2015 wasn’t a great year for the Chinese, either. These were some of the main storylines:
1. Declining growth rates as the government attempts the difficult task of rebalancing the economy.
2. A major market correction which damaged the prestige of the government and raised questions about its acceptance of a market economy and its ability to manage one.
3. Large industrial accidents also raised questions about the honesty and competence of the government, particularly at local levels.
4. An opening to Russia didn’t accomplish much, at least in the short run.
5. Aggressive actions in the South China Sea prompted a push back by the affected parties: Japan improved its relations with South Korea and India; the TPP was signed; and the US continued to assert the right of free navigation in the area.
6. Xi consolidated his power, while the anti-corruption campaign expanded.
7. Cooperation with the US and other countries on climate change improved, and resulted in the Paris Agreement.
The main issues for 2016 are whether the government can successfully balance the needs of a dynamic market economy (regulatory neutrality; respect for property rights; the free flow of information) with the Communist Party’s desire to exercise arbitrary power, and what consequences will flow from the ongoing dredge and fill projects in the South China Sea.