CHINA IS ABOUT TO CHANGE LEADERSHIP; HERE ARE SOME PROBLEMS CHINA FACES:

Sarah,

China has dominated the last decade economically.  However, China has problems too.  Here are some of them:

Drama Within The Communist Party:

China is ruled by top officials in the Communist Party.  Top officials become top officials by being promoted from within the party.

China’s top leadership has decided that Xi Jinping will succeed Hu Jintao as president of China.  The transition should go smoothly.  However, there have been several political hiccups in the last year.

First, Bo Xilai, the ex-governor of Chongqing, an absurdly large Chinese city, has recently been purged from the party.  This is significant because he was enormously popular and once thought to be in contention for a top leadership position.  The drama started when a British acquaintance of Mr. Bo named Neil Heywood was found dead in a hotel room.  Now, Mr. Bo’s wife is now on trial for murdering Mr. Heywood. (given China’s 98% conviction rate she will surely be imprisoned or executed.)   Additionally, Mr. Bo loudly campaigned against China's growing economic inequality and this caused a rift with other party members.  In a system that values consensus, his dramatic expulsion is a big deal.

Second, China’s military is seeking greater influence over political decision making.  Many generals are grumbling that China’s military should be more assertive.  For now, Mr. Hu (the current president) serves as chairman of the Military Commission and may continue to do so even after he steps down.  This may create tension between Mr. Hu and the incoming Mr. Xi once he is president.

Economic Slowdown:

China’s economy is slowing down.  Its property prices have fallen and local government debt has grown.  Imports and exports are down and the government is taking steps to encourage banks to extend more loans.  Does this mean anything?  Maybe, I don’t know, I’m not an economist.  I do know that the overall economy is still growing at around 7.5%, more than three times faster than America’s economy

Rising Discontent In The Middle Class:

In the past decade, the number of people in China’s middle class has exploded.  This group of people is now connected to the internet and they are starting to complain about food safety, product safety, pollution, and corruption.  Thus far, protests have been manageable, but they seem to be growing.

Migrant Workers In The Cities:

At least 225 million people have left China’s countryside to find work in China’s wealthier coastal cities. (the total population of the United States is 314 million)  These migrant workers are not afforded the same rights as permanent residents and struggle to find housing, medical care, and education for their children.  As a result, there is a widening wealth gap between incoming workers and China’s emerging middle class.  Over the last year, migrant workers have rioted several times.

An Aging Population:

In 1978, China adopted a one-child policy restricting married, urban couples to one child.  Although it is not universally enforced, the policy has slowed down the birth rate.  Accordingly the percentage of the population that is over 65 is rising rapidly.

Pollution:

There is a consequence to having most of the world's factories.  Air and water pollution in China is bordering on ridiculous.  This will catch up with them sooner or later.

Bottom line: China is still growing, but it is facing more problems.