New year, new challenges at home and abroad

In recent years, mainland leaders have heralded the arrival of the new year with the word 'critical' to warn of the challenges ahead. It was no exception as the Chinese people welcomed the Year of the Tiger.

Premier Wen Jiabao has already described this year as even more complicated after the mainland succeeded in overcoming the global economic crisis and ensuring a robust economic growth last year. 'Winning is not difficult, but sustaining the winning is,' was the Chinese proverb he quoted in a speech to greet the arrival of the Year of the Tiger earlier this month.

Indeed, the mainland is faced with daunting challenges at home and from abroad. While the mainland economy grew strongly last year, the growth was mainly supported by the massive government spending in the form of a four trillion yuan (HK$4.5 trillion) economic stimulus package. This means that mainland leaders are faced with a delicate task this year of reining in government spending and expansion of bank loans to temper inflation and rising asset prices without applying the brakes so hard that it would stifle economic growth.

Its efforts to steer economic growth onto a healthier track by reducing overinvestments and overcapacity in many industries such as steel and cement are bound to run into stiff resistance from local officials.

Amid those economic uncertainties comes the draft of the 12th Five-Year Programme, which will set out the economic growth blueprint for the period from 2011 to 2015.

Internationally, it is faced with more trade protectionist measures from Western countries against Chinese exports, and the deepening rift with the United States over human rights, Taiwan, Tibet, and internet freedom signals a more challenging international environment.