OOn January 1, Quishi, the official ideological newspaper of the Chinese Communist Party (CCP), published a speech by President Xi Jinping. In this document, the strongest leader in China since Mao Zedong called for an prolonged “struggle” to maintain political security, reach self -sufficiency and demonstrate the superiority of the modernization of “Chinese style” over the one that praised in the West.
“History has repeatedly proven that the security search by the fight brings real security,” said Xi, “while seeking security by weakness and the concession finally leads to insecurity.”
This looked like a rallying cry in response to recent challenges, in particular record unemployment of young people, deflationary pressures, stock market crash, housing bubble and spiral debt – not to mention the return to the White House of Donald Trump, who made the electoral promise of the world’s economic top of the hiking of the prices of the exporting nation.
However, XI’s speech was in fact pronounced during a CCC study session in February 2023.
“The last 23 months have been terrible for the Chinese economy, terrible for households,” said Jacob Gunter, main analyst in the Berlin economy, in Berlin Institute for China Studies, at a press conference in late February. The fact that this speech has just been published, adds Gunter, “said a lot that This is the path, and we must not expect a deviation.
What is another way of saying do not expect large splashes as the National Congress of the Chinese People (NPC) – This annual parliament of ruby -three -three -time trips – moving on Wednesday. By opening the one -week meeting, the Chinese Prime Minister Li Qiang published his annual work report, or budgetary health check, which repeated the growth target of 2024 “approximately 5%” for the coming year and revealed that military spending will increase by 7.2%, which is also roughly the same.
“This year’s objectives will not be easy, and we have to make difficult efforts to reach them,” said an audience of 3,000 executives piled up in the Great Caverneux Peking Hall of the People.
Of course, that nothing will change much “obviously by the fact that this NPC follows the heels of the third plenum of the CCP last July, where long -term objectives were set: strengthening the capitalism of the party of the party, countering American containment, stimulating innovation and attracting loyalty to XI. As the NPC is a state organ and therefore downstream of the CCP Apex, the drastic course corrections finally fall outside its discount.
However, IPP intransigence highlights Beijing’s ability to ignore short -term tribulations in favor of long -term objectives. Even if, adds Gunter, “continuity given the economic slowdown and the internal and external difficulties to which China case is in fact quite remarkable.”
But although political bombs are falling from the NPC, the burst of speeches and reports will suffocate what we already know: stimulating consumption and expansion of domestic demand are at the top of the Beijing political agenda, as well as stabilizing the besieged real estate market, attracting foreign investments and walking the self -sufficiency of the supply chain.
As for American prices, China today benefits from the experience of Trump’s first mandate and adopts a more bloody approach. Tuesday, Trump added an additional 10% rate on all Chinese imports in addition to the initial 10% he imposed on February 4. In response, Beijing announced 15% of prices on imports of American chicken, wheat, corn and cotton, as well as 10% on sorghum, soy, pork, beef, aquatic products, fruits, vegetables and hold products.
Find out more: American farmers fear more pain in the Trump trade war
“Beijing’s response has so far been a chickadee, but not really making it a big problem, probably with the expectation that getting into a big spat would exacerbate things,” said Chong Ja Ian, an expert in Chinese politics and professor at the National University of Singapore.
How long this composure can continue is a big question. In Trump’s speech before a joint session of the congress which started only a few minutes after Li’s work report, the American president doubled the threats he would impose reciprocal prices on each nation from April 2. “We have been scammed for decades by almost all countries on earth, and which will no longer be authorized,” he said.
As such, the longtime commitment from XI to the self-compliance is more and more premonitory. On February 17, he welcomed some of the biggest names in the Chinese technological sector for a very choreographed meeting, where he urged them to “show their talent” and contribute to the growth of China. He marked a return tour of the heavy regulatory repression of Beijing four years ago and reflects the concern of CCP leaders concerning a slowdown in growth in the midst of American efforts to hinder China’s access to transformative technology.
The meeting showed “a recognition that the economy did not manage well,” said Steve Tsang, professor at the University of London and director of his Soas China Institute, “and a large -scale gesture must be taken to show that XI is serious to put the economy on the right track”.
Indeed, the efforts to carry out self -sufficiency – devoted to work in controversial policies such as Made in China 2025 – bring dividends given the recent technological breakthroughs of the head of the head, as a radically improved yield for the AI platform of Huawei, which contributed to a buzzing of the Généative de la China, both Rally which added Ralaly from the generative platform to brands, both in the brands, which contributed to a stock rally which added Rally Trillet to brands, both in the brands, in a stock rally that punctuated 4 tickets to brands, in brands, in brands, in a stock rally that punctuated 4 trillets in brands, Brands, in brands in a rally rally that was Ras China and Hong Kong.
However, maintaining this bull market and improving China’s economic perspectives ultimately depend on the increase in domestic consumption, which continues to delay. The problem, writes economist Michael Pettis, a non -resident researcher at Carnegie China, is whether low expenditure is simply falling from consumer confidence or rooted structural problems. “While low confidence is certainly part of the causes of China’s economic discomfort, a large part, if not most, of causality can be structural,” he wrote.
Li’s work report has spoken of a good game on the attraction of foreign investment, to stimulate food security, to trigger the creativity of “future industries” and plowing $ 100 billion in new infrastructure projects. In addition, China will issue 1.3 Billion from RMB (180 billion dollars) to ultra-long-term special bonds, as well as 4.4 yuan billions ($ 600 billion) in special local government bonds to compensate for the negative effects of the drop in tax revenue and sales of depressed land.
But analysts doubt these measures directly and do not properly deal with the underlying reasons for dull consumption: public anxiety about future benefits in the midst of a torpid economy and the decline in real estate values, which is the main household wealth store.
“Although they have provided a certain increase in tax support, the degree of relaxation is more modest than it seems,” writes Julian Evans-Pritchard, head of the Chinese economy in capital economics, in an information note. “We remain skeptical about what it will be enough to prevent the growth from slowing down this year.”
As such, the annoyance of XI of the “struggle” without adequate examination of the cause of the difficulties can predict more pain to come.
