Advancing economic reforms and deepening his power base will be the top two priorities for Chinese President Xi Jinping in the new year, say analysts.
On both fronts, Mr Xi looks set to face increased difficulties despite having purged many political opponents since taking power in November 2012.
First, with the Chinese economic slowdown continuing into this year, pushing much-needed economic reforms, already an uphill task, will pose an even bigger challenge as calls for stimulus measures to prop up short-term growth grow louder, say observers.
"Xi has to strike a balance...enduring short-term pain in exchange for long-term gains for the economy," Dr Wang Xiaolu, deputy director of the National Economic Research Institute in Beijing, told The Straits Times.
China's economy last year is expected to dip to 7.3 per cent, which is the slowest rate of expansion since 1990 and lower than the official 7.5 per cent target.
For this year, think-tanks and banks are forecasting growth in the 6 per cent to 7 per cent range, citing as key factors the shaky global economic recovery and China's wobbly real estate sector.
Mr Xi has openly welcomed slower growth as a "new normal" - within an acceptable range - and a conducive period to restructure the economy from one reliant on exports and investments to one driven by domestic demand and innovation.
To that end, China has been implementing a 60-point reform agenda unveiled at a policy summit in late 2013 that entails making the economy more market-oriented by cutting the state's involvement and boosting domestic consumption by enhancing the social safety net.
But observers say a slowing economy brings with it job cuts and loss of income, which could potentially erode public support for the Chinese Communist Party (CCP).
"I don't know how Xi would think or act but I'm hoping that he will prioritise economic reforms ahead of short-term growth targets," said Dr Wang.
"We can't stop the economy from slowing and we can ensure strong mid- to long-term growth if we focus on reforms. But if too much focus is put on short-term growth, we might have to pay a high price in the future."
To keep the focus on reforms, Mr Xi will have to convince officials, especially those at the provincial levels, to take a longer-term perspective and provide them with the resources to tide over short-term difficulties in a slowing economy, said Beijing-based analyst David Kelly.
"Xi will also need some of his measures like free trade zones and free trade agreements with other countries to take off and create jobs and new markets. It is a big question if he can get all the cards right," said Mr Kelly of the China Policy research consultancy.
Thankfully for now, fears of a hard landing in the world's No. 2 economy may be unfounded, say analysts. They cite how China added 13 million jobs last year, exceeding its official 10 million target, despite the economy slowing from 7.7 per cent in 2013, and how the services and retail sectors are still witnessing strong growth.
Said Peking University analyst Wang Yong, director of its Centre for International Political Economy: "The Chinese economy may suffer from risks caused by a bursting of a real estate bubble or a run on banks. But generally speaking, it still has a big potential to grow at a relatively rapid rate, and the government has adequate resources to prevent the partial crisis from spreading."
Mr Xi's other top priority this year is to make early preparations for the semi-leadership transition in 2017, as five of the seven Politburo Standing Committee (PSC) members are supposed to retire at the 19th Party Congress then, due to their age.
"Obviously, Xi wants to install the men he trusts to the key leadership posts," said Singapore-based analyst Huang Jing.
He believes Mr Xi is not happy with the political rivalry between his predecessors Jiang Zemin and Hu Jintao, which resulted in an effectively one-term leadership after the 18th Party Congress in 2012. Only Mr Xi, now 61, and Premier Li Keqiang, 59, are eligible to stay on after 2017 based on the tacit retirement age of 68.
"The goals of someone who serves only five years are different from those who have 10 years. Xi will want to prevent a repeat of 2012 and ensure people who replace the five in 2017 are his men," said Prof Huang of the Lee Kuan Yew School of Public Policy.
Mr Xi will have to start early as competition for the top spots is expected to be fierce. With five PSC seats up for grabs, it means the current 25 Politburo members have a one-in-five chance while several hundred Central Committee members stand a chance to enter the Politburo.
With only two plenary sessions of the CCP's Central Committee left before 2017, Prof Huang believes this year will see major personnel changes "so that Xi will have a solid foundation in 2016 to choose the people he likes in 2017". Thus, analysts expect Mr Xi to maintain his high-octane anti-graft campaign which has netted many "tigers" or senior officials as it helps to advance his reform agenda by dismantling vested interest groups and to tighten his grip on power.
He might also have to handle potentially tricky court trials of big tigers like retired security czar Zhou Yongkang and retired general Xu Caihou this year.
Observers are split on how successfully Mr Xi could tackle his priorities this year, with his current power base getting a mixed appraisal. Said analyst Hu Xingdou: "I believe 2015 will be Xi's year. Thanks to his anti-corruption campaign, he will have more room to do things according to his vision."
But others think Mr Xi could face stiffer resistance from officials - his anti-graft and austerity campaigns have reportedly made life harder for them - as well as higher expectations from the public after two years in charge.
"Xi has the upper hand by eliminating rivals through the anti-corruption drive, but it is still not a convincing winning position," said Mr Kelly. "He has not created institutions that are self-sustaining. Everything now depends on him and the question is whether he can find the right people to maintain the pressure."
This article was first published on Jan 02, 2015.
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