China

The following sections are included:

• Editors

• Preface

• Contents

Although Hu Jintao and Wen Jiabao have more political room to manoeuvre in their second term following the 17th Party Congress in 2007, a spate of unexpected disasters, events and strong vested interests have prevented the Party-state from making substantial progress in their policy initiatives. The global financial tsunami triggered by the US subprime-loan crisis in 2008 has not only undermined the dominance of pro-market and small-government neoliberalism in China, but also consolidated the leadership’s paluan (fearing instability) mentality, thus preventing the leaders from making breakthroughs in their journey towards democratisation. The Chinese leadership has sidestepped the shockwaves of the western debt crisis, curbed inflation and deftly tackled social protests in different parts of the country. Despite the quiet confidence, the Chinese leadership is keeping a close tab on the mushrooming of disgruntled social groups and an increasingly vocal and politically more conscious intelligentsia. The internet age has globalised protests from the “Arab Spring” to “Occupy Wall Street”. Chinese citizens today are no longer apolitical or passive; their deft usage of social networking sites like Weibo (or Twitter-like mini-blogs) to challenge China’s political establishment testifies that China has entered a new age. The global financial crisis has proven to be a double-edged sword for the Chinese government. On the one hand, the party-state has successfully minimised exposure to the western economic downturn through the massive launch of Keynesian-type stimulus measures and reinforced state sectors in the national economy; on the other hand, the enhanced state capitalism has sparked a domestic backlash on issues of guojin mintui (the state advances, the private sector retreats) and guofu minqiong (the state is rich, the people are poor)…

In the past 66 years, the mode of succession for the Chinese Communist Party (CCP) top leadership has evolved from a “two-front” model to a generation transfer model…

Virtually silenced for decades after 1989, “political reform” recently re-emerged on the agenda of discussions and deliberations of Chinese intellectuals about the nation’s development and future. Societal pressures on the regime in this regard are mounting, especially over the new leadership that is designated to come into power at the forthcoming 18th Party Congress in late 2012. This chapter will briefly summarise these discussions and, accordingly, analyse the leadership’s responses.

While the Chinese Communist Party (CCP) is busy reshuffling thousands of Party committee secretaries and members of the Party committees at various levels before the 18th Party Congress scheduled in 2012, three municipalities in the eastern part of Jiangsu province have made changes to the non-transparent selection process through introducing contested elections to select top Party leaders. As an experimental move towards intra-Party democracy, a buzzword in Chinese politics since the 17th Party Congress in 2007, Wuxi, Nantong and Suqian cities in Jiangsu province for the first time in history nominated a total of 1,127 candidates for the three Party secretary positions. After going through two rounds of screening by two panels of provincial-rank cadres based in Jiangsu, the list was narrowed down to six candidates. Members of the Standing Committee of the Jiangsu Provincial Party Committee then balloted and the three with the highest votes became the Party secretaries of the three cities…

The Politburo of the Communist Party of China (CPC) adopted a document on 21 August 2010, instructing grassroots Party organisations to be more open in Party affairs. The document stresses such openness as a necessity for expanding grassroots democracy within the Party, safeguarding the democratic rights of Party members, and improving local governance…

A “free and democratic China” was once a rallying cry for the Chinese communist revolution. In 1945, Chinese communist leader Mao Zedong once stated his ambition for a “free and democratic China”: “ ‘A free and democratic China’ will be a country where its governments of all levels up to the central government are produced by universal, equal, and confidential elections and the government is accountable to the people who elect it. It will follow Sun Yat-sen’s ‘three principles of the people’, Lincoln’s principle of ‘government of the people, by the people and for the people’, and Roosevelt’s ‘four freedoms’.”¹ Based on the face value of his words, Mao endorsed a universalistic understanding of democracy…

By any measure, the Chinese Communist Party (CCP) is the largest political party in the world. At the end of 2010, its membership reached 80.27 million, more than double the 37 million in 1978 when the post-Mao reform era began. It rivals the population of a major nation. Were it a nation, the CCP would have ranked the 17th most populous out of the 196 countries of the world. The percentage of Party members in the population had also inched up from less than 0.9% in 1949 when the CCP came to power to almost 6% in 2010…

In 2005, three years after coming to power, Chinese President Hu Jintao announced the objective of “constructing a harmonious society”. Together with the “idea of scientific development”, Hu outlined his political blueprint — balanced development between economic growth and social harmony — which requires the Chinese Communist Party (CCP) and the government to pay more attention to social problems that may undermine regime stability…

China’s population accounts for 21% of the world’s total population, but the country has only about 9% of the world’s available arable land. Feeding such a vast nation, with such an unfavourable man to land ratio, has always been a great challenge for China’s rulers, past and present…

