East Asian Policy

Since he became commander-in-chief in November 2012, Xi Jinping has promoted altogether 11 generals in three batches. The promotion of the third batch came in the shadow of expelling Xu Caihou, former vice chairman of the Central Military Commission and Politburo member, from the Party. In the future, Xi Jinping will have to strike a balance between the anti-corruption campaign in the military and the establishment of a core support group in the People's Liberation Army.

The PLA role in China's foreign policy is integral and deep. Politically it follows overall civilian primacy in foreign policy-making. Militarily the PLA sticks to assertiveness/war aversion dynamics in tackling external security threats, especially over territorial disputes. Functionally, the PLA abides by a top-down division of labour with diplomats. The PLA role in foreign policy-making can be overtly influential, as national/security/military-related foreign affairs are generally more important.

Once privatised, SOEs are operating in a market with free competition; their reported earnings become an important indicator of the enterprise's operational performance. The degree of control that the state is able to exert over the company will diminish after privatisation. The concentrated ownership structure and the strong political and economic connections between the government and listed companies are the main causes of earnings management in China.

The new state-owned enterprise (SOE) mixed ownership reform have some distinct features that were not addressed in previous reforms. While some central SOEs and local governments have unveiled their own plans to diversify ownership structure, the success of the reform hinges on how the government resolves two credibility problems: one is to restore credibility to the reform commitment and the other is to convince private investors that their interests will be sufficiently protected.

China released the National New-Type Urbanisation Plan (2014-2020) and the State Council Opinion on Hukou Reform in 2014. The new leadership adopts a tiered approach to hukou conversion, ranging from full liberalisation in towns and small cities to strict control in mega cities. China is highly likely to meet the target of 100 million more urban hukou population by 2020. A big challenge is the integration of migrant workers in large cities.

China's domestic migration in recent years has featured the migration of working-aged workers from the rural areas to cities and from the poor regions to the rich ones. As a result, the poor regions saw their elderly dependency ratios as well as median population age rise faster than that in the rich regions. This phenomenon of “youth drain” has profound impact on interregional disparity.

Participatory gender budget (PGB) has been in practice in China since 2005. Three PGB models have evolved: the “outsider model”, the “insider model” and the “integrated model”. Among the three, Zhejiang's Wenling experiment is unique due to its introduction of the “democratic consultation meeting”; it has accelerated the fulfilment of government's commitment to gender equality, executed some adjustments to the government budget, enhanced equal resource distribution and empowered women in the budget-making process.

Being a major recipient and an important source of foreign direct investment (FDI), China shifted its policy focus from attracting FDI inflow to facilitating and protecting outbound FDI. The shift is reflected in China's efforts to negotiate and to upgrade its bilateral investment treaties (BITs), especially the decision to revive the China-US BIT negotiations. This is important as the United States has become a significant designation for China's outbound FDI; numerous challenges however remain.

Since May 2014 Beijing has started to push its two-pronged new policy plans in anti-terrorism and social development in Xinjiang after a series of Uighur-initiated violent terrorist attacks. One involves heavy-handed tactics and fierce crackdown campaign. The other is the announcement of a new social and economic policy package, including promoting Chinese national “consciousness” among ethnic minorities, boosting employment with a “one household, one job” policy and promoting bilingualism in Xinjiang's education policy.

Beijing's Asian Infrastructure Investment Bank appears to be a “game changer” in the political economy of East Asia. In an era when the US superpower and Japan are facing fiscal problems, China has ample funds to woo Asian states seeking economic development. Notwithstanding its maritime disputes in the South China Sea with some ASEAN states, Beijing has offered the carrot of development as a means to serve its geopolitical ends.