Asian powers ponder options as America turns inward
With internationalism on the retreat in the United States and Europe, Asia’s two biggest powers find themselves on the spot. Both China and India have spoken in defense of globalization and a multilateral, rules-based order. But neither appears ready to fill the vacuum left by receding U.S. power.
Global Outlook 2017: China’s rocky year
The election of Donald Trump in the United States brings with it a great deal of uncertainty for China and its leaders. It could face the threat of a trade war, and diplomatic challenges regarding Taiwan and the South China Sea. However, as Washington takes a more isolationist stance, 2017 will also offer China the opportunity to fill the vacuum.
The U.S. and China’s ‘free trade’ agendas
The United States and China are not true champions of free trade. Beijing pushes exports but effectively curbs imports through a maze of administrative obstacles. Washington traditionally concentrates on job protection and creation; its trade policies reflect these priorities.
Global Outlook 2017: Prospects for Xi Jinping
Chinese President Xi Jinping has consolidated his power and now is pushing to make a lasting impact, including by changing the rules to remain in office for a third term. It looks likely that he will achieve his goals, but plenty of obstacles still stand in his way. Expect him to emphasize ideology over practical economics. If his efforts stall, he may turn to the military for support.
President Trump’s impact on Latin America
We do not know how much Donald Trump does not know about Latin America. If he keeps his campaign promises, the U.S. economy could suffer as much as Mexico’s or Brazil’s, and illegal immigration could get worse. A lot will depend on the new president’s learning curve.
Xi’s power plays will determine China’s future
Chinese President Xi Jinping is consolidating power at a strikingly effective rate. His anticorruption drive has not only managed to gain him popularity, he has also used it to eliminate political opponents. But his success raises questions about what direction he plans to take China and whether he intends to remain in power longer than expected.
China’s next big test: reforming state-owned firms
China’s state-owned enterprises dominate huge swaths of the economy, but their outlook is grim. Rapidly growing debts from politically driven loans, risky real estate deals and lower investment returns imperil their future and that of the entire Chinese economy. Many will be privatized, merged, or otherwise dissolved within the next few years. How this reform is managed will have a huge impact on China and possibly the world.
Beijing’s dilemma in the South China Sea
Beijing is not going to back down after losing an international court case over its territorial claim to the South China Sea. The Chinese authorities have a long menu of policy options, including military escalation, economic pressure and diplomacy. Given the risks involved, they will probably be in no hurry to make a choice.
Military corruption crackdown strengthens Xi
The People’s Liberation Army (PLA) was, until recently, held up as a paragon of virtue in China, but that changed when President Xi Jinping came to power. By 2016, his anti-graft campaign had resulted in 46 senior military officers facing corruption charges. The campaign shows no sign of stopping. The result will be a massive restructuring of the military, designed to weaken generals and increase President Xi’s personal power base.
China’s slowdown could bring environmental benefits
Beijing is eager to use China’s economic slowdown as a means to improve the country’s environment. The slower growth gives the government maneuverability to address some of the country’s most pressing environmental problems. Nevertheless, doubts remain as to whether authorities are truly committed to green issues or are merely saving face. Lacking rapid economic growth to appease the populace, the government must address the other concerns, such as the environment.