China’s Political and Economic Waters Look Choppy

China’s Political and Economic Waters Look Choppy

China’s Political and Economic Waters Look Choppy

As China’s leaders gather for their annual Yellow Sea retreat, its political and economic waters look choppy.

Chinese President and ruling Communist Party leader Xi Jinping is beset by economic, foreign policy and domestic political challenges just months after clearing his way to rule for as long as he wants as China’s most dominant leader since Mao Zedong.

Mounting criticism of the Xi administration’s policies has exposed the risks he faces from amassing so much power: He has made himself a target for blame.

Notably, Xi used to dominate state-run newspapers’ front pages and the state broadcaster CCTV’s news bulletins on a daily basis but has in recent weeks made fewer public appearances.

Of greatest concern to many is the trade war with the US that threatens higher tariffs on hundreds of billions of USDs of Chinese exports. Critics say they have yet to see a coherent strategy from Beijing that could guide negotiations with Washington and avoid a major blow to the economy.

Beijing instead seems to be opting for defiance and retaliatory measures only.

Both the stock market and the RMB Yuan have weakened in response and the Communist Party itself conceded at a meeting last month that external factors were weighing heavily on economic growth.

At the same time, a scandal over vaccines has reignited long-held fears over the integrity of the healthcare industry and the government’s ability to police the sprawling firms that dominate the economy.

Trust is the most important thing and a loss of public confidence in the government could be devastating.

Xi’s signature project, the trillion-dollar “Belt and Road” initiative to build investment and infrastructure links with 65 nations, is running into headwinds over the cost among the countries involved. Some Chinese have also questioned the wisdom of sending vast sums abroad at a time when millions of Chinese remain stuck in poverty.

That in part plays into concerns over Xi’s abandonment of the highly pragmatic, low-key cautious approach to foreign relations advocated by Deng Xiaoping, the architect of China’s economic reforms that laid the groundwork for today’s relative prosperity.

Leaders are expected to discuss at least some of these challenges during informal discussions at the Beidaihe resort in Hebei province as part of a tradition begun under Mao. Xi and others generally drop out of sight for 2 weeks or more during the summer session.

Xi’s brand of Chinese triumphalism “has not been popular with many in the party.”

Resentment lingers also over Xi’s moves to consolidate power, including pushing through the removal of Presidential term limits in March and establishing a cult of personality.

That resentment was given voice in a lengthy jeremiad titled “Imminent Fears, Imminent Hopes” penned by Tsinghua University law professor Xu Zhangrun, who warned that, “Yet again people throughout China … are feeling a sense of uncertainty, a mounting anxiety in relation both to the direction the country is taking as well as in regard to their personal security.”

“These anxieties have generated something of a nationwide panic,” Xu continued before listing eight areas of concern including stricter controls over ideology, repression of the intelligentsia, excessive foreign aid and “The End of Reform and the Return of Totalitarianism.”

Even more boldly, Xu called for a restoration of presidential term limits and a re-evaluation of the 1989 pro-democracy movement centered on Beijing’s Tiananmen Square. The peaceful protests were crushed by the military and remain a taboo topic to this day.

Although Xu is reportedly out of the country and has not been officially sanctioned, another long-time critic, retired professor Sun Wenguang, found himself carted off by police in the middle of a radio interview with the Voice of America in which he railed against China’s lavish spending abroad.

A sign of the Xi administration’s anxieties is a new campaign to promote patriotism among intellectuals, a recurring tactic when public debate is seen as needing a course correction.

The notice of the new campaign, issued July 31, cites “the broad masses of intellectuals” and the “patriotic spirit of struggle,” while giving little in the way of specifics.

Much of the discontent with Xi can be traced to his administration’s perceived ineffectiveness, said Zhang, the retired academic.

“If you want to be Emperor, you must have great achievements,” Zhang said. “He has not had any, so it’s hard to convince the people.”

Stay tuned…

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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