China 2016 is likely to be characterized by a host of contradictions, perhaps best described by Charles Dickens' "It's the best of times. It's the worst of times." The old is withering away while the new is sprung upon the unwary.
A slowing China with a roller-coaster stock market appears now the New Normal. Notwithstanding recurrent predictions of a hard-landing, if not total collapse, Goldman Sachs January 2016 Investment Strategy Group Report maintains a sober assessment. Growth in 2016 is expected in the range of 5.8% to 6.8%. But a hard-landing is considered a negligible probability. Download 2016OutlookLastInnings
A reforming China is likely to remain a massive and rapidly-changing work-in-progress. A great deal of challenges persists. Indeed, much of China's current travails in the financial market may be considered the birth pangs of a New China. Download A Slowing China - Deepening Malaise or Birth Pangs of a New China
Kevin Rudd, 26th Prime Minister of Australia and president of the Asia Society Policy Institute in New York, writes in the Time Magazine online (21 December, 2015) offering his read on China's priorities in 2016.
Meanwhile, ahead of the much-awaited March release of the 13th Five Year Plan (2016-20), Beijing's Central Economic Work Conference has unveiled an economic blueprint for the coming year, focusing, for the first time, on "supply-side reform". This translates into streamlining bureaucracy and eliminating excess capacity e.g. through subsidized sales of empty housing to migrant workers from rural areas. It also means structural reforms to enhance productivity in areas including finance and resources such as land and materials as well as manpower, equipment and technologies.
Economic restructuring is one of the three key "hard-battle" grounds (for which 2016 will be a "ground-breaking year") to realize China's "two-centenary" ambitions. These are - (a) to become a moderately well-off country by 2021, the 100th anniversary of the Communist Party of China (CPC) and (b) to become "a modern socialist country that is prosperous, strong, democratic, culturally advanced and harmonious", by 2049, the 100th anniversary of the founding of the People's Republic of China (PRC). The first aim would be crucial to the achievement of the second. Click here
Another "hard battle" ground is the eradication of poverty. Notwithstanding China's breakneck economic growth and rapid income rises, some 250 million Chinese (or 18% of the population) still subsist with less than $2 dollars a day. Gross economic inequality remains a threat to the CPC's legitmacy as a governing Party.
The third "hard battle" ground is military transformation. Apart from reducing the size of the People's Liberation Army (PLA) by 300,000 strong, this aims to completely modernize the entire military forces, streamlining the strategic command and operational structures between the Military Commission, military regions and strategic military units, and shaping the military's capabilities to fight and win warfare in the 21st century, including information and space warfare. Central to this "hard battle" is the ongoing anti-corruption campaign covering the military.
2016 is likely to witness a struggling transition to a New China. The defining dynamics and data are expounded upon in an in-depth report by The Beijing Axis - The China Compass - in October 2015. However, this report omits coverage of perhaps the most critical area of China's transition, that towards a freer, more open and just society where the rule of law, rather than mere "rule by law", is upheld. One of the key essentials, apart from a Party subject to check and balance held to public account, is a more autonomous, or "independent" judiciary.
Suffice to say that the Party is alive to this challenge. Measures have been introduced to transfer the power of judicial appointments to the provincial level. There are also moves to introduce a system of "circuit courts". Huge problems remain, including the lack of professional judges. Nevertheless, a step forward, however limited, is far better than standing still, let alone rolling backwards.
On the micro-economics and business side, a report by Gordon Orr, director emeritus of McKinsey, What might happen to China in 2016, expounds on the socioeconomic dynamics such as slower growth, re-centralization, fewer jobs, quality of life goals, greener economy, wealth management, innovative manufacturing, massive agricultural imports, spread of satellite towns, explosive growth in movie entertainment, both online and offline, and interestingly, football.
However 2016 may turn out for China, it is unlikely to be anything but eventful.
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