China: A State in Decline?

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2016 has seen major upheaval in the Western world. We have experienced the recent rise of nationalism and far right ideals across countless Western democracies, whilst the decline of the left fails to act as an effective tool of mitigation. By contrast, the Chinese economy has relatively stabilised following the 2015 stock market crash, yet the outflow of foreign capital into the country will undoubtedly prove a grave cause for concern in the New Year.

While the 2016 Chinese New Year indicated that the 2015 stock market crash might escalate further, China’s economic instability showed clear signs of stabilisation as the year progressed. Following a series of announcements in August 2015 reporting a sharp decline in the Chinese Stock Market, with the main Shanghai stock exchange falling an estimated 8% and then 7% over the 24th and 25th respectively, in the final 4 months, there was evidence of a Chinese economic recovery. However, January 2016 signalled that recovery was only temporary. As China’s stock market collapsed again, with the ‘Wall Street Journal’ measuring a decline of 18% between the 4th and 15th. While figures collated by ‘The Economist’ in October 2016 appear to suggest that China’s economy has grown at a fixed rate of 7% throughout the year, questions have been raised regarding the legitimacy of these statistics, and consequently the extent to which Chinese recession can be submitted to the history books is a more contentious discussion.

The inauguration of Trump will undoubtedly pose further challenges for the People’s Republic of China, as the U.S. is likely to adopt an anti-China policy in 2017 and beyond. Tensions between the two ‘super powers’ have already arisen in the dispute over the South China Sea, and Trump will no doubt further exploit these tensions. The actions of the US have recently caused the Chinese media to post that the state should attempt to take Taiwan through military force. The Global Times, a state run tabloid, often reflects the views from within the Communist party. The paper stated that China’s stance towards Taiwan should be to ‘make the use of force as a main option and carefully prepare for it’, and ‘the Chinese mainland should display its resolution to recover Taiwan by force’, highlighting a potential diplomatic crisis on the cards for China in 2017

Historically, the US switched its recognition from Taipei to Beijing in 1971, yet the impending Trump administration has already indicated its intention to invert away from this established policy towards one of Taiwanese independence. If the media does reflect the views of the Chinese government, this will no doubt plunge the global order into disarray due to Taiwan’s ‘grey’ status. Taiwan is not formally recognised by the United Nations as an independent entity and currently the status quo is under the ‘one china, two systems’ policy that fragilely maintains the peace between the two entities. Although this idea may seem a little far-fetched to some, the earlier election of Taiwanese President Tsai Ing-wen this year has seen China’s communist regime take a tougher stance against Taiwan.

Indeed Trump has alienated PRC politicians by speaking directly to Taiwan’s President, the first time a President has done this since 1979. The President-elect has said he may use the One China policy as a bargaining chip in future negotiations, which would be a dramatic blow for relations between the two countries, as in order to form diplomatic relations with Beijing, the country must switch their recognition from Taipei to Beijing. With tensions between the PRC and the US administration already precarious, it looks likely that the Trump presidency could become a real danger for the continued stability of China and the greater East Asia region. While 2016 has been relatively quiet for China, it seems as though the fragile stability in East Asia is likely to be threatened in 2017.

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I am a second year Modern History and Politics student.

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