Amidst the rumbling waves of China’s economic challenges, President Xi Jinping is seemingly turning a blind eye to pressing issues. While the world watches in suspense, China’s leader appears to be engrossed elsewhere, letting serious economic matters slide.
Economic Woes Fall on Deaf Ears
From property sector unrest to rising local debt and floundering consumer spending, there’s an evident cacophony of economic problems. Many have anticipated and even suggested a flood of capital to stabilize spending, halt deflation, and fortify a feeble currency.
However, Jinping’s ears seem tuned to a different frequency, mainly focused on internal and global security matters. Despite the cacophony, he remains stoic against large-scale fiscal stimuli, fearing added governmental debt and potential financial system instability.
China’s meticulous orchestration of interventions to bolster economic growth, especially in the pivotal property sector, might sound like a step in the right direction.
Cities like Guangzhou and Beijing are redefining first-time homebuyers, while the central government toys with interest rates and down payment ratios.
Additionally, the People’s Bank of China has recently adjusted foreign currency holdings, a move to support the declining renminbi. All these actions, yet the country’s economic scorecard for July disappointingly missed the mark.
As a result, economists are adjusting growth forecasts, shaving off optimistic projections, and echoing the call for robust stimuli. There’s a pressing cry to support the housing sector, especially as distress among developers begins to seep into other financial sectors.
And yet, the central government’s stance remains, prioritizing risk control over boosting the housing market. It’s evident that China’s vision is shifting from infrastructure and property development to consumer services and high-tech manufacturing.
A Glaring Oversight: The Private Sector
One stark oversight in China’s economic reform strategy is the seeming neglect of the private sector. The “common prosperity” campaign rolled out in 2021 intended to bridge social inequalities, but its ripples have been mostly adverse.
Reestablishing the party’s control over China’s billionaire echelons was a core agenda. The aftermath? Plummeting confidence, decimated company share values, and a looming cloud of regulatory uncertainty.
Private entrepreneurs, the backbone of wealth creation, GDP growth, and urban employment in China, now tread with caution. This hesitation is in stark contrast to the unabated growth and influence they enjoyed in previous decades.
Now, with the weight of regulatory unpredictability, their entrepreneurial spirits are dampened, awaiting a sign that the government will once again allow them to flourish.
While other global leaders might falter under the weight of such a convoluted economic quagmire, Jinping remains unshaken. His grip on power remains unyielding, reinforced by a team chosen not for their economic prowess but for their unwavering loyalty.
Jinping’s current team is mostly a cohort of longstanding allies and rising talents that echo his ideologies. The sheer loyalty of this assembly means that even with significant dissent on the horizon, no one dares to question his leadership.
Moreover, during China’s unprecedented growth, the state amplified its security machinery, ready to clamp down on dissent if needed.
Jinping might not favor using this machinery, but its mere presence speaks volumes about his readiness to maintain power, even if it means sidelining the country’s more pressing issues.
Bottomline is China is at an economic crossroads, and its president’s focus could very well determine its trajectory. The choices made today will reverberate through generations, and one can only hope for a leadership that truly understands the stakes.
