The governments decades old diplomatic campaign against Taiwan, whose independence is protected by American armed forces, has escalated into dangerous territory. Diplomatic pressure, and economic threats, have forced every country on the planet, except the United States, to stop selling weapons to Taiwan. Now, the popular enthusiasm for this approach, cultivated by decades of nationalist propaganda inside China, is putting pressure on the government to make some real threats to the U.S., to halt American arms sales to Taiwan. If the U.S. continues refusing (usually) to be intimidated, this escalation of threats could lead to war.
The government believes that the best way to subdue Tibet, and defend it, is via economic growth. To that end, much money and effort is being put into building roads, railroads, and electrical power plants. More jobs, and prosperity, deprives Tibetan nationalists of much needed recruits. But that prosperity also attracts more Han Chinese immigrants, which dilutes the ethnic Tibetan majority, and angers ethnic Tibetans. The expanded road network also makes it easier for security, and military, forces to be moved around. China already has a better road network on their side of the border, than India does. This is a major military advantage, which the Indians only recently noted, and reacted to.
China's economic invasion of Africa in the last decade has been running into more resistance. The Chinese custom of importing Chinese to do the work, including manual labor, for construction projects, has caused increasing anti-Chinese feelings in African countries. There, high unemployment, and cultural differences, are leading to more clashes between Chinese and the locals. Chinese firms are being forced to hire more locals. The Chinese don't like this, because the Chinese work harder and more efficiently, and the locals don't like being ordered to try and keep up. This Chinese invasion is spreading to the Middle East, South America and sensitive (to India) nations like Nepal.
Grassroots unrest inside China was up last year, although the government is trying to keep details quiet. But with over a third of the adult population on the Internet (the largest Internet population on the planet), and most adults having cell phones, news of the most outrageous incidents gets out. Most of the unrest has to do with government corruption. The most odious incidents involve government officials stealing homes and farmland for real estate developers. Increasingly, the resistance involves force.
Google and China are in a showdown over government demands for Google to participate in censoring Google search in China, and recently discovered Chinese government hacking efforts against Google's U.S. based computers. China denies it, but Google has upped the ante by halting the self-censorship, and threatening to leave China. So far, the Chinese government has failed to call Google's bluff, and push Google out of the country. Most Chinese Internet users believe China needs Google more than Google needs China. Google's Chinese search operations have a third of search traffic, and that share is growing.
China has succeeded in building an economy that can compete by meeting (when it has to) world class standards. An example of that is a recent agreement to allow Japanese food inspectors to monitor Chinese manufacturers of food products headed for Japan. The Japanese are very fastidious about food quality, and were very upset with food contamination scandals, over the last few years, in China. While China can meet world standards now, most Chinese economic growth comes from serving a growing Chinese market. And there, most of the customers are not accustomed to world standards, and firms often engage in a race to the bottom. Poor government supervision of product safety then results in people dying. When foreign customers start dying, or just getting ill, that hurts export sales. But the Chinese market is what drives Chinese economic growth now. The export market is gravy, and a way to learn how to build better products and steal technology.
The Chinese auto market is now the largest in the world. These factories build a lot of cars (10.3 million last year) that wouldn't sell in the West (too simple and plain), but most of the production is for trucks (13.6 million last year). This has enabled the domestic economy to thrive. Even though most Chinese are still poor, and live in the interior (where road building is booming, along with much needed industry), but incomes are rising along with economic activity. All those rugged Chinese trucks have made it possible for the army to motorize, finally.
All this economic activity has increased Chinese dependence on the sea. This is unique in Chinese history, for in the past, China was self-sufficient and ignored naval matters. No more. The admirals are pointing out that, without control of long sea routes to Africa, Australia and South America, the Chinese economy would choke. Forget about exports, it's the raw materials China needs, and only a stronger fleet can guarantee access. To emphasize that point, last year China became the largest exporter on the planet (passing Germany), with nearly ten percent of global exports. The U.S. is the number three exporter.
Another necessary import, that is causing friction with the neighbors, is brides. Decades of the "one child" (for urban couples especially) policy, and the preference for baby boys, has created a girl deficit. In the next decade, over 20 million more Chinese men, than women, will be looking for mates. Already, legal brokers, and less legal gangsters, are supplying the shortage by attracting (or kidnapping) young women from neighboring countries. This is not popular with the neighbors, and causing increasing tension.
January 12, 2010: The government announced a successful anti-missile test using the locally made HQ-9 anti-aircraft missile system. This was probably a SCUD type (short range) ballistic missile interception, as the HQ-9 is similar to early model U.S. Patriot missiles (which were, two decades ago, tweaked to hit incoming SCUDS.)