Year in review

Four years after the Beijing Olympics, China is a bigger global force than ever before. The view from the world stage is likely different than what it expected. Compare China today with the country that enthusiastically prepared for its Olympic coming out party by beautifying the capital and launching a campaign to “civilize” its populace. China in 2012 was undoubtedly more developed, richer and wiser about the outside world.

But as China’s connections with the outside world have grown, so have the complications. Clashes with Vietnam and Philippines over claims in the South China Sea dominated headlines in the first half of 2012. In September, the spotlight shifted quickly to Japan, as Tokyo purchased a disputed island chain in the East China Sea.

China’s relationship with the US was also troubled. In 2010, roughly two-thirds of Chinese respondents described the US-China relationship as one of cooperation; by 2012, that proportion had sunk to just 39%, according to a poll by the Pew Research Center.

Many Chinese saw the US as egging on other Asian nations in their territorial claims, especially after the US revealed plans in June to shift 60% of its naval assets to the Pacific Ocean by 2020. Political transitions and struggling economies in both the US and China undoubtedly added to the strain, as politicians and media outlets spouted increasingly protectionist messages.

Tensions ran highest in April, when blind dissident Chen Guangcheng fled to the US embassy seeking asylum just before a high-profile bilateral meeting between economic and security officials. However, both governments acted quickly to resolve the situation – perhaps a signal that combative popular rhetoric is disguising a new era of heightened government-to-government cooperation.

Similar trends were apparent in the business world. Moves by US legislators to block Chinese telecom equipment makers Huawei and ZTE from the US for national security concerns grabbed headlines, as did opposition in the US and Canada to state-owned Chinese petroleum company CNOOC’s bid for Nexen. In the background, however, Chinese companies conducted a flurry of deals, acquiring stakes in well-known foreign companies and brands including AMC Entertainment, Weetabix, Putzmeister and African Barrick Gold.

While the media focused on brutal US-China trade disputes in areas ranging from tires to solar products, overall the trend was toward more openness. Beijing opened its credit card sector to foreign competitors, increased the quota of foreign films that could enter the country and expanded its program for foreign institutional investors.

Macroeconomic trends were more worrying. China’s economy remained strong in 2012, but it no longer seemed impenetrable.

There was some good news: Government measures tamed inflation and succeeded in dampening housing price growth. But GDP growth also slowed to 7.4% in the third quarter, the lowest level since early 2009. In response, Beijing introduced a stimulus package that reignited debate over whether China can or will shift its growth model away from investment and toward consumption.

Chinese in 2012 seemed less sure of their economic model than ever before. Small and medium enterprises continued to struggle, adding to worries about the fragility of the informal lending institutions that support them and the excessive dominance of the state-owned sector. In his final work report, however, outgoing Party Secretary Hu Jintao defended the role of state-run enterprises in the economy. His speech marked the end of an era in which critics said too little reform took place (see cover story, page 34). 

Compared with 10 years ago when Hu and Wen Jiabao acceded to power, new media remade China’s political landscape in 2012. The internet ground to a halt on many occasions as the party struggled to contain political scandals. The most prominent was the extended murder-story intrigue that accompanied the downfall of Bo Xilai, but media reports that disclosed the huge family wealth of incoming Party Secretary Xi Jinping and outgoing Premier Wen Jiabao were arguably more destabilizing.

Coverage of China’s political transition increased exponentially in 2012, and many viewers in the West watched the succession process for the first time. They did not always know what to think: The inner-workings of the process remained largely opaque, with Xi Jinping’s mysterious two-week disappearance in September perhaps the best illustration of Beijing’s continual lack of transparency.

The media created not just a window into the country, but also a window out. The Chinese people watched the US election far more closely this year, though often just as a form of entertainment. “For us, the US presidential election is the same as watching an [adult] movie,” one Sina Weibo user wrote. “We cannot participate, but we are willing to stare at it.” This picture of the world was not as rosy as it had been in years past, but it was far clearer.