The Xinjiang Work Conference, a joint conference of the Chinese Communist Party’s (CCP) central committee and the State Council, China’s Cabinet, was held in Beijing from 17 to 19 May 2010 to promote a new deal in Xinjiang Uyghur Autonomous Region, the country’s far west frontier. The new deal outlined a blueprint for Xinjiang’s development until 2020 whereby the government will pour hundreds of billions of yuan to accomplish the plan…

The Internet, because of its ability to share information and ideas across space and time in a virtually instantaneous manner, has given rise to the popular view that it is an effective tool for political liberalisation in any country. Yet, there is a need to look at it from another perspective, i.e. how various ruling parties and governments are making use of the Internet. In particular, this chapter looks at how the leadership in China is tapping the Internet in an effort to improve its governance, and in the process, enhance its legitimacy…

In 2007, US-based Forbes magazine ranked then Chinese Vice Premier Wu Yi No. 2 on its annual list of the World’s 100 Most Powerful Women. That was a significant indicator of the influence of women in Chinese political affairs. Wu symbolised the influence of women in Chinese political affairs and the role of Chinese women in “holding up half the sky” (funu neng ding ban bian tian). Indeed, women’s political participation in China has gained new momentum after the country hosted the Fourth World Conference on Women in 1995. China has made substantial progress in widening women’s political participation, though at a much lower level than that in many other countries, especially those in the democratic West…

Despite achieving an unprecedented annual growth of 10% for over three decades, China’s large continental economy is at a crossroads. While the era of high growth is drawing to an end, the investment-driven, export-oriented development model, which has served China well, requires a fundamental re-configuration. A transformation towards a domestic consumption based economy while China is still relatively poor is no doubt a demanding task. It is especially challenging when many of the Chinese leaders and much of the overall government apparatus continue to be fixated with the high growth mindset. Indeed, to safeguard growth, the state has in fact enhanced its influence on the economy, both directly through government investment and indirectly by implementing policies that favour the state and export sector. These have indeed exacerbated the structural imbalances which will hinder China’s future growth. As such, if China is to sustain a healthy growth in the coming decades, the government should not only enhance its capacity to deal with emerging challenges, but more significantly re-orientate its efforts to encourage further market development and to foster a vibrant non-state sector.

Thanks to its successful economic reform and open-door policy starting in 1979, the Chinese economy has experienced spectacular performance, growing at an annual average rate of 9.9% with reasonable price stability for the period of 1979 –2011. China has become the world’s second largest economy with its total GDP in 2011 amounting to RMB47.2 trillion (about US$7.3 trillion), which is 110 times more than that in 1979 (Figure 1). Its per capita GDP rose 30 times from 1979 to RMB 35,000 (US$5,500) in 2011. In 1978, China produced a meagre 150,000 units of automobiles. Today, China is the world’s largest automobile producer with 18.4 million units. Sustained high growth has lifted more than 500 million Chinese people out of poverty and this is far more significant than having more cars on the road. In short, China’s growth performance for the past 33 years was indeed “impressive” “by any standard”, as the World Bank puts it…

China’s economy has evolved after three decades of reform. This chapter provides a snapshot of China’s market mechanism, focussing on allocation mechanisms for commodities, labour, land and capital, property rights and the degree of openness in China. An analysis of China’s stabilisation policy combining totally different tools, direct instruments from its previous economic planning period and newly conceived market economy measures will shed further light on the transformation of China’s economic system in the second half of the 2000s.

China’s spectacular growth performance in the last three decades has been driven by rapid industrialisation, which is heavily influenced by various government policies. Between 1978 and 2011, industrial value-added in real terms grew at 11.5% a year on average, which is 1.6 percentage points higher than that for the country’s gross domestic product (GDP) (Figure 1). Industrial growth was particularly important in the 1990s, contributing to over 55% of the overall economic growth.

While industry as a whole has grown consistently and significantly in size and complexity, priorities have shifted gradually to suit the country’s general development goals as well as to adapt to varying domestic and external circumstances. Overall, the main objectives have moved from achieving industrialisation during the early reform era to industrial upgrading and restructuring in the most recent decade.

The 31 provincial-level administrative units of mainland China can be roughly grouped into three macro-regions, namely the eastern, central and western regions, for purposes of examining regional cooperation and state policy orientation. Within each of the three regions, there are also many more sub-regional areas, e.g. the Pearl River Delta (PRD), Yangtze River Delta (YRD) and Beijing- Tianjin-Hebei (Jing-Jin-Ji) regions. There is huge variation across China’s regions in terms of population size, geographical conditions and level of economic development. China faces serious challenges posed by unbalanced regional development and regional economic disparities have increased considerably since 1978…

The Fifth Plenum of the 17th Chinese Communist Party’s Central Committee in mid- October 2010 adopted the proposal of the 12th Five-Year Programme (FYP, 2011–2015), which sets out broad guidelines and strategic priorities for China’s economic and social development over the next five years. This Party document was formally ratified by the National People’s Congress (NPC) in March 2011, and it has since become an official national policy blueprint for the country’s overall economic and social development in the following five years…

