welcome to foreign policyof China.
Highlights of the week: china economy Growth amid alarming data, China’s Xi Jinping flies to South Africa but misses scheduled annual meeting address BRICS Summitand economic depression hits Chinese homeowners and workers difficult.
Concerns over the state of China’s economy have grown rapidly in recent weeks amid a barrage of bad news, without the help of central government policy. clumsy effort to hide data.Last month’s data reveals a grim picture retail sales To export. In August, Major real estate developer and big financial management company China is defaulting on its debt payments and the central bank is cutting interest rates. main interest rate.
China is unlikely to face a so-called crisis. Lehman moment, the collapse of a major corporation creates potential catastrophe for the entire system. The central government simply unforgivable Such a collapse has occurred, and bailouts are now a well-established policy tool. Moreover, the economic problems caused by the collapse are now becoming apparent. real estate sector To debt crisis of unknown range This spans municipalities, but this is nothing new. They’ve been bubbling under the surface for years.
What is new is investor confidence in China’s ability to neutralize or prevent a deep recession and the accompanying deflationary surge.Over the years, many economists have used the so-called chinese miracle Persistent growth, coupled with the sheer scale and opaque nature of the Chinese economy, misplaced confidence in China’s political leadership. That confidence has now faded.
Global investors and analysts no longer see this year’s economic slowdown as a painful stagnation caused by a weak recovery from the COVID-19 pandemic, but rather as the beginning of new possibilities. Looking. China’s lost decade. The Chinese public appears to have similar concerns, but this stems from a widespread breakdown in trust in the government caused by China’s President Xi Jinping’s growing authoritarianism (including state power). Removal of term limits 2018) and unsuccessful handling About China’s new coronavirus policy last year.
In the midst of these economic hardships, Mr. Xi almost non-existent It is probably hidden away in the Beidaihe lair of the Chinese Communist Party (CCP). To further his concerns, he flew to South Africa to attend the annual BRICS summit, which will be held in person for the first time since 2019, after which he sent a proxy. give his speech After attending lunch with the South African leadership on Tuesday. It’s possible that leadership pranks are going on behind the scenes, but it’s also possible that Mr. Xi is just sick, and China’s leaders have never admitted to it.
Concerns about the Chinese economy lots of Individual About this week’s economic crisis.Beyond foreign policyOwn coverage, some of the best takes include Adam Posen’s analysis What does that mean for US geopolitics? Lee YuanNoah Smith reading up on China’s business mood Structure description Crisis and Current Analysis by Linling Wei and Stella Yifanshi broken model of economic growth.
But one of the relatively less hidden factors in this shift in mood is the Chinese government’s recent crackdown About the healthcare industry. Following a signal from the central leadership, multiple states It has embarked on an anti-corruption campaign in this area, targeting not only hospital management, but also the relationship between doctors and private health care providers and the pharmaceutical industry. For some investors, this is like straw breaking a camel’s back. News of the repression was wiped out on August 7th alone. $27.4 billion A-list healthcare stocks are more valuable.
It was a particular shock. Among investors, there was cautious, if any, misplaced optimism that the round of regulatory crackdowns that began in 2020 might have wiped out. $1.1 trillion The value of China’s technology sector alone is over. Chinese leaders are economists argued, knew we had to focus on growth, not politics. Unfortunately, this well-intentioned notion lacked evidence from Beijing’s actions and rhetoric, as it has continued to emphasize. ideological security and party control.Health care crackdowns also hurt as health care was sold many years As a great opportunity for foreign investment.
Nonetheless, China’s healthcare sector Corrupt And change is needed. We have a health insurance system Improved, the majority of the costs are still borne by the patient. Most hospitals in China are public, but they are profit-seeking organizations within the state management system.Except for a moment when they were hailed as heroes during the pandemic, doctors unpopular and further mistrustful in China. Most doctors are not trained to global standards and even senior doctors Under $15,000 One year on average, the funds are usually supplemented by rebates.
The medical campaign reflects the current government dilemma. Reform is needed in many areas, but it needs to be done carefully and systematically. In the current political climate, coercive repression has become the norm. There may be a way out of China’s economic crisis, but it will require skills and flexibility that the Xi administration almost certainly lacks.
Is BRICS a block? Xi’s omission of a speech at the BRICS summit in Johannesburg, South Africa, this week surprised observers, especially given China’s tough stance. considerable weight about the event. It is also unclear whether the Chinese leader’s planned sideline meeting with Indian Prime Minister Narendra Modi will take place. brick countries is a strange group whose name is literally made up of Goldman Sachs jargon. China thought this idea was convenient because it implied unity among the non-Western world, but it seems that this is not the case.
Consider the relationship between other members and China. Russia is only a formal ally.china is Supported The Russian economy and what probably fed it useful technology during the Ukrainian war. South Africa has long-standing ideological ties with the Chinese Communist Party, which has supported the ruling African National Congress in its freedom struggle.india to china threat And they clash regularly along the disputed border. Brazil fluctuates depending on who is in power. It does not provide a stable base for world blocks.
Summit of Camp David. US President Joe Biden has summoned the leaders of Japan and South Korea for a meeting. important summit Between two nations that have rarely gotten along throughout history. Japan has brutally occupied South Korea for decades, and South Korea harbors a grudge against issues such as Japan’s refusal to compensate so-called comfort women and a full apology for its colonial atrocities. there isSouth Korea imposed strict ban Until the late 1990s, there were restrictions on Japanese cultural works such as movies and music, and some such bans still exist.
However, in the midst of historical change, China is now less popular South Korea has a larger population than Japan, thanks to Chinese government support for North Korea and the effects of North Korea’s air pollution. factory in china in Korea. In addition to this, the rise of a more conservative South Korean government, with the support of Washington, has brought closer ties between Tokyo and Seoul. The pact between the two countries is aimed at countering not only China but also North Korea.Beijing is reacted With predictable complaints.
The fate of Chinese homeowners. in the center of China economic crisis The real estate sector is bloated, Estimate It would make up 30% of the country’s GDP, compared to about 17% of the US GDP. The upper urban middle class, the base of Chinese Communist Party support, invests heavily in real estate because they have lived in large cities for many years where government-owned properties have existed. There is also forwarded passed from old to private hands Dunway The housing system of the 1990s. Since then, the property’s value has skyrocketed.
In many cases, these upper-middle-class property owners are people who, as they grew up, migrated to big cities in China and bought properties there with loans from large families. There was an assumption that real estate values would continue to soar, and people built their financial futures accordingly. That is why the government is reluctant to let housing prices fall.they probably stopped more More than official figures allow, local governments Prohibited real estate company Because it’s overpriced.
Even if they weren’t actively trying to sell their homes, admitting a severe drop in value could trigger an even wider crisis of confidence among these property owners. But the problem is that the price is fixed at an artificially high value, so the inventory doesn’t move and sky development.house sales 43 percent decrease The hole in local government finances, which depend on land sales to real estate companies, has become even more acute.
The fate of young workers. Homeowners may be worried, but the impact of the economic slowdown on the poor and young could be even more acute. Youth unemployment has reached 21.3 percent, but could rise further in the future. much higherthe government now stopped publishing all the data. account Young graduates tell sad stories of how many rely on factory jobs.
Yet, more than that 40 percent Some young people in China do not go on to higher education. The real estate sector has long relied on migrant workers from rural areas. Decrease in new construction I have an expensive job. These migrant workers service department Instead of getting a job in manufacturing, they are left with a paradoxical labor shortage, usually in places graduates don’t want to live. Wages appear to have fallen since the pandemic, with many immigrants complaining they can’t find work. living wage A region that once flourished.
