
As I mentioned in a previous post, China’s diplomacy was a big success in 2014. To continue its success will not be easy for China in 2015, especially when we consider the potential challenges facing the global economy and growing security concerns. Here are four potential challenges that China must handle with great patience and skill:

The first challenge will be the tensions over the South China Sea, which still remain strong. In particular, the arbitration case between the Philippines and China will receive lots of attention from the international community. The U.S. stepped in by releasing its own opinion paper, which challenged China’s nine-dash line claim. Also, Vietnam has reportedly submitted a request to the tribunal, thus complicating the situation even further. China’s worry, then, is that Vietnam and the Philippines will join forces in challenging China’s maritime rights, with the tacit support of the U.S. and even Japan. One piece of good news, however, might be that declining oil prices would make oil exploration in the South China Sea less profitable and thus reduce the likelihood of conflict between concerned countries in the short term.

A second potential headache — one that should not be underestimated — is the danger of a global economic slowdown or even crisis. Although the current low oil prices should benefit some economies, the global economic outlook in 2015 is far from a rosy one. The Eurozone’s growth rate is expected to be around 1 percent, thus continuing the trend of its gradual recovery (or the lack thereof) since 2009. Japan’s ‘Abenomics’ reforms have so far failed to increase domestic consumption, and analysts are now talking about what a possible fourth arrow would look like. America’s recovery seems to be doing better than the EU’s and Japan’s, but there are some worries such as stagnating incomes and the potential for deflation. In the meantime, China’s growth rate in 2015 will likely be between 6.5 percent and 7 percent, a low growth by Chinese standards but a very good one for an economy that is already the second largest one in the world. Still, China’s economy nowadays is deeply interconnected with the global economy; this means overseas problems could spread to China and cause economic and even social instability.

The third thorny issue is Sino-Japanese relations, which should be under careful scrutiny this year. Despite the handshake between President Xi and Prime Minister Abe in November 2014, tensions remain high in Sino-Japanese relations. This year marks the 70th anniversary of the end of World War II, which is a very sensitive topic for both China and Japan. It is likely that China will use this occasion to emphasize the legitimacy of the post-world war international order whereas Japan will call for more reforms to the United Nations. And there is still the Diaoyu/Senkaku islands dispute, which has refused to go away since 2012. The most worrying possibility in 2015 is an accident involving Chinese planes or vessels and Japanese planes or vessels. Though such an accident is unlikely to occur, one cannot entirely rule out the possibility and observers should remain alert throughout 2015.

The last and fourth problem concerns North Korea, which will likely be a trouble-maker again in 2015. Determined to develop nuclear weapons, North Korea will not bow to outside pressure (from either China or the U.S.) to abandon its nuclear programs. North Korea now seems a bit desperate, as its relations with China have continued to decline since Xi Jinping took over in 2012. This is why North Korea is currently very interested in warming up relations with South Korea and Russia. Key issues to look at include: Will North Korea conduct another nuclear test in 2015? Under what conditions will North Korea come back to the six-party talks? Furthermore, there is always a possibility of regime failure in North Korea, in spite of the seemingly strong loyalty to the Kim family. In any case, the last thing that China wants is to see a collapsed North Korea, so we should expect China to make efforts to stabilize the North Korean situation.

Enjoying this article? Click here to subscribe for full access. Just $5 a month.

Besides these four major issues, there will always be unexpected crises for China’s diplomacy, like the rise of ISIS in 2014. As China’s global influence continues to expand, it will face increasing challenges. China’s domestic politics will also have a big impact on its diplomacy. One thing is certain at least: these are indeed interesting times for China’s diplomacy.