Three decades of energetic economic growth have made China mighty. But the changes have made the country more difficult to govern, at least as a communist police state (which is what China actually is, despite a huge PR campaign trying to conceal the rough side of this). For example, the more affluent, better educated segment of the population, that goes along with the larger, more dynamic economy, are harder to intimidate into blind obedience. Alarmed at corruption, pollution and inept civil servants, these new middle class Chinese are smart enough to protest without ending up in a prison camp. These citizens know how to use lawyers (even though the legal system is dominated by Communist Party officials), the Internet and the mass media (even though most of it is, in theory, controlled by the government) to pressure the government. The way the younger generation (those who began using the Internet in the last decade) has adopted an independent attitude is very worrisome. These young people are very smart, ambitious and resourceful. The government fears this, and is really uncertain how to deal with them. Putting lots of them in prison could cripple, or hobble, the economy. But letting these kids run free, could smash the police state that has ruled China for over 60 years. This is doubly scary, as this generation will come of age (to take more senior government and business jobs) at the same time, in 20-30 years, that China's population control efforts of the last three decades, will begin to reach a crises (too many retirees and too few workers).
Relations between China and Cambodia are continuing to go downhill. Cambodia has been more aggressive against ethnic Chinese groups (and their armed militias) who have long lived on the Cambodian side of the border. This is the Wild West for both nations, long a generally lawless (or just poorly policed) area. For several decades after World War II, this region was the source of most of the world's heroin supply (that business has relocated, because of military pressure, to Afghanistan). Now, the border area is being used by Uighurs trying to escape the Chinese police (and prison, or worse, because the cops are looking for real, or potential, enemies-of-the-state among Uighurs.) Burma is willing to tighten border security, and send back Chinese exiles. But the Burmese generals want more Chinese economic and military support. Burma is also a police state (but not a communist one) that has ruined its economy. So economic help is important. China is interested in making deals.
Major Chinese military headquarters have been ordered to adapt to modern communications technology. Currently, there is still a lot of paper (lots of it handwritten) being pushed within the Chinese bureaucracy. The new regulations are an attempt to change that, sooner rather than later.
Last year, Taiwan opened up to Chinese tourists. Next year, Chinese can attend Taiwanese universities. Taiwan still bars Chinese graduates of Taiwanese universities from taking jobs in Taiwan, and greatly restricts Chinese investment in Taiwan. The Taiwanese universities were eager to take Chinese students, although the government wasn't. But in the last decade, Taiwanese universities have expanded, as the Taiwanese birthrate plummeted. The Taiwanese universities face ruin if they don't get more students, and Chinese speaking students from the mainland are perfect. The Taiwanese universities provide a U.S. style education, but largely in Chinese. While English is still seen as a necessity for success, not all students are that good at learning very different Western languages.
All this appears to be part of a Chinese strategy of gradually absorbing Taiwan. To that end, China has long been receptive to investment by Taiwanese firms. This has led to hundreds of billions of dollars of Taiwanese money being invested in China. So many Taiwanese live, full or part time, to oversee these investments, that over five percent of the Taiwanese population is in China at any time. Taiwan is less welcoming, fearing that China will simply buy control of Taiwanese media, and slowly change the message (to a very pro-Chinese one) and buy control of large (and key) Taiwanese companies. The basis for this is the enormous economic growth in China. Last year, China passed Germany to become the third largest economy on the planet (after the U.S. and Japan). Currently, the U.S. has a GDP of $13.8 trillion, Japan $4.4 trillion, China, $3.5 trillion and Taiwan $700 billion. The per-capita share of that GDP varies greatly, since the U.S. has 302 million population, China 1,300 million, Japan 127 million and Taiwan 23 million. Thus the average Japanese generates more than ten times the GDP as the average Chinese, and the average Taiwanese, more than six times. But Chinese companies hold on to a lot of cash, and the Chinese government can mobilize huge amounts of cash. So Taiwan has more to fear from a Chinese hostile buyout, than from a military invasion. A military operation would be bad for business, while a buyout would not.
December 4, 2009: In the last two days, eight more people have been sentenced to death, for crimes committed during the ethnic violence in western China last July. Nine people, all local Turkic Uighurs, have been executed for similar crimes. Hundreds have been sent to prison. Over 200 people, including some police, were killed during the unrest. While police killed some, most were victims of Uighur or ethnic (Han) Chinese rioters.