In March 2012, the Chinese authorities approved a financial reform pilot project in Wenzhou, a city with a reputation for entrepreneurship and informal lending. According to the statement issued by the State Council, this “general financial reform zone” project will legalise the city’s underground lending, allowing private lenders to operate as investment companies to augment the credit to small and medium enterprises (SMEs). The move clearly demonstrates Beijing’s concerns over not only China’s shadow banking sector which may pose systematic risks to financial stability, but also the country’s ill-structured formal banking sector which fails to lend to small borrowers…

The US dollar has been the leading international currency for more than 60 years. However, many are questioning the dollar’s hegemony as the United States’ economic power has been waning after two costly wars and one devastating financial crisis. Between March 2009 and July 2011, the dollar’s value had fallen by 17% on a real trade-weighted basis. The US Federal Reserve’s “Quantitative Easing 2” (QE2) measures in November 2010 and America’s recent debt crisis have further accelerated the slide…

China sowed the seeds of a local government debt crisis in late 2008 when Beijing responded to the global financial turmoil with a stimulus package of four trillion yuan. Unlike the rescue programme for the Asian financial crisis in 1997, which was under the strict control of the central government, this package has been accompanied by massive local investment projects. To finance these projects, local authorities have set up thousands of Local Government Financial Vehicles (LGFVs) to borrow from state banks and bond investors…

China’s state-owned enterprise (SOE) reform was formally initiated in the late 1970s. SOEs were then mired in inefficiency and low profitability while burdened with having to provide basic social welfare and employment. Early reforms were focussed on granting some managerial autonomy, thus introducing incentives. Since the mid-1980s, SOE reforms were mostly characterised by the so-called fangquan rangli (decentralising powers and sharing profits), where central ministries have gradually transferred some decision-making powers to the managements of the SOEs and local governments while allowing them to retain larger shares of the profits for investment and employee bonuses…

A sovereign wealth fund (SWF) is a state-owned investment fund or entity that is commonly established from balance of payments surpluses, official foreign currency operations, proceeds of privatisations, governmental transfer payments, fiscal surpluses and/or receipts resulting from resource exports. The concept of a SWF is not new and close to half of the top 40 SWFs in the world have been created since 2000. In an effort to manage China’s foreign exchange reserves, which have risen rapidly from a mere US$1.6 billion in the year 1978 to nearly US$3.2 trillion in the year 2011, the Chinese government had set up its first SWF — China Investment Corporation (CIC) in September 2007…

With an annual growth rate of 17% since 1978, trade expansion has been important to China’s growth over the past three decades. Since the early 2000s, trade expansion had further accelerated, achieving an annual growth rate of 26% between 2001 and 2008. Consequently, China has become a leading trading nation, as it ranked number one in exports and number two in imports in 2009, accounting for 9.6% and 7.9% of the world’s total exports and imports, respectively. Trade-to- GDP ratio also went up, from around 10% in 1978 to about 30% in the early 1990s and further to over 65% in 2006…

According to a European Commission report, China surpassed the United States, EU-27 and Japan to emerge as the largest exporter of high-tech goods. In 2006, the global share of China’s high-tech exports surged to 16.9%, closely followed by the United States at 16.8%, EU-27 at 15% and Japan at 8%. US Census Bureau data show that since 2002, the United States has consistently run a trade deficit with China in advanced technology products. The deficit reached a record high of US$94 billion in 2010. Statistics from the Chinese government present a similar story: hightech exports reached US$492 billion in 2010, accounting for over one-third of China’s total exports…

China has maintained high economic growth for over three decades (1978–2011). However, this growth has led to some undesirable environmental consequences which have forced policy makers to seek a new growth model in the coming decades. This model should be innovation- or knowledge-oriented and thus environment-friendly and pro-people. The purpose of this chapter is to present a critical review of China’s research and development (R&D) and hence draw policy implications for China’s R&D sector in the near future. The rest of the chapter begins with an overview of the trends in China’s R&D sector. This is followed by an investigation of the R&D role of Chinese enterprises. Then R&D activities within the industrial sectors are examined. Subsequently, some challenges faced by China’s R&D sector are discussed in the final section, concluding the chapter…

Chinese small and medium enterprises (SMEs) constitute the backbone of China’s vibrant economy. The data provided by the National Development and Reform Commission (NDRC) indicates that the over 11 million China’s SMEs, which accounted for 99% of enterprises in China, have provided almost 80% of urban employment, contributed to 60% of China’s GDP and 50% of national taxes, and created 75% of patents of invention in China…

