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Rising wages and capital costs are squeezing China's small- and medium-sized enterprises, while administrative attempts to mandate lending through quotas are distorting credit markets.
While China's behavior in its surrounding seas has become more assertive in recent years, its basic strategy of avoiding conflict in favor of negotiation and cautious management, while defending against attempts by others to undermine its position, remains the same.
A gradual democratic transition in China would promote a more peaceful Chinese national security policy by enabling greater checks and balances, stronger civil society, and improved civil-military relations.
Despite China's low consumption and high investment relative to GDP, key indicators suggest that its growth is not actually unbalanced.
China’s high level of investment is causing a rapid rise in debt and will likely lead to a slowdown in the country’s economic growth.
Recent tensions between China and Vietnam over islands and energy exploration in the South China Sea have demonstrated the need for Beijing to implement more intense diplomatic initiatives to forge a multilateral solution to the South China Sea disputes.
Global trade imbalances result from national policies that stimulate high or low saving or consumption rates, rather than from cultural predispositions to save or spend, making coordinated policy reform crucial to rectifying those imbalances.
Although regional institutions have proliferated in East Asia in recent years, their ability to provide a cohesive governance structure for the region is limited by mutual mistrust among their member states.
Recent unrest in China's Inner Mongolia province and simmering resentment of Han majority control in other western provinces suggests that China should give more local political autonomy to ethnic minority groups.
China is promoting the use of its currency for trade and investment, but this will eventually require China to open its capital account and make its exchange rate more flexible—moves that political considerations may block for years to come.