[I curated this piece was curated for the PRIMO blog and contributed to the section on China]
2016 was a tumultuous year across the globe. Political unrest in Turkey and Brazil – one attempted coup, one political “coup” successful in ousting President Dilma; both countries, along with China and Russia, faced increasing economic challenges, albeit in different areas and to different degrees; the World Trade Organization (WTO) remained in dead lock; the UK voted to leave the European Union; and President Trump’s election in November heightened fear of growing protectionism. After all this, what is in store in 2017?
Surely, 2017 will see many of last years’ challenges develop and mature. Brazil and Turkey will have to deal with deteriorating security situations in addition to economic and political challenges. But will 2017 bring more clarity regarding “Brexit”? What will be the impact of Trump’s policies on the Rising Powers, in particular China and Russia? Will the WTO be able to make a comeback as an important forum for global trade negotiations? And who will take leadership in global affairs?
The following contributions by our PRIMO fellows outline the most important domestic and international issues that these countries and organisations face this year. Read on for outlooks for Brazil, China, Russia, Turkey, the UK, and the WTO in 2017.
In China, the 19th Party Congress, progress of economic reforms, as well as China’s response to US policy and its economic diplomacy will shape the Year of the Rooster.
The outcome of the 19th Party Congress, to be held in fall, will determine China’s policy direction for the following five years. Crucial issues are the expected leadership transition, confirmation of the main party line, and introduction of new ideological positions. Having reached the official retirement age of 68, a large part of the 25 members of the Politburo are expected to retire, including five out of seven Politburo Standing Committee (PSC) members, China’s top leadership body. The two leaders President Xi Jinping and Premier Li Keqiang will remain.
Xi’s elevation to ‘core’ leader at the Sixth Plenum of China’s Central Committee in October 2016, an honour previously granted only to Mao Zedong and Deng Xiaoping, enhances Xi’s power and gives him greater room to promote the people of his choosing.
These developments are decisive for China’s direction during Xi’s second term and determining China’s reform progress. While reform-minded appointments could influence Xi, quite a few of the current Politburo members are considered liberal minded, but they have had limited impact in the past five years.
Since President Xi announced supply side reform in early 2016, Beijing outlined five major tasks to tackle the Chinese economy’s structural problems, including overcapacity, overstocked products, and high debt levels. However, overseas commentators lament insufficient improvements due to the lack of clear direction. In contrast, the government affirms substantial progress and further deepening of reform in 2017, with priority given to merging and re-organising “zombie firms” in the steal and coal industries, and “de-stocking” over-supplied properties in the housing market.
Deviant voices point to continued slowdown of the economy and Beijing’s inability to achieve its strategic goals as a result of retreating foreign investment, the investment-driven growth model (particularly through real estate), and the resurgent debt level of state-owned enterprises. However, pro-government voices also predict increased uncertainty about this year’s reform outcome, largely due to challenges arising from US policies under the Trump Administration – one of the priorities for China’s foreign policy in 2017. Contentious issues include the conflict in the South China Sea, questioning the One-China policy, and economic policies.
While policy-makers in both China and the US recognise the dangers of a potential trade war, the US will likely introduce some new economic measures such as increasing tariffs. However, US protectionism presents a chance for China to present itself as the new leader of economic globalization. Negotiations over the RCEP (Regional Comprehensive Economic Partnership) between China and 15 Asian countries are accelerating and, with the US revoking participation in the TPP, possibly drawing (near) to conclusion.
Further Chinese-led initiatives such as “One Belt, One Road” (OBOR) and the Asian Infrastructure Investment Bank (AIIB) will expand: a forum for international cooperation on OBOR will be held in Beijing this May, and 25 new countries from Europe, Africa, and South America plan to join the AIIB later this year. Thus, there is a window of opportunity for China to take a leadership role in the global order, but 2017 will also show how much action will follow the rhetoric.