2023 has been a disappointing year for many Chinese citizens who grew up in prosperous times. Despite the relief of the end of COVID-19 restrictions, the Chinese economy is not experiencing a rapid recovery. Housing sales are stagnant, families are cutting back on spending, and recent graduates are struggling to find employment.
The Chinese government has set a target of 5% economic growth for this year, but economists warn that this goal may be unattainable due to a potential property market collapse and local government debt crisis. With growth expected to decline further in the next decade, it will be challenging for China’s GDP to surpass that of the United States or achieve its aim of doubling by 2035.
Even if Xi Jinping, the current leader, is no longer in power by then, it will still be difficult to fulfill his promises of “common prosperity” and reducing inequality. The economic slowdown is undermining the implicit agreement between the Communist Party and ordinary Chinese people, which states that accepting party rule will lead to a better future for individuals and the country.
The legitimacy of the Chinese Communist Party heavily relies on the perception of improving lives for its citizens. Xi Jinping recognizes this and has shifted his focus from material wealth to demanding political loyalty and encouraging young people to endure hardships for the nation’s benefit.
While being an authoritarian leader limits dissent, it also means that Xi ultimately bears the responsibility for the country’s economic predicament. He has accumulated significant personal power and surrounded himself with loyal followers, making him more accountable for shortcomings in comparison to his predecessors. If he fails to navigate China out of this economic crisis and avoid stagnation, it could jeopardize his credibility as a capable leader.
The despondency among young Chinese individuals is already having a negative impact on the economy. Many have stopped working, leading to record high youth unemployment figures. This passive protest movement has its own slogans, such as “lying flat,” which refers to doing the minimum work necessary to get by. Young graduates opt to live with their parents and prioritize their own well-being over working hard for the nation. China’s birthrate has also dropped to a historic low, contributing to a shrinking population.
Xi Jinping lacks the tools to address the current economic downturn that his party previously relied on. The massive stimulus of debt-fueled property and infrastructure construction used in the past is no longer feasible. The financial challenges faced by local governments and real estate developers are a consequence of overinvestment. Returning to this approach might relieve immediate pressure but could lead to further indebtedness and a larger crisis in the future.
Additionally, foreign companies are growing wary of China as an investment destination. Direct investment has reached a record low due to concerns about economic headwinds and politically driven policies under Xi. Recent actions by the Chinese authorities, such as police raids and regulatory crackdowns, have made foreign executives feel unwelcome and uncertain about the business environment.
Xi Jinping has emphasized the importance of Communist Party control and national security, often prioritizing them over economic growth. He is now searching for an economic response that avoids additional financial risks. However, the policy response has been limited thus far, despite acknowledging the challenging path to economic recovery.
Real estate, a significant contributor to economic growth, is posing a problem. Chinese citizens are aware of the dangers of increasing property prices, and the bursting of the housing bubble has made the situation apparent. Liberal economists suggest direct cash transfers to boost spending and confidence, but this contradicts Xi’s vision of a state-dominated economy centered around advanced manufacturing.
Chinese Premier Li has been implementing support measures for businesses, but many private entrepreneurs remain cautious. The question remains as to how many structural components can be removed before instability sets in.
Overall, 2023 has presented significant economic challenges for China, which may have long-lasting implications for Xi Jinping’s leadership and the country’s future.
Denial of responsibility! VigourTimes is an automatic aggregator of Global media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, and all materials to their authors. For any complaint, please reach us at – [email protected]. We will take necessary action within 24 hours.
