China has rarely enjoyed such a good year as 1997. The national humiliation of one and a half centuries ended with the return of Hong Kong on July 1st. The Chinese leader, President Jiang Zemin, his position consolidated at a Communist Party congress in early autumn, made an historic state visit to the United States, and President Clinton undertook to come to Beijing in the new year.
The coalition of world countries which annually criticised China's human rights record fell apart for the first time since Tiananmen Square. Economic growth continued at a fast pace. The year passed without any major disaster - no mean achievement in a country of 1.2 billion people to which man and nature have dealt many cruel blows this century.
But as the leaders contemplate the future over bowls of green tea this New Year - the hard stuff will be kept for the Chinese New Year in February - there are a few clouds on the horizon. The slide in currencies and stocks in south-east Asian countries which began in the summer will eat into China's competitiveness in world markets, and the financial turmoil in Japan is affecting the flow of investment which has become the fuel injection pump for its growing prosperity.
China is not yet integrated into the world economic community - membership of the World Trade Organisation is a goal for 1998. Nor is the yuan convertible on the capital account, so it escaped destructive attacks by currency speculators. Much of its inward investment is from beyond south-east Asia and not subject to Asian turmoil.
So the financial guardians of the nation are keeping their fingers crossed. So far the export boom is not affected, and Chinese officials confidently predict that growth will continue at the forecast 8 per cent. At the end of the year the leadership took a decision to reform within three years the Chinese banking system, which is overburdened with bad debts, and all the relevant government departments are now working on this directive.
Many is term as prime minister ends in the spring. Qiao, who made the National Assembly less of a rubber stamp and more of a forum for airing grievances, lost out in the leadership tussle before the Congress, failing to secure a place in the top six. With a successful Congress behind them, Zhang and Li steered China towards new pragmatic relationships with old enemies Russia and Japan, holding a flurry of summit meetings at the end of the year with promises of new levels of partnership. This suited all three nations, which for differing reasons would prefer that there should be a global focus in the Pacific region to counter the influence of the United States.
The Chinese leadership passed a big test in the way it handled the return of Hong Kong in July. Beijing promised that the territory would retain a high degree of autonomy and its capitalist ways for 50 years under the one-country two-systems policy, and Zhang Zemin and his officials proved as good as their word.
Governor Chris Patten's democratic reforms were rolled back, but the Chinese had all along said they would do this so no one was surprised. The lights did not go out when the British left, and the capitalist freedoms remained intact.
Part of the reason was the determination by China to show Taiwan that the one-country two systems deal works and would they please start talking about reunification on these terms. Taiwan remains the big potential trouble spot in the far east, especially as pro-independence parties seem to be gaining ground on the island Beijing regards as a rebel province. If anything the threat to Hong Kong freedoms came from within in the form of self-censorship. Two Hollywood films critical of China's role in Tibet for example were turned down by Hong Kong distributors in December, though cost factors were cited as the reason.
However, the PLA soldiers who came in like marionettes on the back of trucks in July disappeared into old British barracks and have hardly been seen since. A big test for Hong Kong will come next June 4th when pro-democratic forces will seek to stage their annual candle-light vigil in commemoration of those who died in Tiananmen Square.
So far pro-democracy protests in Hong Kong have not been stifled, though the police have been taking a tougher line than in the past. This issue of human rights stretched Chinese diplomacy to its limits during 1997. Beijing achieved a major success in the spring when first France, then Germany, Italy and Spain refused to back an annual EU motion criticising China's record on human rights and Tibet at the UN Commission on Human Rights.
Australia and Japan, in common with other nations doing big business with China, also took the attitude that dialogue on human rights was preferable to confrontation. Ireland joined those countries which backed a critical resolution tabled by Denmark. Beijing's response was to cancel some contracts and visits planned for the offending countries, including an unannounced visit to Ireland by Zhu Rongji, which would have been the highest-level official visit from China ever. Zhu is due to visit Europe again in March and history may repeat itself.
Beijing threw a bone to the human rights lobby in the form of Wei Jingshen, father of the country's pro-democracy movement, who was allowed to go to the United States on compassionate health grounds in November after 18 years in jail. The gain was not just Wei's but China's. In exile he is no longer a focus for world criticism and the act mollified the White House. The 1998 visit by President Clinton may prompt similar action in the case of Wang Dan, a jailed student leader.
The pro-democracy movement in China meanwhile is in tatters, with most of its active members in prison or in exile. The best hope for reform is from within. The Communist Party last year began to experiment with village democracy, which if extended could lead to elected mayors in the not-too-distant future. But for those who would like to see a western-style democratic China - don't hold your breath.