A lot has happened in 2016. In January, Taiwan’s independence-leaning Tsai Ing-wen won the island’s presidential election by a landslide; in July, an international court handed down a landmark ruling against Beijing’s claims in the South China Sea, and in November, Donald Trump beat Hillary Clinton to become the United States’ next leader.
As we usher in 2017, our team of reporters have put together a list of key China issues to watch out for in the new year.
1. Can China’s slowing economy keep up with its growth targets?
China has held growth steady at 6.7 per cent throughout the first three quarters of 2016, but it is still facing big challenges as the economy continues to slow.
Beijing is trying to keep the country’s gross domestic product growth above 6.5 per cent, a floor set to double its economic size by 2020.
The US Federal Reserve’s interest rate rise in December and two or three more expected increases in 2017 have forced China to reintroduce capital outflow restrictions to defend the yuan. It has also squeezed room for credit easing, with the government now tightening controls on liquidity as preventing financial risks moves up its agenda.
More proactive fiscal policy, especially infrastructure construction, will be the main tool supporting growth. In 2017, the government may also raise the fiscal deficit ratio, issue more municipal and special construction bonds, and leverage private capital inflow through public-private partnership projects.