How 2012 Changed China

Dragon lantern
Andrew Jk Tan
Dragon lantern

In ways that China's leaders were probably not expecting, the Year of the Dragon lived up to its hype. According to the Chinese zodiac, 2012 — as a dragon year — was supposed to be particularly lucky and momentous, charged with auspicious signs of change.

While the Chinese government may dispute that this year has been full of good luck, for China watchers, 2012 has certainly delivered. From the reverberating fall of Bo Xilai to the economic slowdown to the escape of blind legal activist Chen Guangcheng, this last year has been one of the most momentous in China's recent history.

(Read More: How China Has Changed Since the Last Leadership Transition)

Here, GlobalPost gives a review of the five biggest events of 2012 that changed China — and will continue to shape it into next year.

1) The Fall of Bo Xilai

Perhaps the biggest story was the operatic ouster of one of the Communist Party's strongest and charismatic figures, Bo Xilai. Over the space of several months after his police chief fled to a US consulate in February, the Chongqing Party boss — long considered a front-runner for China's top rung of power — was sacked, dismissed from his positions, and charged with a laundry list of violations of party discipline, including "improper sexual relations with a number of women."

Why does it matter? It revealed vividly that, despite the unified face it tries to show to the world, China's Communist Party is riven with factions. After a long struggle over Bo's fate, his dismissal continued to play out in behind-the-scenes negotiations over the once-a-decade power transition this fall. It was also a rare occasion when China's opaque political system was opened up to the outside world.

In 2013, the affair Bo may finally put to rest the canard (long argued by Tom Friedman, among others) that China's one-party system is enviably and uniquely united in its rule, and therefore superior to the "messiness" of democracy.

2) The South China Sea Heats Up

One of the more concerning trends of the past 12 months has been the steady rise in tensions between China and her neighbors in territorial disputes over the South China Sea. In April, China and the Philippines got into a standoff over the Scarborough Shoal — a series of rocks used by fisherman — that led to an economically devastating ban on imports of bananas from the Philippines. A few months later, Japan and China came to a head over the Senkaku/Diaoyu islands, with protesters smashing Japanese cars and Japanese-owned businesses.

At stake are resources, including large fisheries and potentially huge troves of oil and natural gas. What's more, $1.2 trillion of US trade passes through the sea lanes, along with half of all global intercontinental trade. The rest of the world clearly has an interest in keeping the sea open. But what to do?

So far, the US has avoided getting involved beyond a few statements saying it would support its allies in the event of conflict. But as the disputes show no sign of cooling — Japan's new government is promising a more aggressive stance, and China has taken to flying over Japanese airspace — the South China Sea may be one of the main hotspots for Americans to watch in 2013.

3) The flight of Chen Guangcheng

One of the more inspiring and iconic images of the year was that of blind activist Chen Guangcheng, limping in a cast and wearing dark spectacles, after his dramatic escape from house arrest in Shandong province. A self-taught lawyer, Chen had been held in extrajudicial detention for advocating on behalf of women given forced abortions. In late April, he clambered over a wall, evaded his guards, and fled hundreds of miles to the US embassy in Beijing.

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After two rounds of intense diplomatic negotiation, Chen was granted a visa to study abroad at New York University.

Apart from the stirring imagery, why does it matter? Throughout his saga, Chen's argument has always been that he merely wants the Chinese government to obey its own laws. Experts say China has made great progress in the rule of law, but enforcement on the ground is still sorely lagging. Chen's case has given a human face to this challenge: can the government succeed in making officials follow the rules?

4) The Ascent of Xi Jinping

This year, China welcomed its first new leader in a decade: the princeling Xi Jinping. While his prior record gave few clues to his priorities, Xi's first month in power has already revealed some departures from his predecessors. For starters, Xi evinces a casual, down-to-earth speaking style, and has made a point of making cadres speak off-the-cuff. In addition, his first visit in office—to the southern boomtown of Shenzhen—seems to calculated to suggest that he wants to pursue more economic reform. Finally, Xi's promised crackdown on corrupt officials has heartened ordinary Chinese tired of hearing about Party bosses' ill-gotten riches.

Still, it's too soon to say much about Xi Jinping's actual goals. So far, the biggest slogan he has introduced is "national rejuvenation" — a term that suggests that a stronger, more assertive foreign policy from China may be on the way in 2013.

5) Economic Slowdown

First, a caveat: what qualifies as "slow" in China (7.5 percent annual GDP growth) is still screamingly fast for the Western world. Nevertheless, 2012 saw a remarkable shift in sentiment about the future of China's economy. While many still believe the fundamentals for growth are strong, many more have become skeptical about how long China can rely on exports, construction, and infrastructure as drivers. Nowadays, even Chinese economists acknowledge that the days of double-digit growth were over.

This is not all bad news. Chinese officials know that the economy needs to rebalance, focusing more on innovation and domestic consumption than low-end manufacturing. And the government also knows that it is more important to address yawning income inequality than to keep delivering sky-high GDP figures.

ow smoothly that can happen remains to be seen. The Communist Party has for decades justified single-party by pointing to China's economic success. Will people be satisfied with more modest prospects? Keep your eyes on that in the year to come.