Variety of problems will result in 'vexing year for China', says think tank report

China faces a host of economic, demographic and geopolitical challenges that will test its people and governance structure in 2024, but is also likely to take a greater leadership role in setting climate targets and expanding its investment and outreach to the Global South, according to a report released on Tuesday by the New York-based Asia Society.

"This is go be a vexing year for China," said Bates Gill, executive director of the Centre for China Analysis, which produced "China 2024, What to Watch". "We'll see a much, much sharper focus by Beijing to invest in climate resilience and adaptation measures in 2024."

This is important for Beijing's national interest, Gill added. "But this is probably also a pathway by which China can help burnish its international reputation, particularly with regard to the developing world."

Do you have questions about the biggest topics and trends from around the world? Get the answers with SCMP Knowledge, our new platform of curated content with explainers, FAQs, analyses and infographics brought to you by our award-winning team.

The news this week that property giant Evergrande will be liquidated underscored the continued difficulties that China's economy is facing this year in a nation where real estate still accounts for 23 per cent of GDP. While Beijing achieved its 5 per cent GDP target last year, and is likely to set a similar target this year, achieving that will be arduous, the report said.

A key challenge for the government will be to restore trust and confidence, said Jing Qian, the centre's managing director, no small feat in the face of a declining population, battered social safety net and shifting government policies that have unnerved some investors.

"A broader financial crisis or economic recession is unlikely, but China's economy is likely to continue to at best muddle through in 2024 rather than demonstrate a significant recovery," the report said, adding that the outcome will affect not only the future of China but of the entire global economy and geopolitical balance of power.

China is likely to remain relatively accommodating toward the outside world this year after its earlier, confrontational Wolf Warrior diplomatic approach, according to the report.

Early indications are that it is biding its time before reacting severely to the presidential election in Taiwan on January 13, which saw Lai Ching-te elected from the independence-leaning Democratic Progressive Party, and awaiting the outcome of the US presidential election in November as it calibrates future policy, the 28-page report said.

"Beijing is likely to continue its freeze on political ties with Taiwan and escalate its military pressure on the island, while using most of 2024 to make what preparations it can to mitigate against and, if possible, capitalise on a possibly chaotic shift in US political leadership," it said.

China likely understands that it will be a source of political fodder during the campaign and the object of more stringent policies moving forward, whether US President Joe Biden or former president Donald Trump is elected.

For the past year, it has weathered a string of proposed anti-China US congressional bills, local restrictions on Chinese investment and the unwelcome attention of the House Select Committee on the Chinese Communist Party.

In the aftermath of Russia's invasion of Ukraine, and Beijing's bolstered diplomatic ties with Moscow, China has seen its relations with Europe strained amid its continuing difficulties with the United States. That is likely to see China redouble its pivot to the Global South, analysts said, in a bid to secure raw materials, develop new markets and bolster diplomatic, security and economic influence on the world stage, with a particular eye to the Middle East, Africa, Latin America and Southeast Asia.

This year will likely see Beijing heavily promote at the UN and beyond its Global Development, Global Security and Global Civilisation initiatives, three frameworks aimed primarily at building ties with developing countries.

Analysts also expect China to support a significant expansion of the Brics grouping, an organisation made up Brazil, Russia, India, China, South Africa, Egypt, Ethiopia, Iran and the United Arab Emirates.

The centre also forecasts a continued policy tussle between national security and economic growth within President Xi Jinping's government, more public discontent as the economy falters and greater governance problems as debt-saddled local governments try and meet the welfare needs of an ageing population without access to property sales.

"The year 2023 was in many ways a difficult one for China," the report said. "Looking ahead to 2024, are matters likely to improve? In short: not by much."

This article originally appeared on the South China Morning Post (SCMP).

Copyright (c) 2024. South China Morning Post Publishers Ltd. All rights reserved.