Economics

Political risk is a problem faced by government and businesses due to changes in politics that alters the result and quality of an economic process leading to failed business objectives. It also means the interference of Government in the trade affairs of foreign investors or firms doing business in a certain country. The Government may interfere with the foreigners assets by taking them away by force or even cancel their contracts in favor of Government firms. Even though the USA has specific guidelines to guard against such occurrences, China is extremely hazardous when it comes to political risks. In 1949, China was involved in nationalizing foreign firms. Also, cases of forceful ownership, inflation, cancellation of contracts and devaluation of their currency have been reported. The main political risk in China is the Battle of Supremacy between the central government with local and provincial administration over the law to be applied when dealing with foreigners and whether it is being observed or not. This has given the foreign firms difficulties of knowing the exact rules hence the saying The Mountains are high and the Emperor is far away.

Political leadership
China is divided into two types of reformist leaders. The liberal leaders who wanted to learn from the past mistakes of China and lead the country towards socialism. The conservative leaders, who wanted to eliminate those corrupting the moral society of China and bring back the moral integrity of their Republic. Apart from inflation, the governments economical policies of rapid economic growth through interference with retail energy prices have increased the market prices of raw materials, oil and coil in the world. It has also caused an increase in food products. The government is being advised to give subsidies to enable the poor citizens purchase products at low prices and also accelerate economic growth. This is necessary in avoiding the social unrest among their communist supporters which will cause financial losses to government, reduction of profits in government firms and increase of non-performing loans in banks. This will automatically lead to the withdrawal of foreign investors. 

External conflict
Chinas Political risks have either directly or indirectly affected the entire globe. Chinas Economy has been growing very first as the income inflation has been on the rise leading to an increase in prices for commodities like oil and food stuffs. This has been felt by the entire world. Also, the increase in the income of their citizens has changed their lifestyle making them abandon the grain products for meat products. This has reduced the agricultural produce in China yet many developing countries in Africa and others like South Korea depend on China for the exports of the products. The ever rising inflation has hindered foreign firms in investing in the country. The battle of supremacy between the three main points of power is affecting Chinas relationship with foreigners who wish to invest in the country.

Corruption in China
Corruption is a vice that occurs when an individual intentional interferes with the normal functioning of administration processes for personal gain. They may either be Government officials or even people in the private sector. The individuals try to keep the deals a secret making it difficult to determine the level of corruption in the country. Corruption in China scares off foreign investors because of large amounts of money they are to part with to give the corrupt officials. Corruption is wide in China at 16 with heavyweights in business and government being arrested. Government has come up with anti-corruption measures like media freedom, reduction of excessive power of CCP, advocacy of independent judiciary, and crackdown on corrupt government officials.