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As Hu Jintao Steps Down, Predictions For China in 2012

The Year of the Rabbit is quickly coming to a rather anti-climactic close. Over the past year, the world continued to wait for some cataclysmic event in China that either would launch it as a global superpower or bring the whole nation to its knees. But instead China calmly and strategically scripted out its next moves. This is not to say that no major events transpired in 2011. However, where the Year of Rabbit came and went with few conspicuous bumps, the Year of the Dragon looks to be a more turbulent.              

2011

Sino-U.S. relations enjoyed an increase in communication via high-level diplomatic exchanges. Chinese President Hu Jintao toured the U.S. in January while Vice President Biden reciprocated with a trip to China in August. Both visits helped increase ties between the countries’ leaders and sought to expand mutually beneficially economic investment. The exchanges also helped dampen the negative affects of U.S. military shipments to Taiwan and facilitated important dialogue with Vice President Xi Jinping, the heir apparent of the Communist Party. Though certainly significant, nothing drastic resulted on either side of the Pacific from these largely symbolic meetings.

Throughout 2011, news sources reported on the gradual tapering of China’s hyper-economic growth as import and export data continued its decreasing trend.  But this came to no surprise as experts predicted the trade surplus could only decrease from its 2008 record of $298 billion. Chinese policymakers did not expect to maintain this level of exports either.  Accordingly, officials pursued a conservative fiscal policy to create a “soft landing” for the economy as trade with a teetering Europe slowed and housing prices fluctuated. A deliberately undervalued renminbi ensured a steady, uneventful cooling as well.

However, large protests held in the northeast city of Dalian somewhat bucked the trend of predictability in 2011. In August, thousands of citizens rallied outside a local municipal building in response to fears of a chemical leak from a local factory.  In response, the government swiftly deployed riot police to confront the protesters though no significant conflicts resulted. 

Two important factors should be noted from this incident. The first was the sheer size. Reports say the area outside the government building, Renmin Square, overflowed with demonstrators. Having been to Renmin Square, it is obvious that in order for it to be filled, estimates of tens of thousands of people would not be hyperbolic. The second was the protests lack of spontaneity. Had the protesters gathered immediately following the leak, it could be dismissed as simply a reactionary response caused by personal safety fears.  But, in fact, protest organizers used social media outlets to mobilize a week after the perceived breach. They produced signs and shirts sporting protest slogans and put forth clear demands. Also significant, the government responded with the appropriate level of peacekeeping measures and actually listened to the protesters, promising to shut the factory down. It was a unique example in China and may have lasting influences. This was arguably one of the most surprising incidents in China in 2011.                   

2012

Comparatively, the Year of the Dragon seems to have more challenges in store. First, and most notably, 2012 will begin the long awaited shift in power from President Hu to Vice President Xi. This will be the sixth transition of power in the CPC’s history and its smooth completion will be incredibly important to the future of the country. Hu’s appointment was arguably the first stable transition as past transfers of authority were marred by purges or suspicious political dealings. This doesn’t provide the approaching succession with much of a precedent and therefore the world will be scrutinizing Xi’s ascension.

Next, relations between the U.S. and China may sour from levels reached this year. Just as China is facing a leadership transition, the U.S. is entering an election cycle. This will undoubtedly lead to tough talk on how best to deal with China. GOP hopefuls and Obama have already increased their stern rhetoric especially on China’s economic controls and military escalation. Both Obama’s Marine deployment to Australia and Secretary of State Hillary Clinton’s visit to Malaysia are unambiguous signs of America’s increased interest in addressing Chinese expansion and serve as harbingers for U.S. policy in 2012. In addition, Xi is known to be more critical of the U.S. than Hu and less likely to tolerate strong-armed US policies. 

To add to this strain, Beijing will face more popular criticism over pollution concerns as the American consulate continues to monitor air quality levels and post them on Twitter. The U.S. equipment accounts for smaller pollutant particles, thus publishing higher pollution levels than the Chinese. Towards the end of 2011, Beijing officials had to repeatedly deflect accusations from its own citizens of underreporting. Public intolerance of dangerous pollution levels and demand for government action will sharply increase.

The job market will be another crucial aspect in 2012. As rural farmers continue to migrate to cities in the millions and the number of college graduates increases dramatically, the nouveau urban and educated will demand quality jobs. Signaling this focus, Beijing lowered bank reserve requirements hoping to increase domestic production, consumption and, most importantly, job growth throughout 2012. The government has to concentrate more on job creation next year or risk facing a disgruntled, overqualified and underutilized population. 

While certain trends provide us clues for how China will navigate 2012, questions abound on issues we have few, if any, precursors on, making it impossible to even offer predictions. Therefore we wonder, what surprises lie ahead? And to take it a step further, will these surprises catch China off-guard or just the rest of us? Only the Dragon Year can say.

Photo Credit: futureatlas.com

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