China
For centuries China stood as a leading civilization, outpacing the rest of the world in the arts and sciences. But in the 19th and early 20th centuries, China was beset by civil unrest, major famines, military defeats, and foreign occupation. After World War II, the Communists under MAO Zedong established a dictatorship that, while ensuring China's sovereignty, imposed strict controls over everyday life and cost the lives of tens of millions of people. After 1978, his successor DENG Xiaoping gradually introduced market-oriented reforms and decentralized economic decision making. Output quadrupled by 2000. Political controls remain tight while economic controls continue to be relaxed.
While there are no known threats against foreign travelers to China, crime is a rising concern in large cities and several foreign visitors to China have fallen victim to crime and were murdered in the hotel rooms or near nightspots.
Beijing regards the island of Taiwan as a part of Chinese territory that must be reunited with the mainland, by force if necessary. It has threatened to invade should Taiwan declare independence.
Tensions have been running high in 2005 between China and Japan. Some of these tensions have been manifest in anti-Japanese protests in several cities, including Beijing. While the protests have been generally peaceful, the government's refusal to intercede is cause for concern and sites associated with Japanese interests, including the Embassy and consulates, should be avoided.
Little was known about low-profile President Hu Jintao when the National People’s Congress elected him in March 2003, or of what his appointment held in store for China.
A committed Communist Party member since 1964, his party career took off in the late 1970s. In the 1980s he served as party chief in Guizhou and Tibet, where he oversaw crackdowns on pro-independence protests. In 1992 Hu became the youngest member of the Politburo Standing Committee, the party's main decision-making body.
The appointment established Hu as the presidential heir-apparent - a position cemented at the 16th Communist Party Congress in 2002 when he succeeded Jiang Zemin as head of the party. Jiang's decision to stand down as head of the powerful Central Military Commission in 2004, three years earlier than planned, was said to have completed the first orderly transition of power since the communist revolution in 1949.
Hu has made the fight against corruption a priority; he has promised to promote good governance, saying the fate of socialism was at stake. But he has rejected Western-style political reforms, warning that they would lead China down a "blind alley".
Chinese rule over Tibet remains controversial. Human rights groups have accused the authorities of the systematic destruction of Tibetan Buddhist culture and the persecution of monks loyal to the Dalai Lama, the exiled spiritual leader who is campaigning for autonomy within China.
China is the world's most populous country, with a rapidly growing economy. Economic development has proceeded unevenly, with urban coastal areas, particularly in the Southeast, experiencing more rapid economic development than other areas of the country. China has a mixed economy, with a combination of state-owned and private firms. A number of state-owned firms have undergone partial or full privatization in recent years. The Chinese government has encouraged foreign investment -- in some sectors of the economy and subject to constraints -- since the 1980s, offering several "special economic zones" in which foreign investors receive preferable tax, tariff, and investment treatment.
With China's entry into the World Trade Organization (WTO) in November 2001, the Chinese government made a number of specific commitments to trade and investment liberalization, which, if fully implemented, will substantially open the Chinese economy to foreign firms. In the energy sector, this will mean the lifting or sharp reduction of tariffs associated with imports of some classes of capital goods, and the eventual opening to foreign competition of some areas such as retail sales of petroleum products.
Despite moves toward privatization, much of China's economy remains controlled by large State Owned Enterprises (SOE's), many of which are inefficient and unprofitable. Restructuring of the SOE sector, including the privatization of some enterprises, is a major priority of the government, as is restructuring of the banking sector. Many Chinese banks have had to write off large amounts of delinquent debts from state-owned enterprises.
Layoffs have been part of the restructuring of the SOEs, as many were severely overstaffed. This has created unemployment, and also has been a burden on the government budget, as the government begins to provide social benefits that were previously the responsibility of the SOEs. The geographic concentration of privately owned industry in the urban centers along the coast also has created social strains.
China's real gross domestic product (GDP) grew at a rate of 9.1% in 2003, up from 8.0% in 2002. Real GDP for the first quarter of 2004 was up 9.8% year-on-year -- a pace many observers see as unsustainable. Real GDP growth is forecast to drop to 8.1% for 2004 as a whole. Much of the increase in the GDP growth rate has come from excessive spending on capital goods and construction, particularly in the state sector. In an effort to cool an economy seen as overheating, the Chinese government has taken a number of steps in the second quarter of 2004 designed to counter this trend. Monetary policy has been tightened, and measures have been adopted to slow spending on capital projects and rein in bank lending. China's banking sector remains a key concern for the country's economic stability, as the ratio of problem loans has been rising.
Inflows of foreign direct investment (FDI) into China in 2003 totaled $53.5 billion, a new record, but with the year-on-year growth rate slowing considerably. Japan, Taiwan, and the United States are China's most important sources of FDI.
After a sharp rise in 2002, China's trade surplus shrank in 2003. The 2003 trade surplus was $25.3 billion, down from $30.3 billion in 2002. Imports increased by 39.9% in 2003, largely capital goods being acquired to refurbish outdated industrial facilities. Exports increased by 34.6% in 2003.
China has several territorial disputes with other regional states that are relevant to the energy sector, particularly the dispute over the potentially hydrocarbon-rich Spratly Islands, which are claimed by China, Vietnam, the Philippines, Brunei, Taiwan, and Malaysia. Another dispute is over the East China Sea, claimed by Japan.
The greatest long-term foreign policy issue facing China is the question of eventual reunification with Taiwan. Tensions between Taiwan and the mainland have sparked fears of military action in the straits. The leadership of Mainland China has reserved the right to use force to bring Taiwan under its control, and has missiles aimed at the island. The military threat is partly offset by the United States' cooperation with Taipei, and by the military capacity of Taiwan itself - one of the world's big arms purchasers.
Chinese anti-foreigner sentiment has emerged from time to time in response to events outside China. Subsequent to the US bombing of the Chinese Embassy in Belgrade, Yugoslavia in 1999 Chinese citizens directed scorn and verbal harassment not only at Americans but also toward all foreigners and particularly westerners in many cities. While there were no reported incidents of physical abuse of foreigners, the atmosphere proved unsettling for many visitors.
While there are no terrorist groups per-se in China, bomb attacks and arsons have become a relatively frequent occurrence. These attacks can be attributed to a number of factors including criminal activities, commercial disputes, vandalism as well as labor and political motives.
