First, in its content, Mr. Xi portrays China under his watch as a guardian of the international order, a liberal example of globalization and free trade, and an opponent of self-defeating nationalist protectionism. It was called. And second, in its subtext, with Donald Trump’s inauguration just days away and Davos preparing for an “America First” upheaval to take control of world politics, Xi may act as an adult in the venue.
This week reminds us of what has changed and what has stayed the same. Trump’s landslide victory in the Iowa caucuses underscored how large his shadow will loom over the United States and the world in the coming months. At Davos, a major delegation from China upset the US delegation. In a plenary address on Tuesday, Chinese Premier Li Qiang touted his government’s commitment to international civility and prosperity, stressing the need to keep global supply chains “stable and smooth.”
But now China’s position on the world stage is markedly different. Mr. Xi’s ruthless crushing of political freedoms in Hong Kong has drawn attention to the increasingly authoritarian nature of his government. Thanks in part to Trump, it has become more common for Western politicians to bemoan the whole project of globalization, and in particular the way the Chinese government has manipulated the rules of the road to their advantage. .
And China itself is weaker than it seemed in 2017.. In his New Year’s address, Mr. Xi acknowledged the “headwinds” facing China’s economy. China’s economy is in the midst of a structural slowdown created by weak exports, weak demand, rising unemployment, and unstable investor confidence that will never recover after the pandemic.
“Some businesses were in a difficult situation. Some people had difficulty finding work or meeting their basic needs,” Xi said, adding that he hoped to “strengthen the momentum” to revitalize China’s economy. “We will strengthen it,” he promised.
That’s easier said than done. Li told the Davos audience that China’s GDP growth rate was about 5.2%, matching the 5% target set by the Chinese government last year, but much slower than the pace of growth before the pandemic. . China is expected to set a similar target next year.
The Financial Times explained that, “Although steady compared with developed countries, China’s targets last year were the lowest in decades.” “This would have been easy to achieve after tough lockdowns hit the economy in 2022, but growth faltered in the middle of the year, forcing the government to step up fiscal support, analysts said. ”
The dramatic outflow of foreign investment represents a startling change in China’s image. “Chinese companies are investing more overseas than foreign companies are investing in China, and foreign companies now seem completely reluctant to invest in China,” said David Rubin of Chatham House. “Foreign companies withdrew $12 billion of capital from the country in the three months to September, the first time this has happened in a generation.”
Mr. Lee used the opportunity at Davos to promote overseas business., eschewing more potentially divisive rhetoric and stances on wars in Ukraine and the Middle East. But Chinese consumers are tightening their purse strings, China’s young people are facing record unemployment, and Mr. Mr. Xi is having a difficult time because of the situation.
China is grappling with a series of interlocking challenges. “An extended real estate recession hurts consumer confidence and investment, increased scrutiny of foreign companies’ activities in China, and regulatory crackdown on successful private industries like high tech and education,” by Jason Douglas of The Wall Street Journal. He outlined: “Fear of deflation and rising interest rates in the United States are also playing a role in sucking capital out of China.”
In Davos, China’s rise has often been the toast of the town, celebrated by respected politicians and financiers, but Beijing has largely looked like the sick man of the global economy. International Monetary Fund President Kristalina Georgieva called on China to implement major reforms in an interview with reporters there.
“Ultimately, what China needs is structural reforms to continue opening up its economy and rebalancing its growth model more towards domestic consumption, which in turn creates more confidence in its people. [they] Spend more instead of saving,” Georgieva said.
Analysts are watching closely to see what steps Mr. Xi will take to revamp fiscal and monetary policy. “I think this is an important year for the Chinese economy in the sense that deflation could enter a vicious cycle,” Robin Xin, chief China economist at Morgan Stanley, told the FT.
Meanwhile, Mr. Xi must heal his wounds on other fronts as well. That includes the aftermath of Taiwan’s presidential election, which was won by China’s least-wanted candidate, and a more openly defiant stance against the Chinese government and hostile to Mr. Xi’s rhetoric as he ultimately seizes state power. This includes the Democratic Progressive Party being in power for a third consecutive term. unification with the mainland.
Communist Party organs redistributed an old speech that President Xi gave in 2022 after the Taiwan vote, in which the Chinese president said that the Chinese government would “nurturing patriotic and pro-unification forces in Taiwan, He said more efforts were needed to “strengthen the economy.”
This is typical jargon aimed at winning over ordinary Taiwanese voters, ideally by promising stronger economic ties with China. As read by Bloomberg News, President Xi pointed out how a healthy Chinese private sector can contribute to its cross-strait neighbor Taiwan. Given China’s predicament under Xi, such a vision remains illusory.