In its World Development Report 2012, the World Bank ranks China as "an upper middle income country" for the first time. Considering that the country had been a low income country by the World Bank definition only until a decade ago, this is a remarkable achievement for China. By international comparison, China's economic growth rate over the past three decades has been exceptionally high: It is the only country since 1960 to have ever maintained an annual GDP growth rate of over 8% for three decades. It is also one of the only two countries (with the other being Singapore) to have ever kept the economy growing at over 7% per annum for four decades in the past half a century (Table 1)…

At the start of 2012 China was facing another year of tight labour market, with even more severe labour shortage and drastic wage increment expected. According to Yin Weimin, Minster for Labour and Social Security, labour shortage has become a structural issue in the Chinese economy, but, enterprises have learnt to better cope with it with the experience picked up in the last two years. As usual, the situation is most serious for the export-oriented sectors in coastal industrial regions, but most inland labour-exporting provinces are also badly hit…

In recent years, labour shortages have emerged as a new labour market phenomenon in China that spread gradually from the Pearl River Delta and the Yangtze River Delta regions to many inland provinces. This development is indeed puzzling as China is a country where the unlimited supply of cheap labour has been taken for granted for decades since the labour market was liberalised in the 1980s. Is China’s demographic dividend drying up very soon?…

Terms such as “governance” and “good governance” have been popular in scholarly discussions in China. Good governance, when understood as a set of features such as being consensus oriented, participatory, rule binding, effective and efficient, accountable, transparent, responsive, equitable and inclusive, is of course desirable and inspiring. Understandably scholars have been using this concept to call for political and social reforms. Good governance, when understood as a set of operational guidelines and practices, can create frustrations and even undesirable outcomes; however, China’s encounter with good governance, as will be illustrated below, has proven this point. In China’s social domain, some good governance practices such as decentralisation and marketisation have produced mixed results at best.

China’s official discourse has been struggling with the concept of social governance. The term formally endorsed in official documents is social management. There are fundamental differences between the two terms. Nonetheless, social management is still an unfinished project and a largely undefined concept. The competition among local governments in innovating social management has paved the way for varied local initiatives. Some may be more accommodative towards good governance than others. The most important thing for China is whether it can find ways to deal with the changing realities and challenges. This will ultimately determine how social management is defined and evaluated.

Politically, the Chinese working class has been named the nation’s leading class in the Constitution since 1949. Under the class label system of social stratification in the Mao years, workers’ political status was only inferior to revolutionary soldiers and cadres’. Therefore, workers enjoyed great advantages in joining the Chinese Communist Party (CCP), such as becoming candidates for promotion in the political hierarchy, and so on. Economically, Chinese workers enjoyed job security, stable wages, and many other benefits such as free housing and medical care. Basically, almost all aspects of their typical needs in life were taken care of by their enterprises and governments. They were the “masters” of their enterprises and permanently employed by the state without labour contracts.

In the mid-1990s, the labour contract system replaced the permanent job system nationwide. As a result, Chinese workers lost permanent job security and became free labour. In the late 1990s, Chinese state-owned enterprises (SOEs) launched a series of mass lay-offs to cut production cost and improve business efficiency. By 2005, over 85% of small and medium-sized SOEs were restructured and privatised, resulting in about 30 million laid-off workers, or almost half of the SOE workers. For those who were fortunate enough to keep their jobs in public-owned enterprises, most of the previously guaranteed benefits have either been completely withdrawn or drastically reduced. Almost all the enterprises stopped providing free housing to their employees. Major benefits such as medical care and pension were outsourced to government sponsored social insurance agents and employees had to share the insurance cost with their enterprises.

China’s rising middle class has attracted the attention of both policy makers and the academia. In a mature industrial society, the middle class is the mainstream. It is not only the major source of consuming power, but also the stabiliser of the society, providing an ideal buffer zone between the upper class and the lower class…

China’s dynamic economic growth since the late 1970s and its shift to a market economy have given rise to a new moneyed class, a heterogeneous group consisting of private entrepreneurs, managers of large corporations, professionals and state officials with discretionary powers. China’s double-digit growth in the early 2000s resulted in a booming property market and the launching of IPOs has also provided a new method of wealth creation. Since then, China watchers have begun to talk about the coming of age of a new class of wealthy Chinese, particularly those with financial and property assets of over RMB100 million (yiwanfuweng). Despite the global economic downturn, McKinsey still predicts that the number of wealthy households in China will increase to more than 4.4 million by 2015, up from 1.6 million in 2008. Here, wealthy households are defined as urban households with annual income in excess of RMB 250,000.

