As China’s economy was meant to drive global economic growth this year, its dramatic slowdown is sounding alarm bells across the world, with economists and experts criticizing Chinese President Xi Jinping (習近平) for his unwillingness or inability to respond to the nation’s myriad mounting crises.
The Wall Street Journal reported that investors have been calling on Beijing to take bolder steps to boost output — especially by promoting consumer spending — but Xi has deep-rooted philosophical objections to Western-style consumption-driven growth, seeing it as wasteful and at odds with his goal of making China a world-leading industrial and technological powerhouse, and rather shows a penchant for austerity.
US President Joe Biden even came to the conclusion that Xi has “his hands full” coping with economic problems at home and “doesn’t have the same capacity as before” to attack Taiwan.
On the point of ideology, austerity has been at the heart of China’s revolutionary tradition of economic development. After the founding of the nation, aside from political movements, the Chinese Communist Party (CCP) has adopted an “increase production and practice thrift” economic policy.
History tells us that “increasing production” turned into the disastrous “great leap forward,” which caused tens of millions of deaths through starvation and led to total economic failure, while “thrift” became a repeated mantra.
The idea of frugality manifested itself in former Chinese leader Mao Zedong’s (毛澤東) “anti-waste” policy during 1951’s “Three-anti” campaign.
Mao also stated that “it should be made clear to all government workers that corruption and waste are very great crimes.”
However, former Chinese leader Deng Xiaoping (鄧小平) went against the grain, and opened up and reformed the economy, proclaiming that “development is the hard truth” during his southern inspection tour in 1992.
Deng’s reforms unleashed an economic boom in the 1970s that turned China into the “world’s factory” over the next 40 years.
However, after Xi came to power, he moved away from Deng’s idea of opening up and negated his notion of development. Xi thought economic growth was a given and even thought of keeping the nation under lockdown, while failing to understand that the Chinese economy can no longer develop in isolation from the world.
China can no longer look to domestic consumption for its “domestic circulation,” while stealing sensitive US technology and corporate information for its “external circulation.”
The cultural revolution led to production suspensions and losses, and yet Mao raised funds to support the “world revolution.”
Despite the many efforts of former Chinese premier Zhou Enlai (周恩來) and former Chinese president Li Xiannian (李先念), they found no way of curing China’s ailing economy until Deng took on the mantle and opened up the Chinese economy and attracted foreign investment.
This year marks the 10th anniversary of Xi’s Belt and Road Initiative, and while China has put many nations in trouble with its debt-trap diplomacy and won influence over their domestic politics, it is now feeling the pinch as well.
As anti-China sentiment started to spread in some African nations, Beijing was forced to shift its diplomatic focus away from Africa to the Middle East. Nonetheless, Xi was intent on celebrating the 10th anniversary of the Belt and Road Initiative.
As China promotes the idea of “common prosperity,” experts have suggested issuing substantial stimulus packages or cash handouts to the public to stimulate domestic consumption, but these proposals have been rejected. As there is widespread corruption in China, there is no way that officials would let something like cash handouts fall into people’s hands. Furthermore, people who did not get stimulus payments could “stir up trouble” and undermine social stability, not to mention that this “free lunch” mindset goes against Marxism.
As Xi does not understand the full scale of the dire circumstances of China’s economic downturn, he has no intention of “saving the economy.” Before Xi rose to power, he lived on his family fortune in the north as a “second-generation red,” a phrase referring to the sons and daughters of Chinese political elites who were born in the 1960s and early 1970s, and who were weaned on the politics and ideology of Mao.
In the 1980s, important reformist figure Xiang Nan (項南) transferred Xi to Fujian Province. Xi then slowly made his way up the hierarchy in Fujian and Zhejiang provinces, and then Shanghai as the Chinese economy picked up steam, especially in coastal areas. All Xi needed to do was stamp paperwork as his predecessor had finished laying the groundwork for him.
China needs foreign investment to boost its faltering economy and even though officials keep saying they are open to foreign investment, they still cover up essential data and then introduced a counterespionage initiative, which would only accelerate the pace of foreign investors leaving China.
As state-run enterprises hit a new low, could China perhaps rely on its private sector?
The CCP Central Committee and the State Council on July 19 unveiled 31 measures to promote the development of the private sector, and build a “bigger, better, and stronger” private-sector economy.
The Chinese State Taxation Administration on Aug. 1 launched another 28 measures to facilitate tax payments for small and medium-sized enterprises and self-employed individuals as part of efforts to drive the development of the private sector.
Nevertheless, at the end of last month, Beijing’s Chaoyang District, due to what it called “illegal construction,” ordered many enterprises in its industrial parks to move unconditionally to Xiong’an New Area, a designated special economic zone hailed by state media as a model for urbanization and established by Xi in 2017 as a “Millennium Project.”
The relocation is an act to save Xi’s reputation as Xiong’an New Area had ended up as a ghost town after the COVID-19 pandemic and the real-estate bubble bursting prevented people from moving there.
That said, Foxconn Technology Group’s relocation to Xiong’an New Area could be the right move so that Apple escapes retaliation by the Chinese government.
Paul Lin is a political commentator.
Translated by Rita Wang
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