This week, on the cover of the British economic weekly The Economist, President Xi Jinping descends, on a red background representing the regime, the steps of a bar graph. Under the title “The decline of China”, the strong man of Beijing is singled out: “The problem of Xi Jinping’s new economic model.”
For the liberal economic newspaper, the policy of the Chinese president “damages the economy” from his country. While for twenty years China has been “the most important and reliable source of growth in the world economy” – it has contributed, during this period, “a quarter of the increase in global GDP -, today, “the Chinese economy is in danger”.
The problem of “zero Covid”
The reason is twofold, according to the British newspaper. “The immediate problem is its ‘zero Covid’ policy, which has caused a collapse” of production and runs the risk of condemning the economy to a model “On Off” on the long term. What “reinforces a bigger problem” again, that of “President Xi Jinping’s ideological struggle to rebuild state capitalism”.
If Shanghai slowly emerges from a two-month confinement, “China is far from being rid of Covid”, especially in Beijing and Tianjin. “More than 200 million people are in lockdown, and the economy is in freefall.” For the first time since the Tian’anmen Square massacre in 1989, Chinese growth may not exceed that of the United States. Which falls rather badly for a Chinese president who “intends to be reappointed” after the XXe Party Congress, which will take place by the end of 2022.
According to the weekly, Xi Jinping “bears a great deal of responsibility” in this situation by clinging to its “zero Covid” strategy which imposes “test battalions”. Le “same ideological zeal” prevails for his “new development plan” tasked with tackling inequality, monopolies and debt, so that “China dominates new technologies and is armed against Western sanctions”. But if these intentions are commendable, the plan implemented was so “punitive and erratic”.
Avalanche of fines and purges
A “a flurry of fines, new regulations and purges has stagnated the vibrant tech industry, which accounts for 8% of GDP”. As for the recovery “wild and incomplete” real estate, which represents 20% of GDP, it has “led to a funding crunch, which is why home sales fell 47% in April from a year ago.”
The economic ideology of the Chinese president “has great consequences for the world”, valued The Economist. Despite stimulus measures, “likely” repeated confinements “jeopardize a global economy that is flirting with recession”. The size of the Chinese market makes it “impossible for multinationals to ignore it”. Ultimately, its international commercial presence could be even more “Politics”. China could “become more menacing” economically, while being “less efficient”.