region, China could side with Russia to prolong the bloodshed in Syria and encourage Tehran's unhinged "Supreme Guide" to pursue his suicidal course. But it could also help those who strive for democratic transition in Damascus and a change of course in Tehran.

As they gather in Beidaihe, the Chinese leaders would do well to ponder that choice.

Amir Taheri was born in Ahvaz, southwest Iran, and educated in Tehran, London and Paris. He was Executive Editor-in-Chief of the daily Kayhan in Iran (1972-79). In 1980-84, he was Middle East Editor for the Sunday Times. In 1984-92, he served as member of the Executive Board of the International Press Institute (IPI). Between 1980 and 2004, he was a contributor to the International Herald Tribune. He has written for the Wall Street Journal, the New York Post, the New York Times, the London Times, the French magazine Politique Internationale, and the German weekly Focus. Between 1989 and 2005, he was editorial writer for the German daily Die Welt. Taheri has published 11 books, some of which have been translated into 20 languages. He has been a columnist for Asharq Alawsat since 1987. Taheri's latest book "The Persian Night" is published by Encounter Books in London and New York.