Over the years, the Chinese Communist Party (CCP) has played an important role in legitimising the moneyed class. It officially recognised private entrepreneurs in 1988, and radically amended the Party Constitution in 2002 to allow private entrepreneurs to join the party. Through co-option and inclusion, the CCP has enhanced the political status of private entrepreneurs. The media have also played their part in legitimising wealth as a highly positive value. Discussions about social stratification were restricted in China in the 1990s for fear of social instability. Into the 2000s however, popular magazines began to report widely on the incomes and lifestyles of the wealthiest people in China. The international media and business community have also been making great efforts to legitimise consumerism and moneyed lifestyles in China. The Millionaire Fair, an annual exhibition that was inaugurated in Europe in 2001 to showcase luxury goods and lifestyles, was held in Shanghai in April 2006. Some 10,000 VIP guests from all over China were entertained in a swirl of gala dinners, cocktail receptions and performances by international troupes.

With growing economic and social freedom since the late 1970s, non-governmental organisations (NGOs) have come to play an increasingly important role in welfare provision and environmental protection. The development of NGOs indicates profound changes in China. To enhance the understanding of the development of NGOs in China, this chapter introduces the ministries in charge of NGOs, describes the main types of NGOs and explores the relationship between NGOs and the government.

Since China launched its market-oriented economic reform in the late 1970s, the country has undergone tremendous urban transformation. The pace of urbanisation was relatively modest before 1995. Between 1978 and 1995, urbanisation rate in the country grew from 17.92% to 29.04%, equivalent to an average annual growth of 0.65%. Since 1995, urbanisation process has accelerated as a result of national policy adjustments on urban development. From 1995 to 2009, China’s urbanisation rate grew from 29.04% to 46.59%, translating into an annual growth of 1.25% (Figure 1), or an average increase of 19.29 million people in cities each year…

The current hukou system was set up in 1958 as a mechanism to control China’s enormous population. In some ways, it is similar to the apartheid system by which social mobility is restricted. However, as China opened up economically in the late 1970s and early 1980s, rural-urban migration was increasingly on the rise as people looked for jobs and better living conditions in the cities. This puts a strain on the hukou system as migrant workers, who are registered as rural residents, are not covered by the cities’ social welfare network despite their contribution to city building. Social problems that arose as a result threaten the stability and sustainability of both local and national development. Hence, reform is inevitable, but its actual implementation tests the wisdom of governors at both local and national levels. With social reform being pressed and primed for formal inclusion into the 12th Five-Year Programme, a number of cities took the lead in pioneering trial reforms. Guangdong and Shanghai are two such cities. The initiatives implemented by the local governments and the rationale behind their initial hesitation in the implementation are examined.

Health expenditure in China has grown by double digits annually for more than a decade, accounting for about 5% of GDP in 2010. Out-of-pocket payment as a percentage of total health expenditure in 2010 was above 36%, implying healthcare affordability of individual patients is still a serious concern. Also, many people in China have difficulty gaining access to healthcare services, in particular primary care and public health services. Both accessibility and affordability of healthcare services are serious challenges for long-term development…

Care for the elderly has traditionally been the responsibility of the family in China and the state mainly plays a residual role in looking after childless and disabled old people. However, a number of recent socio-economic changes have posed important challenges to the provision of elderly care, gradually making elderly care a legitimate public policy concern in China. Since the 2000s, the Chinese government has formulated a social care framework that involves more sectors in care provision for the elderly. In recent years, it has established a universal social security for the elderly, putting in place a social care system for the elderly. China’s national strategy proposed for the 12th Five-Year Programme (FYP, 2011–2015) is to establish a social care service system “with home-based care as the foundation, backed up by community-based services and supported by institutional care”.

To assess China’s capacity for meeting this ageing challenge, the driving factors leading to the social care expansion for the elderly in China would first be examined, including the accelerated population ageing, the changing family and the eroding filial piety. The Chinese government’s recent policy initiatives to expand its social security system and establish a social care system for the elderly are also discussed in greater depth. The analysis will shed more light on the major challenges that China faces today in the social policy domain of elderly care.

The search for good governance has become an increasingly important element of policy management and is high on the political agenda of the global leadership. In China, the increasingly ferocious political contestation, large-scale urbanisation, rapid demographic changes and severe environmental pollution amidst dramatic economic progress have necessitated the quest for alternative housing governance.

China has adopted reforms that enable housing privatisation and marketisation to work together, a common strategy used in shaping the patterns of housing governance in East Asia. How then is China going to change its role from one of direct control to that of guiding appropriately? What are the state’s strategies in its search for effective housing governance and in defining relations between itself and the market? How has housing development shaped, and is shaped by the diverse political and socio-economic situations? This chapter aims to provide insights into China’s housing trends and explore Chinese housing governance by firstly evaluating the changing roles of the state based on the norms of equality, efficiency, effectiveness, accountability, participation and sustainability, and secondly by analysing an empirical example of the recent state intervention.

