Chinese leader Xi Jinping’s top-down attempt to revive the nation’s struggling economy hasn’t taken into account the destruction caused by his zero-COVID policy, Radio Free Asia reported.
In response to the rolling lockdowns, travel restrictions, mass testing, and quarantining of his zero-COVID policy, which ended in December, the ruling Chinese Communist Party general secretary calls for measures to “expand domestic demand,” according to an article published in full on Thursday in the ideological journal of his party.
Citing Beijing’s effective responses to the Asian financial crisis of 1998 and the global financial crisis of 2008–following which the government funded massive infrastructure projects, including hydropower, motorways, and high-speed rail links to boost domestic demand–Xi wrote that “insufficient aggregate demand is a prominent contradiction currently facing the economy.”
But, it seems like Xi is more interested in consumer behaviour, referring to it as “the basic factor driving economic growth.”
According to Radio Free Asia, the article, penned by Xi Jinping, suggested loosening consumer credit to encourage consumer spending, saying that it was necessary to increase the income of urban and rural residents “through multiple channels, especially the consumption capacity of low- and middle-income residents who have a high propensity to consume but who have been greatly affected by the pandemic.”
He claimed that to boost private investment, establish “modern infrastructure” in metropolitan areas, and remove obstacles that prohibit private investors from funding infrastructure projects, the government would still need to implement its own initiatives.
But, Xi also urged for tighter oversight of local government debt, saying that mergers and such oversight may “defuse danger” in that area.
In an article based on quotes from his speech at the Central Economic Work Conference on December 15, 2022, Xi emphasised the need for people to “exercise their domestic [economic] power and stand firm.”
Professor of finance at Taiwan’s Yunlin University of Science and Technology, Cheng Ping Cheng, claimed that zero-COVID had scared away international investors as well as discouraged individuals from going out and making purchases.
Focusing on the domestic economy
Xi’s insistence on depending solely on the domestic economy and abandoning the export-led institutions of the previous four decades made the situation even worse.
By establishing Communist Party branches in those businesses, they meddled with the ownership structures of [private tech titans] Alibaba and Tencent, according to Cheng.
He claimed that some time ago, while Guizhou province was under lockdown, a number of officials were moved in to take control of private businesses, greatly harming those businesses.
Private businesses hold the key to domestic demand, but the Chinese government continues to place a premium on state-owned businesses, according to Cheng.
Since Deng Xiaoping’s economic reforms opened up in China in the 1980s, Cheng claimed that the Shanghai lockdown in the spring of last year has alarmed international investors more than anything else.
They discovered that the Chinese government may take such action for the sake of maintaining internal stability, he said.
The Chinese Communist Party has come under fire most for emphasising the development of the state sector at the expense of the private sector, according to Cheng. An enormous shift to the left has occurred.
Jinping’s ambitions for military
Cheng said that if Xi maintained his current level of military ambition, mainly if he chose to follow out his threat to invade democratic Taiwan, it would be considerably harder to stimulate the economy, a report in Radio Free Asia read.
He said that some foreign businesses have relocated to Vietnam or India because of the increased likelihood of armed war in the Taiwan Strait and the South China Sea.
If [Beijing’s] military expansionist objectives aren’t curbed, Cheng said, “The international backlash will intensify, making it even more difficult to achieve economic reforms in China.”
He claimed that the country’s current economic strategy looks to be solely Xi’s doing, with more fiscally responsible authorities like vice president Wang Qishan and premier Li Keqiang now being excluded from the decision-making process, Radio Free Asia reported. (ANI)
