East Asian Policy

Hu's handover of both party and military rein to Xi at the same time surprised many as a new norm for future power transition. Xi's power is still constrained by his two predecessors, as well as his six peers in the Politburo Standing Committee. Bo Xilai's downfall not only disgraced the left-leaning “Chongqing model”, but unveiled the tip of an iceberg of how unbridled political power could impact the judiciary system.

China devoted much effort to manage its relations with Asia-Pacific countries in 2012 due to the US pivot to the region. China views the military-centric focus of the US pivot as directed at China and as emboldening regional countries to be more assertive in their territorial claims vis-à-vis China. In 2013, the Chinese leadership will likely strike a balance between seeking a stable external environment and standing firm on issues concerning China's national interests.

The Chinese economy experienced serious slowdown for the greater part of 2012 as a result of export slump. It rebounded in Quarter 4 and ended 2012 with around 7.8% along with 2.6% inflation. The slowdown signals the end of China's era of double-digit rates of growth and precipitated government efforts to step up macroeconomic rebalancing by boosting domestic demand-led growth, a departure from the past investment-driven growth. The year 2012 marks a critical shift in China's growth pattern.

On the social policy front, the new Xi-Li government will continue the minsheng project started by the Hu-Wen government. Meanwhile it will seek to make breakthroughs on other fronts, such as urbanisation, anti-corruption and so on. On social stability, the new administration will be facing an increasingly vibrant and complex society which makes it even harder to contain social and political pluralism in China.

The year 2012 was an eventful year for Hong Kong. On top of two important elections — of the chief executive and the legislative council — society had witnessed numerous scandals involving high level politicians and tycoons, pervasive social disgruntlement and protests of increasing intensity, frequency and scale. The new administration is now facing three key challenges in putting together a credible and competent government, dispelling social mistrust and gaining legislative support. It appears that the new Chief Executive is close to resolving none.

The year 2012 had witnessed a cauldron in Taiwan that combined domestic political malaise, a cooling-off of cross-strait relations, and tumbling developments in terms of the most important external relations to the island, the Taiwan-US relations. As shown subsequently, different political forces had capitalised on these uncertainties, with the hope to reap political credit for themselves. However, a window is open in 2013 for continuing development in Taiwan, provided all political forces work together.

Taiwan's economy is expected to grow in 2013 from the sharp slowdown in 2012 thanks to an anticipated recovery in demand from its key export markets. In the long run however, the US' and Europe's unsolved debt problems, China's industrial upgrading and Taiwan's minimal involvement in regional economic integration will affect the island's export prospect. The Taiwan government is likely to open itself more to China as it is the easiest short-term solution.

Right winger Abe Shinzo became Prime Minister of Japan again after leading his party to a landslide victory in the December 2012 Lower House Election. However, Abe is likely to be a “pragmatic hawk” who will prioritise economic growth and seek to avoid diplomatic ruptures with China and South Korea.

South Koreans made history in the year of 2012 when it elected its first female president. Having won the general election in April, president-elect Park Geun-hye will enjoy strong support from the legislature in implementing her campaign promises. Park and her party have embarked on an “economic democratisation” policy to realise a fair-competition economy. She is also committed to improving relations with the North and adopting a balanced diplomacy with South Korea's neighbouring states.

Kim Jong-un placed power consolidation as his primary mission in 2012, mainly through leadership reshuffle. He presented a new face to the world by emphasising “people's livelihood” although the military first policy remains the top priority. In 2012 China-DPRK relations worsened due to Kim's continued violation of Chinese vital interests. Although Beijing's DPRK policy is still status-quo based, Xi Jinping has taken new approaches to manage the Pyongyang challenge. China-DPRK special relationship is no longer sustainable.