China’s ability to attract global talent is helped by the large pool of overseas Chinese students accumulated over the years. The number of overseas Chinese students had grown from 270,000 in 1996 to 2,245,000 in 2011, with the number of returnees increasing from 89,000 to 818,000. In 2011 alone, out of the 339,700 new Chinese students going overseas, 12,800 were sent by the government, 12,100 by organisations and companies, while the remaining 314,800 were selffunded students, accounting for more than 90% of the total. On the returnee side, among 186,200 returnees, 9,300 were sent by the government, 7,700 by organisations and companies, and 169,200 were self-funded students, again accounting for more than 90% of the total returnees (Table 1). This composition contrasts sharply with the 1980s and 1990s where the majority of the overseas Chinese students were sent by the government and with relatively higher qualifications. Currently, the diverse composition of overseas Chinese students influences China’s returnee situation: on the one hand, the government is striving to attract top level talent back to China. On the other hand, more and more returnees who are less competitive face greater challenges in securing well-paid jobs. This chapter focusses on the former, i.e. China’s policies and development in attracting high level talent from overseas, as this is considered to be highly strategic for the country’s development…

China’s higher education reform took place at a time when decentralisation and marketisation were globally seen as the best strategies to reform the government and the economy. There was unprecedented emphasis on efficiency, performance and “value for money” around the globe. China’s higher education was under the same pressure to reform…

The implementation of market-oriented reforms, including the reforms of state-owned enterprises, the fiscal system, housing and land, and the labour market, has profoundly shaped local governance in urban China and weakened the work-unit system as the main pillar of governance and control. In response, since the 1990s, the Chinese government has embarked on extensive community building programmes in cities. Neighbourhood organisations, which formerly engaged the elderly, retirees and less-educated to perform trivial and mundane tasks such as monitoring residents, collecting fees and implementing birth control measures, have been transformed into important players in local governance and community participation.

In China, “community” (shequ), or neighbourhood, is an administration-oriented concept. It refers to an area with hundreds of buildings and surrounded by natural boundaries such as rivers or broad roads. In Shanghai, a neighbourhood may include several lanes (linong), new-style urban villages (jumin xincun), modern condominiums (gongyu) and public facilities such as schools and shops. Usually, the population in a neighbourhood is around tens of thousands. To facilitate administration, local government usually divides a neighbourhood into several sub-neighbourhoods (xiaoqu) and establishes a Resident Committee (juweihui, RC hereafter) in every sub-neighbourhood to help oversee residents. Shanghai took the lead in China in revamping its neighbourhood system and promoting community building programmes.

Recent waves of labour unrest cast the spotlight on the plight of Chinese workers, who toil for long hours under poor working conditions for meagre pay but have not been able to partake of the fruits of China’s wealth so far. On 16 January 2012, more than 8,000 assembly line workers at an electrical machinery plant in Guangxi Nanning staged a walkout to demand for year-end bonuses; at the close of 2011, privately owned factories in Guangdong, Shenzhen, Nanjing, Chongqing, Chengdu and Shanghai were paralysed by striking workers in protest of unfair labour practices; earlier that year, in August and October, cab drivers in Hangzhou and Xiamen went on strike to express their displeasure with escalating operating costs; from May to June 2010, Guangdong witnessed a string of suicides at Foxconn’s factories and consecutive strikes at various Honda Motor plants…

After more than three decades of open door and reform policy, China has moved from being a marginal player to becoming a key actor at the centre of the world stage. This outcome did not come easy given the fact that other communist or socialist-oriented countries had earlier lost out to more successful capitalistic-oriented countries at the end of the Cold War. Furthermore, China had to fight off its “pariah” status that involved political isolation and economic sanctions imposed by other countries following the 1989 Tiananmen crackdown. Today, China has virtually shaken off the shackles of the past and is basking in the international limelight with its presence being felt in various fields…

China-US relations have entered a more challenging phase with the United States stepping up its presence in the Asia-Pacific region on several fronts. At the political level, the United States made its presence felt at the East Asia Summit in November 2011 as a full member and raised the sensitive issue of the South China Sea (SCS) disputes despite China’s objections. The United States also ended its diplomatic isolation of Myanmar (that borders China) with Hillary Clinton’s visit to Naypyidaw in December 2011, the first by a US Secretary of State in more than 50 years. The United States also further eased sanctions on Myanmar and appointed an ambassador to Naypyidaw…

The year 2012 marks the 40th anniversary of the establishment of official Sino-Japanese relations. In 1972, then Prime Minister Tanaka Kakuei visited Beijing and normalised bilateral relations. The years between Tanaka’s Beijing visit and the 1989 Tiananmen Incident marked the “golden age” of bilateral relations. At the geo-strategic level, China and Japan were aligned with the United States against the Soviet Union in the context of the Cold War. Historical controversies over imperial Japan’s invasion of China were swept under the carpet for the sake of better bilateral ties amidst the backdrop of a perceived Soviet “threat”…

China and India are emerging economies, and their role in the world economy has been rising. In 2010, the Asia-Pacific region accounted for one-third of global GDP, while over half of the region’s GDP came from China and India. Currently, China is the world’s largest exporter and second largest importer behind the United States. India’s share of global exports had also increased from 0.5% in 1983 to 1.4% in 2010. The share of outward FDI of China and India in total East, South and Southeast Asia FDI outflows rose from 23% in 2007 to 37% in 2008. The 21st century belongs to Asia, and the future of Asia belongs to China and India. Thus how these two powers cooperate with each other will have great impact not only on regional stability but also on the world economy.

