Contributed by: Kiefer Cheng and Shiran Shen, Editors of the Global China Review

China will have to wait for its new leadership team to determine the long-term solutions to the challenges it faces.

Concerns over China’s leadership transition were reassured after pictures of Xi Jinping surfaced from the National Science Popularisation Day in Beijing. For two weeks in September, the Chinese Vice-President disappeared from the public spotlight and cancelled important state meetings with Hilary Clinton and Singaporean Prime Minister Lee Hsien Loong. Online bloggers and media sources had varying hypotheses on his public disappearance—from back pain to an internal political struggle.

Xi is largely considered to be the next Chinese president. More recently, the senior leader’s public record was challenged after his extended family’s wealth was revealed by Reuters. Corruption within the central government is a sensitive topic within China, but the news is unlikely to change the senior leader’s prospects as the next president. Of more importance is what kind of reforms he will bring about, which remains unclear.

Among the top issues that the new leader will face are:

Dispute over the Diaoyu/Senkaku Islands

On August 24th, 2012 Japanese Prime Minister Yoshihiko Noda declared that “there is no doubt [that the Senkaku Islands] are an integral part of Japan” and denied controversy over the island’s sovereignty. The Chinese Foreign Ministry immediately issued an official response, expressing “strong dissatisfaction” with the Japanese actions. The Chinese government was further exasperated when the Japanese government announced it would purchase the islands from their private Japanese owners for around $30 million. China sent two ships to the area and vowed to draw up an action plan to defend the islands. Anti-Japan protests have flared up across China, many of which were demonstrations of Japanese-manufactured cars being destroyed on the streets. In addition to the deteriorating Sino-Japanese relationship, the general Chinese public and elites see the U.S. as provocatively siding with Japan. Though the U.S. publicly maintains a neutral stance, the U.S. is bound by the 1960 Treaty of Mutual Cooperation and Security to be involved militarily should any of its allies be in a threat. More of the history of the Diaoyu/Senkaku Islands dispute can be read here.

China’s weakening economy

The National Bureau of Statistics announced an 8.9 percent rise in domestic production during the month of August, the lowest level since May 2009. In addition, trade numbers indicate that imports fell by 2.6 percent and exports grew less than what analysts had predicted at 2.7 percent. This shows that China is not immune to the perturbations in the world economy, as well as the slow growth in and lack of demand from developed countries. In order to move to a more domestically consumption-driven economy, new policies are necessary to address its population’s income disparity and to develop a stronger national competitive advantage.

There is no striking evidence that indicates political instability or economic downturn in the short term. China is waiting for a new leadership team. Xi’s leadership and the composition of the Politburo Committee will change how China perceives international relations and economic development.

This monthly editorial is brought to you by The Global China Review, a semi-annual publication created by the GCC community. For more information, please e-mail Kiefer Cheng (Editor-in-chief) kiefer.c@gmail.com. Please note that all independant contributed opinions do not necessarily reflect the viewpoints of the whole GCC organization.