China – Xi Jinping’s Challenges

Francisco A. Laguna & James K. Bates

In November 2012, Xi Jinping was both named General Secretary of the Chinese Communist Party and put in charge of the military. Together with the new members of the Politburo Standing Committee, Xi has to grapple with a new China.

  • The Economy

The Chinese economic juggernaut is slowing down. Xi will have to find ways of stimulating the economy while being a good member of the World Trade Organization and the international community at large.

Xi_Jinping_Sept._19,_2012Economic pressure is increased by the fact that the Chinese “baby-boomer” population is aging and retiring. Akin to its US and European counterparts, the government has to generate important revenue to provide the Chinese people with the social benefits and services that define the party and that they expect. China’s one-child rule contributes to the problem by limiting the size of the incoming work force.

It is likely that China will continue to pursue an international investment strategy to promote certain sectors of the economy, among them, investments in oil-rich and mineral-rich African countries and, perhaps, the new Northern Sea Route. The new shipping route along the Artic is now available due to unprecedented melting of ice in the Artic Sea. It is the shortest to date between Europe and the Asia / Pacific region. Successful exploitation of this lane would benefit both Chinese exports and imports (including petroleum and liquefied natural gas). The government has expressed its willingness to assist Russia and the other Artic Sea nations to exploit and protect Artic resources and develop the Northern Sea Route.

Civic Consciousness

Photo credit: James Pomfret

Photo credit: James Pomfret

This Monday, 7 January 2013, there were protests against the provincial government of Guangdong province over freedom of the press. One protester commented on the size of the crowd stating that “civic consciousness” is increasing in China. A nice turn of phrase.

Xi is facing a more confrontational, savvy and cynical public. China is the world’s second largest economy, and the government still censors and controls the internet and many aspects of business and society. Various sectors – entrepreneurial, student, ethnic – are expecting the government to implement reform, especially in terms of corruption and increased rights.

To date, the call for increased democracy has been met with strong government resistance. At the time of publication, there had been no Party reaction concerning the Guangzhou protest. Interestingly, it coincided with Google’s Eric Schmidt’s visit to North Korea.

International Reputation and Cooperation

photo credit to @nidduifardamha

photo credit to @nidduifardamha

Xi assumes command at an internationally active time. China is building its military and flexing its increasing prowess. Regional spats with China and the Philippines over small islands in the China Sea are on-going as is the tension between China and the US over what the Chinese perceive to be an increased US military presence in their sphere of influence.

In addition, if it is to be the sustained and viable voice it wants to be in the international diplomatic community, China will have to address internal issues, including human and ethnic minority rights.

TransLegal helps clients understand and comply with the requirements of doing business overseas. Contact us to discuss your specific questions about China.

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