However, these two countries are still in trust deficit. It is believed that while India may exaggerate the threat posed by China, China may underestimate Indian concerns and worries. Trust deficit and deficient understanding form the major obstacle to China-India relations. The distrust and tensions have become even more explicit in recent years. For example, on India side, a growing number of Indians now see China as a competitor, if not a rival. The Pew Global Attitudes Survey suggested that in 2010, only 34% of Indians held a favourable view of China, and this percentage even decreased to 25% in 2011; in 2010, 40% of Indians viewed their neighbour as a “very serious threat”, and this percentage remained at 35% in 2011. More damaging is the perception which is gaining ground in India that China is the only major power that does not accept India as a rising global player that must be accommodated. Due to the lack of sufficient understanding and in-depth exchanges between India and China, misunderstanding and suspicion will inevitably proliferate.

More often than not, we tend to see China as a “normal” society for its striking economic achievements, a society not much different from ours by appearance — capitalistic, free and noncommunist. The projected images we receive from Chinese cosmopolitan lifestyle, skyscrapers, dynamic stock market, bustling traffic and alike certainly perpetuate illusion. We are therefore led to expect China to behave in a “normative” way on the diplomatic front. We also expect China to be more active in global governance, let alone regional governance. In the post-Cold War period, we have been convincing ourselves that China would show a similar resilience in the world of diplomacy and governance that it has in adapting to globalisation and interdependence. To our dismay, however, China has yet to show such resilience. From political perspectives, many have attributed China’s failure to meet our expectation to the extant differences in Chinese political system, ideology and others alike. Admittedly, we, especially those from (neo-) liberalism school of thought, once had an illusion that the consequences of China’s opening-up and subsequent embracement of international order and institutions, combined with globalisation effects, would marginalise the effect of political differences to the extent that it would be a non-factor to China’s participation in global governance.

However, we are often proved wrong. It is largely because politics does matter! Politics matters because it functions as the foundation on which a state’s external behaviour is rooted and extended. Such a foundation, embedded with shared values and behaviour, is expected to facilitate China to be more compliant with international norms and rules that were set, notwithstanding diplomatic protocols. And it looks increasingly lacking in the Chinese world of diplomacy. China’s external behaviour often fails to comply in part because its foreign policy is interest-driven, if not ideologydriven, and in part because it is principle-oriented. In other words, China has been expected to accrue more of the shared values from its embracement of international order and institutions. Nevertheless, China does not seem to have fully embraced, if not presenting its own existing values underlying international norms, rules, order and institutions, which are built to respect and protect such values as freedom, democracy and human rights.

China has strengthened its relationship with North Korea over the past few years, especially after the late Kim Jong-il’s debilitating stroke in 2008 and the dramatic events that took place in 2010. It refused to openly condemn the North regarding the sinking of the Cheonan and the Yeonpyeong shelling, and strongly protested US-South Korean joint military exercises in the Yellow Sea, significantly estranging its relationship with Seoul. Beijing marked the 60th anniversary of entry into the Korean War, with major ceremonial events and high-ranking military delegation despatched to Pyongyang. China has become North Korea’s key food and energy supplier, and its largest trading partner. Meanwhile, Beijing claims it has limited influence over Pyongyang; indeed North Korea’s provocative behaviour and brinkmanship have often embarrassed and proven deeply frustrating to its Chinese patron, and drawn Seoul, Tokyo and Washington ever closer…

The fulfilment of the China-ASEAN Free Trade Agreement (CAFTA) in the beginning of 2010 was a new starting point for China-ASEAN cooperation. However, while some Chinese scholars, especially those believed that economic interdependence would influence bilateral relationships, argued that ASEAN (Association of Southeast Asian Nations) countries would recalibrate their “balance of power” policy towards China after the CAFTA became effective, international observers were more pessimistic. Some even argued that China-ASEAN relation would stagnate early in 2007. Which prediction depicts the future reality of China-ASEAN relationship? For China, economic cooperation was used as a reassure policy to maintain good relations with ASEAN countries, but as Dent correctly argued, one should not underestimate the impact of ASEAN’s strategic thinking on the bilateral relationship.

This chapter will try to provide more balanced perspectives on the future of the China-ASEAN relationship. An “offer-response” model will be set up based on the political economy and applied to case studies. The case analysis showed that the process of China-ASEAN cooperation was determined by the dynamism of the “offer-response”, while this simple game was based on the interest calculation from both sides. The bilateral relationship between China and ASEAN will thus depend on this “offer-response” mechanism.

