CHINA:China is more robust in its approach abroad through its economic and diplomatic muscle
TWO OF the most significant events in China’s year, both of which will undoubtedly affect it in 2011 and beyond, took place towards the end of 2010 – the awarding of the Nobel Peace Prize to jailed dissident Liu Xiaobo and the shelling of the South Korean island of Yeonpyeong by North Korea.
This was the year in which China started to wield some of the diplomatic muscle it had acquired to match its economic prowess. The country has not been shy about registering its displeasure over the decision to give the peace prize to Liu, calling it an “obscenity” and part of a conspiracy against China.
Beijing also rounded up various dissidents in China and used its economic influence to encourage other countries to boycott the awards ceremony itself.
Among those that responded were Russia, Kazakhstan, Saudi Arabia, Argentina, Tunisia, Pakistan, Serbia, Iraq, Vietnam, Iran, Afghanistan, Egypt, Sudan, Cuba, Morocco and Algeria.
What must have horrified Beijing was the constant stream of acknowledgements before the awards ceremony that this year was the first time a laureate under detention had not been formally represented since Nazi Germany barred pacifist Carl von Ossietzky from attending in 1935. Beijing can tolerate comparisons with the Soviet Union, but it bristles at any Third Reich analogies.
With President Hu Jintao heading to Washington soon, the Nobel issue could join the list of serious impediments to better Sino-US relations, alongside those of Tibet and Taiwan.
For the ordinary man and woman, increased economic success has translated into growing pride in China’s achievements. However it has also seen the rise of a more sinister kind of nationalism, which may play a more marked role next year.
China adopted a very tough stance over the Japanese detention in October of a Chinese fisherman whose boat collided with Japanese patrol ships near disputed islands in the east China Sea. The islands, called Senkaku in Japan and Diaoyu in China, are claimed by both and have undersea oil and gas reserves.
The row has gone on longer than expected and is likely to remain an issue next year.
On the issue of North Korea, China remains that state’s only major ally – the two ideological brothers are seen as being “as close as lips and teeth” – and we can expect Beijing to have a central role in solving the latest inter-Korean crisis.
Diplomatic cables released by whistle-blowing website WikiLeaks show Beijing had been getting frustrated with Pyongyang, mainly over the North Koreans carrying out major actions such as testing nuclear missiles without informing China.
We can expect the Chinese to do more to widen the scope of the six-nation denuclearisation talks, featuring both Koreas, host China, the US, Japan and Russia.
One of the main threats to political stability and prosperity in China is inflation, and rising prices will remain a major political issue next year. Consumer prices hit a 25-month high in November and food inflation surged beyond 10 per cent.
In October, China’s central bank raised interest rates for the first time in almost three years, while it increased the reserve requirement ratio for banks twice in November. The government also adopted a series of administrative measures to control the prices of daily necessities including food.
There are signs that the West is not going to have things all its own way when it comes to trade and doing business with China.
The US and Europe are annoyed over what the West sees as the unrealistically low value of the Chinese currency. Both accuse China of manipulating its currency to gain an unfair trade advantage.
There could be some change ahead, with the Chinese currency expected to rise in value during the year. Just how fast this happens will be the key question and whether it does so fast enough to satisfy Americans and Europeans.
In its position of strength, China is unlikely to bow to any western requests for a significant rise.
In March, Stern Hu, the iron ore chief of Australian mining company Rio Tinto, was jailed for 10 years for accepting bribes and stealing commercial secrets. There was strong evidence of bribery and wrongdoing, the court said at the time, a fact acknowledged by Rio, but the broader concern was the way in which part of the case, relating to state secrecy, took place in closed session.
Looking ahead, we can expect the usual speculation about when China’s simmering economic growth will finally cool. Commentator Martin Wolf says China is almost certain to experience a financial crisis in the next 25 years as it attempts to do what no other country in history has managed – record 50 years of very rapid economic growth.
Analysts are forecasting economic growth to slow to 9 per cent next year, mainly because of a drop in exports, as the rest of the world falls short of China’s performance. However, the huge internal Chinese market will compensate for this.
The communists are proving to be better capitalists than the capitalists. One thing is for sure in 2011: China is not going to spend too much time listening to advice from the West.