Both Rishi Sunak and Keir Starmer have faith in a five-point strategy. China’s government has never knowingly undersold its products, but last week it announced a 31-point strategy.
The news that China’s GDP grew by only 0.8% in the second quarter of 2023 elicited alarm in Beijing last week, prompting a sense that China’s economy requires an immediate boost. In recent years, the Chinese Communist Party (CCP) has targeted the private sector with high-profile crackdowns, fearing that companies such as Tencent and Alibaba were gaining too much prominence. Now, it claims it wants to make the environment for enterprises “bigger, better, and stronger”
China’s economic recovery appears to have stagnated, and the CCP’s standing at home is still dependent on Xi Jinping’s government realizing the “Chinese dream” of a middle-class existence. Eight months ago, the end of Covid restrictions appeared to signify the beginning of a strong rebound in consumption; travel agencies were inundated with people booking vacations they had been denied for nearly three years. In the past few months, however, there have been more indications of concern. In June, approximately one-fifth of China’s 16- to 24-year-old population was unemployed. Numerous university graduates have been forced to work as delivery carriers due to a lack of professional employment opportunities, and social media is inundated with images of certificates of hard-earned but seemingly meaningless degrees.
Indeed, there are numerous employment opportunities for those who seek them. Due to China’s acute teacher scarcity in rural areas, rural children tend to receive an incomplete education. However, few urban graduates are interested in living in a village where flowing water is still a luxury, and China’s severe “residence permit” (hukou) system means that young people who relocate to the countryside may never be permitted to return to the city.
China will experience the contrary dilemma in a few years. China’s working-age population will decrease beginning in the 2030s due to three decades of the one-child policy. Technology will need to evolve in order to create new employment for a reduced labor force, while generating sufficient development to pay for pensions and healthcare for the increasingly aging population.
There have been prophecies for years, if not decades, that China will become the world’s largest economy. However, the current crisis may give the impression that decline is now inevitable. There are, in fact, numerous factors that could enhance China’s situation. It invests 2.5% of its gross domestic product in research and development, an expenditure that pays off in areas such as its highly innovative technology sector. It also has the second-largest single market in the world after India, which became the world’s most populous country this year, and its population has a per capita average GDP of $12,000, which is more than double that of India.
However, China sets pitfalls for itself. The word anquan has the double meaning of “safety” in Chinese, lending it a reassuring sound. “Security” has become the most important political term. However, the term encompasses a vast array of issues, including not only traditional military or national security, but also economic and cultural security. The media has been censored and journalists have been intimidated for reporting on the enormous debts of local administrations. The free flow of information is vital to the modern economy; however, in China there is a risk that economists and business owners will find it imprudent to state inconvenient truths. The dread of taking risks in the face of state retaliation will exacerbate the adage “If I do nothing, I won’t do anything wrong” (Bu zuo, bu cuo).
The political climate contributes to a feeling of unease. The mysterious disappearance of China’s foreign minister, Qin Gang, who has not been seen in public since late June, is another significant story. Other prominent figures, such as businessman Jack Ma, have also vanished in the past, only to reappear after being publicly reprimanded for their political transgressions; however, it is unclear whether Qin is out of favor or merely ill. These disappearing acts contribute to the perception that China’s political sphere is unpredictable and opaque, eroding domestic and international economic confidence. In China, few enterprises, if any, have advocated for democracy, whereas many have pleaded for greater openness. It should come as no surprise that the 31-point plan includes assurances (but not guarantees) that the rights and interests of private entrepreneurs will be respected.
There is one factor that would almost undoubtedly halt the economy: a conflict with Taiwan. Any military conflict in the region would disrupt supply chains, cause investors to evacuate, and result in massive reciprocal sanctions between China and western business partners. Economic reality does not preclude conflict. However, a Chinese professional from the middle class who wakes up in the morning desires financial security, a discounted mortgage, a secure pension, and subsidized healthcare, including affordable care for their parents. A nationalistic conflict that adversely affects their way of life would be extremely unpopular.
In some respects, China’s turn inward is representative of the global community as a whole. Brexit Britain is unique in its pursuit of new markets abroad, as the United States, China, and the European Union all embrace protectionism. Real assets of China include high urban education levels and an innovative private sector. To thrive, however, it must prioritize openness and transparency at home and a cooperative relationship with its foreign trading partners. Without these elements, a 31-, 56-, or 93-point plan is insufficient.
prosecution for threatening economic equilibrium.