The “zero-COVID” policy along with the real estate crisis, and restrictions from the United States and other countries, are hitting the Chinese economy hard. After the 20th Party Congress, the Chinese communist regime urgently needs to show positive economic growth results, however, it faces major obstacles.
One of the most important slogans of the 20th Congress, and underlined by Xi Jinping, is to achieve “common prosperity”. The numbers are not doing China any great favors, and Chinese GDP figures revealed by the World Bank showed a drastic decline. The Chinese regime’s targets will not be fully achieved this year, and only half of what it set out to achieve in early 2022 will be.
Xi insists on his plan to fight poverty and has several of his chips on economic growth that would be achieved by the technology industry, hand in hand with semiconductors. The lithium industry is also an “ace up his sleeve,” controlling 60% of the world’s lithium processing.
China’s economic reports during the pandemic showed growth while the world was plunged into a recession with millions of jobs lost and businesses closed. Now, two and a half years later, China continues to weaken regional economies and industries with the forced lock downs of the “zero-COVID” policy.
Several analysts and international experts specializing in China wondered whether after the 20th CCP Congress, the Chinese leader would show signs of any changes or modifications to the strict “zero-COVID” policy.
Apparently, the policy is Xi’s battle flag and so far it is not known if there is a plan to end the policy, as Western countries have done to resume “normal” life.
Han Wenxiu, deputy director of the General Office of the Central Economic and Financial Affairs Commission, and a possible candidate for promotion within the Party, commented that China must consider development as the number one priority and ensure “reasonable growth” of the national economy in a persistent manner.
Controls on the economy are common currency in China, however, for Han, these are not enough. He said, “We need to implement prudent and effective macro-control and ensure that major economic indicators remain in a reasonable range over the long term.”
Han wrote in one of the official documents released by the CCP explaining the guidelines of the 20th Congress, “We must keep national economic growth within a reasonable range for a fairly long period so that the pie can grow and people’s living standards can catch up with those of developed countries.”
China’s goal is to achieve economic growth that is on par with the most developed countries by 2035, this would imply a consecutive annual increase in GDP of at least 4.7 percent between 2021 and 2035.
According to Reuters, the latest data on the Chinese economy is not very encouraging. China’s exports and imports declined in October, showing the worst month since May 2020.
International demand has not recovered as China needs, and according to economic analysts, the outlook may worsen in the coming months.
An example of this is the automotive industry, which contracted 40 percent year-on-year, following the global trend of shifting consumption from goods to services.
The soybean industry was also hurt, as were copper and coal imports, which fell after peaking in September.
Bruce Pang, chief economist at Jones Lang Lasalle, said, “Insufficient domestic demand is the main constraint to China’s near-term recovery and long-term growth trajectory.”
Will China continue the strict ‘zero-COVID’ policy?
Recently, a former Chinese state CDC official revealed that the CCP is planning to relax some measures of the “zero-COVID” policy.
The reduction of quarantine days for foreigners would be one of the measures. In addition, this former official stated that “major changes” regarding strict pandemic quarantines are on the horizon.
The information was published by Reuters, however, no CCP official has revealed anything further after the 20th Party Congress.
The importance of technological innovation for growth
The report presented by Xi at the 20th Congress stresses, above all else, the importance of technological innovation in achieving the nation’s economic development.
“Significantly increase economic strength, scientific and technological capabilities, and composite national strength; substantially increase [gross domestic product] per capita to be on par with that of a middle-tier developed nation” are the Chinese leader’s priorities.
In addition, China will seek to “join the ranks of the world’s most innovative countries, with great self-sufficiency and strength in science and technology.”
Xi claims that China is among the world’s great innovators, as the nation’s research and development spending nearly tripled in the past decade to $390 billion last year.
Xi’s mammoth claims to propel China as a global advanced technology leader clash with restrictions from the United States, and soon from Europe as well. Global concerns about the theft of technological and trade secrets in the hands of the People’s Liberation Army, whose members are deployed around the world, in prestigious universities and major research institutes, seem to undermine the “Chinese dream” of being a technological powerhouse.
Taiwan, a country advanced in nano-chip technologies and with a transparent, straightforward, Western-style trading system, is far ahead of China, as well as being a democratic system.
How will the CCP succeed in catapulting China to achieve the dream of technological hegemony and solve the economic crisis under a communist political system and centralized economy? Moreover, times have changed. Some countries are taking a critical stand against one of the cruelest communist regimes in human history, despite the communist party’s efforts to hide its long list of crimes. More and more companies are ending their business in China and with the CCP because they do not want to be complicit in its bad business practices. Therefore, there are no longer as many opportunities to cheat their way out of the maze with international help. Little by little, the CCP is approaching its own economic crossroads, with Xi in power for the next five years.