Assessing China’s economic stability requires considering the conflicts and tensions affecting the country – none of which advances the cause of growth. For starters, China’s territorial disputes with many of its neighbors, including Japan, Vietnam, and the Philippines, are undermining regional peace, not to mention economic integration.
Moreover, China’s relationship with the United States is deteriorating, owing to conflict over America’s foreign-policy “pivot” toward Asia and disputes over cyber security. China has already restricted access to its market for some US-based technology firms, and more such actions may follow.
Meanwhile, China’s domestic political system is being shaken up by President Xi Jinping’s anti-corruption campaign – an effort that is essential to boosting the government’s accountability and legitimacy as it pursues deep systemic reforms. But, at a time of rising international tension, there is a risk that Xi’s campaign could mutate into a broader assault on political dissent attributed to “corrupt” foreign influences.