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5 predictions for China in 2017

23 January 2017

The University of Sydney has many University academics who in various and diverse ways work on China. In new commentary, some of these experts share their predictions for China in 2017.

Stock image of the Oriental Pearl Radio and TV Tower in Shanghai.

Will Trump solve China's Yuan woes?

The last couple of months have seen China's local currency, the Yuan, undergo a number of significant fluctuations – the end of 2016 saw its biggest annual loss since 1994, while earlier this month it surged by a record amount against the US dollar.

Associate Professor Salvatore Babones, an expert in China's economy, predicts that US President Donald Trump may broker a deal with China to prop up the Yuan and bring down the dollar.

"In its efforts to prevent capital flight, China is desperately trying to prop up the value of the Yuan. Meanwhile Donald Trump claims that the Yuan is too low, giving China an unfair advantage against American manufacturers.  

"The obvious solution? An agreement for the US to buy Yuan. Trump loves to surprise, and he loves a deal. A currency accord with China may be his biggest yet," Associate Professor Babones says.

Associate Professor Salvatore Babones from the Department of Sociology and Social Policy is an expert in China's economy and society, with a particular focus on China's global economic integration.

China's major public health concerns: air pollution and ageing  

According to Professor Mu Li, 2016 was an important year in health and development in China, with the country's President Xi Jinping calling for health to be at the heart of all government policy making and releasing the "Healthy China 2030" plan.

Professor Li, an expert in public health in China, says the two most pressing health issues facing the nation are air pollution exposure and an ageing population.   

Despite the country's high-profile campaign to curb air pollution in recent years, the first few weeks of 2017 have already seen smog levels in China reach historic levels, with as many as 32 cities under 'red alert', the country's most severe pollution warning.

"One of the most concerning current public health problems is environmental health. The effects of air pollution on the burden of chronic respiratory diseases and overall health of the population are yet to be fully understood.

"Practical and comprehensive interventions are urgently needed at the national, community and individual levels," Professor Li says.

Although Chinese society once heavily relied on families to care for their elderlies, Professor Li says rapid social structure shifts and population ageing are putting enormous pressure on the limited government services.

"The State Council recently opened the market for ageing services, welcoming more social capital to be involved. However, governance and operational policies need to be established, and service quality and industry standards need to be ensured," she says.

Professor Mu Li is an expert on public health in China from the School of Public Health, Sydney Medical School. 

South China Sea developments reflect China's ambition for great military power

According to Ashley Townshend, an expert in US-China relations, US President Donald Trump is shaping up to craft a much more hawkish policy towards China than any of his predecessors.

Trump and his team have been heavily critical of Beijing's island-building in the South China Sea, its failure to comply with North Korean sanctions, and its alleged currency manipulation and unfair trade practices.

Trump has even taken the unprecedented step of casting doubt over America’s commitment to the 'One China Policy' – the bedrock of US-China stability since 1979 – as a way to create leverage with Beijing on other issues.  

"Adopting a hard line towards China on all these issues at once risks making Beijing a more, not less, truculent partner for the United States.

"Rather than being intimidated into submission, China is likely to respond by withdrawing its cooperation with the United States on issues that matter to Washington, such as the future of a bilateral investment treaty or the advancement of military crisis management mechanisms," Townshend says.

"While it does not want a military confrontation, Beijing will press ahead with its strategic encroachment into the South China Sea throughout 2017. Its artificial islands will be further advanced in preparation for future military deployments.

"As China's military modernisation continues at a rapid pace, it will become increasingly common to see Chinese naval flotillas or air force squadrons practising military drills in international waters and skies throughout the Western Pacific. These patrols should not be interpreted as responses to specific US policies, but as part of China's long-term ambition to become a military great power in the Asia-Pacific."

Ashley Townshend is a Research Fellow in the University of Sydney's United States Studies Centre.

What will the China–Philippines relationship mean for the South China Sea crisis?

According to Southeast Asia expert Jonathan Bogais, Philippines' President Rodrigo Duterte might be in a better position to deal with China and the US over the Philippines' reefs appropriated by China, than his predecessors.

"By rejecting international pressure to enforce the 2016 Hague ruling, Duterte has so far been able to diffuse a tense situation while allowing all sides to save face by maintaining status quo, albeit unintentionally, though a process of ambiguous asymmetric counterbalancing. This may suggest that alternative, less confrontational strategies are possible to address this crisis," Associate Professor Bogais says.

"The South China Sea crisis has been wrongly over-simplified by commentators. It is a complex environment for all actors involved both domestically and internationally. One cannot control complexity; the more one tries to do so, the more chaotic, uncertain and unstable the results can become.

"How the Trump administration attempts to use this crisis in 2017 in the backdrop of a possible trade war between the US and China will determine the new geopolitical landscape of the Asia/Pacific region and beyond."

Adjunct Associate Professor Jonathan Bogais, from the School of Social and Political Sciences, is an expert in foreign affairs and conflict, with a particular focus on Southeast Asia and the South China Sea crisis.

China's "challenging" relationship with Northeast Asia

Northeast Asia is the region where China should have the greatest influence, but it's also one where China faces perhaps some of its greatest challenges, says Associate Professor Justin Hastings.

"Xi Jinping has embarked on perhaps the most aggressive Chinese foreign policy toward Asia in decades, but unless China feels like it is backed into a corner because its self-declared core interests are threatened in Northeast Asia, this year is likely to be one of incremental change," he says.

"China's relationship with Japan will remain fraught with tension over territorial disputes in the East China Sea, and neither side has any particular interest in backing away. This is the dispute in Northeast Asia that has the greatest potential to cause an accidental crisis, particularly with China's unofficial policy of staging incursions into Japan-claimed waters.

"China has recently moved closer to South Korea, partly due to its frustration with North Korea, and the massive benefits of trade with the South, but it remains to be seen whether whoever replaces Park Geun-hye in South Korea will continue with Park's policies toward China and North Korea.

"China will continue to attempt to isolate and punish Taiwan for electing pro-sovereignty President Tsai Ing-wen, and probably cause a significant amount of economic damage to Taiwan. But without a major lurch toward Taiwanese independence, it is hard to see what the catalyst would be for China to upset the balance in the Strait of Taiwan.

"North Korea will continue to develop its nuclear weapons and missile programs, and China will likely continue to show its displeasure publicly while allowing enough trade with and aid to North Korea for the country to survive. There is no sign that Xi or the Chinese foreign policy establishment have fundamentally reassessed the nature of China's relationship with North Korea.

"The wildcard for China is the incoming Trump administration. No one, least of all China, really knows what to expect, but Trump's rhetoric about Northeast Asia has largely been about reasserting US freedom to act in the region and stymie China's more aggressive moves. This leaves China uncomfortable and perhaps irritated, but Trump has so far crossed no red lines."

Associate Professor Justin Hastings is a Senior Lecturer in International Relations and Comparative Politics in the Department of Government and International Relations.

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