By Ian Bremmer
January 15, 2015

Cheap Oil Could Boost Xi Jinping

Oil hit $47 a barrel on Jan. 13, the lowest level in nearly six years–and no one benefits more than Chinese President Xi Jinping. It’s not just that China is now the top net importer of oil. It’s that cheaper crude is coming at just the right moment for Xi’s dangerously ambitious economic-reform process.

Xi knows that China can’t keep generating fast-track growth (and better jobs) simply by selling cheap goods abroad. To reach the next stage of its development, China must shift wealth from massive state-owned enterprises (SOEs) toward Chinese consumers, allowing them to buy more of the goods and services their country produces. Beijing must reduce the state’s role in China’s economy by streamlining some SOEs and allowing others to fail. And to contain the risk of public unrest, China must have cleaner air and water.

But real reform will provoke real pushback, because these changes threaten some of China’s most powerful people. That’s why Xi has bolstered his reform plans with an anticorruption drive meant to restore public faith in the ruling party and remove those who might block his agenda. In the process, China’s President has greatly increased his power–and the number of his enemies. Some, including former Presidents Jiang Zemin and Hu Jintao, have warned Xi not to push too hard.

Cheap oil comes at a perfect time, cushioning China’s economy at a moment when many of these reforms would otherwise weigh on growth. The country’s economy will slow, but moderately. Manufacturers will produce less, but cheaper oil will reduce costs, easing the transition from overreliance on heavy manufacturing to higher-tech, cleaner means of production.

Lower fuel costs will boost economic activity by increasing household disposable income, limiting the public anxiety that would inevitably follow a sharper-than-expected economic slowdown and a surge in unemployment. Xi can reduce subsidies and credit lines for SOEs without imposing as much pain. Lower oil prices also support investment in sectors the state would like to see grow, such as manufacturing and logistics.

Xi is also taking steps to boost consumer purchasing power without allowing lower oil prices to undermine his war on pollution. China’s government has increased consumption taxes on both gasoline and diesel to moderate a fall in the price at the pump that would otherwise encourage a surge in consumption. Beijing says it will use the extra revenue from higher taxes to fund pollution-control plans and the development of vehicles that are more fuel-efficient.

As long as it lasts, cheap oil will help Xi carry off his reform. Given China’s importance to the stability of the global economy, Xi is not the only one whose future depends on how those reforms will play out.

U.K.

‘Frankly, I choked on my porridge.’

DAVID CAMERON, British Prime Minister, on Jan. 12, describing his reaction to Fox News commentator Steve Emerson’s calling the English city of Birmingham a “no-go zone” for non-Muslims. The city has a large but minority Muslim population and lower-than-average crime rate. Emerson later apologized for his error.

POLL

HOW POLITICAL ARE YOU?

Pew Research Center asked people in 33 countries how often they engaged in political activity, such as voting or attending rallies. Here’s a sample of those who said they were very active:

[This article consists of 5 illustrations. Please see hardcopy of magazine or PDF.]

63% Egypt

60% Kenya

37% Poland

31% Argentina

12% Pakistan

Dissonant Recovery

HAITI

Musicians play during a ceremony in Port-au-Prince on the fifth anniversary of the earthquake that struck on Jan. 12, 2010, killing more than 250,000 people. As recovery efforts continue, the Haitian government’s failure to agree on terms for long-delayed parliamentary elections threatens the country’s stability. Parliament was dissolved on Jan. 13, leaving President Michel Martelly to govern by decree despite protests against his rule.

THE EXPLAINER

Boko Haram’s Bloody Comeback

The Islamist terrorist group has escalated attacks in northeastern Nigeria in recent weeks, massacring at least 150 people in the town of Baga, where up to 2,000 others are still missing. Here’s what Boko Haram’s resurgence means for Nigeria, with a presidential election looming:

Failure to act

President Goodluck Jonathan, who will seek re-election on Feb. 14, has failed to curb Boko Haram since it kidnapped more than 200 girls last April and sparked a global outcry. The girls are still missing, and the militants killed some 10,000 people in 2014. The group controls 7,700 sq. mi. (20,000 sq km) of Nigeria’s northeast, an area almost the size of New Jersey.

Close election

Opposition candidate Muhammadu Buhari, from the majority-Muslim north, is expected to force a tight race, despite three unsuccessful previous bids for President, by attempting to convince voters that as a former military chief, he would be the better choice to eliminate Boko Haram.

Trouble ahead

Boko Haram, whose leader, Abubakar Shekau, is seeking to establish an Islamic caliphate in Nigeria as ISIS aims to do in the Middle East, will likely attempt to disrupt the election, threatening the legitimacy of the result and increasing the odds of postelection unrest.

WORLD

5%

Share of the world’s largest companies that are run by women, according to a U.N. report; the study also found that women own or manage over 30% of all businesses, most of them small enterprises

Trending In

DIPLOMACY

On Jan. 26, President Barack Obama will become the first U.S. leader to be chief guest at India’s Republic Day celebration in Delhi, a sign of strengthening bilateral ties that officials from both countries hope will boost U.S. investment in India.

SPORTS

The Palestinian soccer team competed in a major international competition for the first time since it was recognized by FIFA in 1998, losing 4-0 to Japan at the Asia Cup in Newcastle, Australia. The team was also due to play Jordan and Iraq in the tournament.

ELECTIONS

Greece is poised to vote in the Jan. 25 parliamentary elections in favor of a far-left party, Syriza, whose leader, Alexis Tsipras, has promised to reverse steep austerity measures imposed on the country after the 2009 euro-zone crisis.

Contact us at editors@time.com.

This appears in the January 26, 2015 issue of TIME.

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