In many ways, China is an extremely big giant when compared to a very tiny Singapore. Whether it is in terms of geographical size, population strength or economic mass, Singapore pales in comparison to China. Given their asymmetrical proportions, there is a view that China does not need to pay too much attention to Singapore. With China’s growing prominence on the world stage, such a view seems to have gained increased currency. By logical extension, China only needs to focus on engaging the major powers such as the United States, the European Union (EU), Japan and India and leave its relations with Singapore to adjust accordingly to big power dynamics…

Relations between the United States and China are often charged with tensions. This is especially the case during election years when presidential candidates in opposition parties will usually criticise the incumbent president for being too soft on China and for allowing the Chinese to “steal American jobs”. Consequently, US-China relations usually arouse more debates than other bilateral economic and political relationships China has with the outside world. However, in spite of political rhetoric and public debates, in the economic field, EU-China relations have surpassed US-China relations in importance in terms of value and volume…

The Middle East, a focal point of great power rivalry in the past century, has assumed heightened strategic importance for China, a rising power that once lacked interest and involvement in the region due to distance and limited historical ties. Its strengthened position in the consciousness of Chinese leaders is directly related to the trajectory of China’s massive industrial expansion that has increased its dependence on reliable overseas energy supplies as well as export markets for its wide range of goods, some of which trade on low profit margins.

For the past three-plus years, whether the United States would remain, as it has been in the past, Taiwan’s close friend and protector, has come into question. In fact, there has been considerable speculation that Washington wants to, and will, abandon Taiwan. To some this may sound like history repeating itself. This is indeed not the first time…

Trade and investment relationships between Taiwan and China have been thriving since the 1990s even though there is no economic cooperation mechanism across the strait to support its development. The enactment of Taiwan’s mainland investment policy since the 1990s has been a response to its uncontrollable upsurge in investment volume into China. The establishment of a more formal, legalised economic relationship with China became urgent with the escalation of economic interaction across the strait. Taiwan’s willingness to sign the Economic Cooperation Framework Agreement (ECFA) with China in 2010 is therefore not to be seen as a move to further encourage cross-strait economic relationship, but rather, a passive reaction of the Taiwanese government towards its inevitable strengthening relationship with the mainland…

The rise of China — its three decades of robust growth in GDP; massive reduction of poverty; expansion of commercial relations with the world over; ascent to the rank of world’s most significant exporter and polluter, and its inevitable and increasingly necessary role in global governance — is ubiquitous in the literature on economic development, environmental issues and international affairs, to say nothing of in the news and other media. Although receiving less international attention than the rise of China, recently, and especially since the 2008 global economic crisis, other large developing countries are gaining influence in international affairs of global prominence. Of these, Brazil, Russia and India — countries identified, along with China, by the US investment bank Goldman Sachs as the “ BRICs” — have attracted particular attention.

The BRICs held their first summit in June 2009 a few months before the G-20 summit in Pittsburgh. Since then, the four countries met annually, and in 2011, they invited South Africa to join their group, thus becoming “BRICS”. Reactions have been mixed. Some argue that the BRICS are replacing the United States and the G-7 as the most important global actors, while others insist that the BRICS are still developing countries with little in common other than their inability and unwillingness to act as global leaders. Between the hype and the critique however is a less controversial but more verifiable conclusion: that the BRICS are cautiously moving towards democratising global governance, giving the developing world a voice on important issues, particularly through the empowerment of the G-20, discussions of reform of the United Nations Security Council and the International Monetary Fund (IMF).

The concept of soft power was coined by Joseph Nye, a Harvard-based US scholar on international relations. He defined soft power as “the ability to get what you want through attraction rather than coercion or payment”. His work was translated into Chinese as early as 2001. Chinese leaders started paying attention to soft power a few years after the concept has attracted attention. China’s government has also endeavoured to augment China’s soft power in the 2000s…

Over the past decades, China has emerged as an economic giant in the world with real annual GDP growth rate of 10% on average between 1978 and 2010. With the Chinese government being fully committed to the goal of high economic growth and poverty reduction, the current development momentum is expected to continue for decades to come. The uncertain global economic environment may slow this Asian giant in the short run but its remarkable economic transformation is a long-run trend…

Since 2010, competition among countries in East Asia over maritime interests in the South China Sea has heated up, turning the region into, what some had described as, the new central theatre of conflict…

The official principle guiding China’s foreign policy is to “keep a low profile” (tao guang yang hui) and to “get some things done” (you suo zuo wei). Chinese paramount leader Deng Xiaoping reportedly said in 1992 that China will become a big political power if it keeps a low profile and work hard for some years; and it will then have more weight in international affairs. Deng also reportedly said that China should never seek hegemony and never seek leadership…

The following sections are included:

• Index