“If you are a realistic person, optimism is not very appropriate. Most people are quite realistic,” says Jan Aha, a 24-year-old accounting graduate. work. “Everybody’s just trying to get over it.”
The Chinese government expects the economy to grow 5% this year, only half the growth recorded in 2008, when Xi Jinping took office as vice president, but economists are imminent. It warns that the target is unlikely to be met because of the property market crash and the local government debt crisis. .
Growth is expected to slow further over the next decade, making it difficult for China’s gross domestic product (GDP) to overtake the United States or reach its goal of doubling by 2035.
Even if Xi isn’t in power at the time, he’ll be 81 by then, and could theoretically run for life. — It remains unlikely that Mr. Xi will deliver on his immediate promise to achieve “common prosperity,” his catchphrase of curbing inequality by sharing China’s new wealth equally across society. It will be difficult.
The economic slowdown is already fraying the weak tacit understanding of ordinary Chinese people that has allowed the Communist Party to stay in power through decades of economic opening. “Accept the rule of the Communist Party without protest, and we will bring a better future to you and your people.”
Lin Cheng, an assistant professor at the Johns Hopkins School of Advanced International Studies, said the CCP’s legitimacy still rests heavily on ordinary Chinese people feeling that their lives are improving, which Mr. said he knew.
“So far no one can challenge him politically. But economic performance has always been at the core of a regime’s legitimacy, which affects how well he can govern the country.” said Chen.
Now, Xi has replaced promises of material wealth with demands for political allegiance, telling young people to “eat the bitter” by sucking it up for the good of the nation.
The good thing about being an authoritarian leader is that few people will disagree. A decade of intense campaigning to instill discipline and expel corrupt and dishonest officials means there are no obvious challengers to Mr. Xi, or even clear naysayers within the regime. .
But the bad news is that Kim is staying with Mr. Xi.
“The economy is in a tough spot right now,” said Randall Phillips, a former CIA Beijing bureau chief who now runs HFBB Associates, a China-focused strategy consultancy. He estimated the situation to be the worst in 35 years.
“This is politically an Achilles heel for Xi,” Phillips said. Because Mr. Xi is ultimately responsible for China’s economic woes and will come up with a solution.
Mr. Xi has amassed so much personal power and amassed so many loyal lieutenants in the top ranks of the Communist Party that he bears more personal responsibility than his predecessors when things go wrong. Premier Li Qiang is technically in charge of the economy, but was appointed to the post because he is close to Xi Jinping.
Unless Xi manages China out of this situation and avoids the stagnation faced by many emerging nations due to shortages of cheap labor, his credibility as a strong but effective guardian of China’s rise will be compromised. may be damaged.
Xi’s grip on power is unlikely to be shaken even if China’s economic miracle ends sooner than expected, but officials close to Chinese politics say the loss of confidence in China’s future is snowballing. He points out that the formula could develop into a quiet resistance movement.
The disappointment of Chinese youth as a whole is already weighing on the economy.
Huge numbers have stopped working. Youth unemployment hit a record high of 21.3% in June, before the government stopped releasing monthly data over a review of survey methods. Some economists believe the real number could be closer to 50%.
No shouting in the streets, but this passive protest movement has its own slogan.
Recent graduates talk about living by “lying down” without working as much as possible. They become “full-time children” living at home with their parents. Responding to Xi’s call to work hard for the nation’s good is a recipe for “getting involved,” meaning that a lot of effort ends up yielding nothing.
As one sign of how gloomy many young people feel about the future, China’s birth rate plummeted It has reached a record low and the population is declining.
But Mr. Xi does not have the tools the party has used before to deal with the current economic downturn. Once upon a time, when a recession was imminent, the answer was a massive stimulus through debt-powered real estate and infrastructure construction.
This approach saved the Chinese economy from the 2008 global financial crisis. The event also gave Communist Party leaders new confidence that the United States and its market liberalism had collapsed and that the Chinese government’s model of state-led development was working.
Mr. Xi took things further by regularly expressing his belief that “the East is rising while the West is declining” and accusing the United States of being the greatest source of “turmoil” in the global economy. .
But a policy that seemed successful in 2008 is now plaguing China again. Analysts say the funding shortfalls facing local governments and property developers are a direct result of overinvestment. A return to the old approach may relieve immediate pressure, but only risks a debt spiral and an even bigger crisis later.
Moreover, foreign companies are no longer so bullish on China. Foreign direct investment plunged to a record low last quarter, reflecting economic headwinds and deep concerns about the Xi administration’s politically motivated policies.
Executives said they felt the recent moves by Chinese officials were unwelcome.
Police raid international consulting firm as national security law expands. Unpredictable chaos due to coronavirus lockdowns long after the rest of the world lifted lockdowns. A sudden regulatory crackdown on growing areas like mobile payments and tutoring wiped it out. trillion dollars Affects the market value of technology companies.
“Xi Jinping did not create all of our current economic problems,” said Zhongyuan Zoe Liu, a China studies researcher at the Council on Foreign Relations. “But the timing of all these crises suddenly appearing simultaneously across so many different issues, it’s just politics and geopolitics that explain it.”
Xi has made it clear that Communist Party control and national security should be given as much priority, if not more, than economic growth.
now he seems to be looking for something economical Responses to avoid additional financial risk. The People’s Bank of China (PBOC) has admitted that the recovery is in a “twisting” state, but so far policy responses have been sluggish.
This is especially true for real estate. Real estate accounts for about a quarter of economic growth and two-thirds of household savings.
“The problem is that they know they’re dangerous and they can’t keep pushing prices higher,” said Cheng of Johns Hopkins. “Now that the bubble is starting to burst, the more we persuade the public to buy a home, the more they realize how serious the situation is.”
Liberal Chinese economists have recommended that China consider direct cash transfers to boost spending and confidence. But analysts say the idea of committing to a shift to consumption runs counter to Xi’s idealized vision of a state-led economy built around advanced manufacturing.
Chinese Premier Li has focused on introducing new support measures for businesses. But many leading private entrepreneurs remain cautious.
“The question is how many bricks can be pulled out of the structure before it becomes unstable,” Phillips said.
Pei-Lin Wu, Taipei, Taiwan and Theodora Yu, Hong Kong contributed to this report.