Stricter control measures in 2024 intensifies economic storm in China

INTERNATIONAL DESK: China’s economy faced many challenges in 2023, such as fiscal deficits, real estate defaults, financial closures, and export decline. These affected the citizens’ welfare, causing lower property values, higher unemployment, and less spending. The situation did not improve, and more defaults were feared. However, at the Davos Forum, Chinese Premier Le Qiang claimed a 5.2% growth for China in 2023, exceeding the government’s target of 5%. This sparked doubts about its validity, and some even said that China had negative growth last year. What is China’s economic outlook for this year, and can it recover from the previous difficulties?

Cai Shenkun, a prominent Chinese media figure in the US, said on the elite Forum that Le Qiang was deceiving himself and the world. He said that the 5.2% figure was unbelievable to domestic and foreign experts and investors. He said that the Bureau of Statistics was not objective, but followed the CCP’s narrative of praising China’s economy. He said that the data was predetermined by the CCP and did not have credibility. He said that most experts agreed that China had no or negative growth last year. He questioned why Le Qiang announced such positive news, saying that he wanted to attract foreign investment, but he was fooling himself and others. He said that China’s main economic drivers – investment, exports, and domestic demand – all declined. He said that fixed asset investment fell by over 10%, and foreign investment dropped to $150 billion in 2023.

China’s exports and domestic demand should have declined in 2023 due to the high youth unemployment rate, which was estimated to be around 50% by some observers. Cai, an economist, warned that the state council’s premier was out of touch with the reality and his boasting could lead to disaster. He predicted that China’s economy would face more challenges and dangers in 2024.

Lee Jun, a TV producer, said that China’s economy had lost its three main drivers: local government debt, real estate bubble, and fixed asset investment. These were unhealthy and unsustainable, and they collapsed in 2023, pushing the economy to a critical point of no return. He also said that China’s top leaders lacked economic expertise and that the new driving forces of the economy were the statistics bureau, the propaganda department, and Xinhua news agency.

Guo Jun, the editor of Epoch Times, said that China’s economic system had inertia and could not change quickly. He said that the economic model of the CCP was based on more control and worse outcomes, and that the future of China’s economy could not be improved by reversing the inertia of the previous years.

China’s economic challenges stem from the political system and structure of the CCP, which has gone through four phases in 70 years. The first phase was post-war recovery, the second phase was socialist transformation with state-owned enterprises, the third phase was reform and opening up with private investment, and the fourth phase was state-led development with global ambitions. The CCP’s top leaders are confident and arrogant, and they ignore the economic problems that result from their planned economy, top-level design, and state dominance. They only tighten their control and launch anti-corruption campaigns in key sectors, which are ineffective without openness, justice, and public oversight.

The CCP’s anti-corruption campaign is not only a way to consolidate its power over the officials and industries of China, but also a means to exert its control over the entire Chinese society. This will have dire consequences for the economy, which is already facing a crisis after years of instability and uncertainty. Many people who considered themselves middle-class have seen their wealth evaporate as the housing market crashed, leaving them with huge debts and no income. They also fell victim to various fraudulent investment schemes that promised high returns but turned out to be scams. One of the biggest scams in Shenzhen involved a company that claimed to use a metaphysical investment model, but actually swindled 500,000 people out of hundreds of billions of yuan. As a result, many properties will be seized by banks, and the economy will face more difficulties this year. Xi Jinping’s speeches have shown his intention to crack down on the financial sector and curb any speculative or excessive profits. He has warned that the financial supervision this year will be sharp, clear, and ruthless. This has scared the financial institutions and the remaining businesses and investors, who fear that they will face more challenges and risks this year. The CCP’s intervention will create more chaos and uncertainty for the economy, which has already crossed a point of no return. The middle class will see their dreams of a better life shattered by the harsh reality.