Xi Jinping Confirmed As New Chinese President

China: The Key Challenges Ahead

Updated: 3:47am UK, Thursday 14 March 2013

By Mark Stone, Asia Correspondent

What are China's key challenges and how will incoming President Xi Jinping tackle them?

:: The Environment

Even from behind the walls of Zhongnanhai,  the vast Presidential compound in the heart of Beijing, it will be impossible to escape what's become known as "airmaggedon" - the sight of a city shrouded in smog. January and February were two of the worst months on record. Levels of pollution reached more than 30 times the safe limit.

Shanghai's 23 million residents have spent the past week wondering if their water is safe to drink after the discovery of 6000 dead pigs floating down the river. The term "Cancer Village" is now part of the Chinese vocabulary, referring to villages where toxic soil is killing people. There are scores of other jaw-dropping food scandals.

China's record on waste disposal - both sewage and household waste - is abysmal. A recent study claimed that one third of the industrial waste water and more than 90 percent of household sewage in China is released into rivers and lakes without being treated.

:: The Economy

In his farewell speech, outgoing president Hu Jintao made the point (several times) that his government had successfully avoided a direct hit by the global economic crisis. There was no Chinese "hard-landing" last year as many had predicted.

However, the knock-on effects of the problems in the Eurozone and America are impacting in China. The country still relies heavily on being the world's factory floor. But if the world isn't buying, then China has a problem.

The challenge for the incoming government is to broaden its domestic consumer base so that it can rely less on the rest of the world. But to achieve that it must pull more people out of poverty and that, in turn, requires workers, in factories, making and selling to the world.

Now add one other dimension to that: south-east Asia is quickly overtaking China as the preferable factory floor for western manufacturers: labour is significantly cheaper than in China.

It all presents a tricky conundrum.

:: Foreign Policy

President Xi said recently that the "great renewal of the Chinese nation is the Chinese nation's greatest dream in modern history." The location he chose to speak those words is seen as significant: a military base.

There is no doubt China has been flexing its military muscle recently. It is engaged in territorial disputes with Japan, Vietnam, The Philippines and of course, Taiwan. A military clash with Japan over a tiny set of islands in the East China Sea is conceivable.

China's footprint now spreads across much of the world. It's presence across Africa and South America is causing unease in some western capitals.

China is now used to being accused of hacking into the world's computers. It angrily denies the charge, pointing out that it too is the victim of cyber-crime. Still, tit-for-tat cyber strikes present both a military and commercial threat and therefore a big diplomatic challenge.

Nearly 40 years ago, former US Secretary of State Henry Kissinger made a secret trip to Beijing. It was the first step in an effort to establish diplomatic relations between communist China and capitalist America. It eventually led to an historic meeting between President Carter and Chairman Mao.

On his visit Kissinger called China "'a land of mystery". Decades on, little seems to have changed.

President Xi said last month: "China needs to know more about the world, and the world needs to know more about China."

And so, despite the country's remarkable growth, reforms and indisputable position of global strength, China is to many still a mystery.

Perhaps that represents the biggest barrier between China and the rest of the world, because a mysterious country is, correctly or not, seen as a threatening one.

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