15-29 January 2023

Fortnightly newsletter tracking high-level policy signals sent by China’s top leaders, powered by Bilby.ai, the AI startup that best understands China. More about Five Things.

Commentary

Despite the last two week’s including China’s new year celebrations, the signals coming out of China show some significant high-level changes in approach, tone and policies. The next few weeks, up to the holding of the annual National People’s Congress meeting in March, look set to be an important period.

One of these signals is the concession that recent times have been hard: “The past year was extraordinary and difficult” (“过去的一年很不平凡也很不容易”), Xi Jinping was reported as saying during an article about his Spring Festival “virtual tour” of China (original in Chinese here; machine translation here). This is consistent with the messages from last November’s Party Congress, however, it is an unusual take for  Spring Festival, where traditionally Xi has travelled to a location in person.

The Spring Festival article itemized various issues that must be on China’s leaders’ minds as Xi made calls to a hospital in Harbin, a social welfare institute in Fuzhou, an oil and gas storage and transportation center at the Tarim oil field in Xinjiang, Zhengzhou East Railway Station, Beijing’s Xinfadi Agricultural Products Wholesale Market and a village in Sichuan rebuilt after the Wenchuan earthquake of 2008.

Given most coverage was China’s handling of Covid-19, but also featured were energy supplies, travel arrangements, food provision and countryside life – all matters of concern to many people.

The fortnight’s articles contained no indication that China’s abrupt Covid-19 U-turn, and the public discontent that probably contributed to it, however, had done anything to weaken Xi’s hold on power.

Rather to the contrary was the clear signal given with the report (original in Chinese here; machine translation here) that the Jiangsu Provincial People’s Congress had unanimously elected Xi Jinping as one of its representatives for March’s NPC meeting. The machinery maintaining Xi in his position at the apex of power in China clearly remains intact. (The voting for Xi as delegate alone was enough to make a minor provincial report something that the whole nation republished).

Nonetheless, clearly we seeing is a shift in outlook at China’s highest levels of government – most obviously in the replacement of its zero-Covid policy with renewing economic growth at the top of the agenda, but also within this a discussion of what measures should be taken to return China to strong economic growth, including whether such a return might in fact be possible.

Accompanying this a change of tone. In the months running up to November’s National Party Congress, messages from the center had an air confidence: the times might be difficult, but China’s leaders were sure that they possessed the tools necessary to ensure the country’s continued advance.

Now, accompanying the calls to study and implement the spirit of last November’s Party congress, are suggestions that people should take on more responsibility themselves, be they businesses emerging from last year’s clampdown or individuals taking care of their health (the latter seen in the numerous articles along the lines of “How to protect your health when visiting relatives and friends in rural areas?”; Chinese here, machine translation here).

The switch has also been signalled in various other ways – announcements about a relaxation of the clampdown on technology platform companies and financial support for the property sector, and a talking up of private consumption. And in the short term, China’s economy will rebound in 2023 following the removal of the restraints placed on business by its Covid-19 policies.

Yet it is far clear how big that rebound is likely to be, and beyond that whether the measures being put in place will be sufficient to push growth up the levels China’s leaders desire. Here what counts are the changed circumstances China finds itself in. Its high rate of economic growth rate from the 1990s to the 2010s was principally driven by a benign external environment: companies intent on globalizing, financial systems prepared to fund them, Western governments and populations willing to tolerate the disruptions involved in return for the stream of goods delivered, etc.

As has been often remarked, no country benefited more from this state of affairs than China. Now, however, those circumstances have changed. Economic liberalization and the globalisation associated with it are no longer the dominant ideas driving economic and business policy in Western countries, largely because their populations decided that they weren’t the primary beneficiaries of such policies.

At the same time, China has become a far more complex society than it was two decades ago. Its institutions have also evolved over that period, but they did so within a CPC framework. Does this framework have the capacity to handle the far more variegated interests found in China today?

So far, it would seem the answer is yes for “CPC-type policies” (that is, ones where leaders have a clear view of what they want done), but often not as much when more nimble solutions requiring fast, independent action are needed. While the system effectively handled mobilization to implement its Covid population management measures in 2020 and 2021, it failed when it came to the lockdowns of 2022. Party techniques can be powerful, but run the risk of being something of a hammer always searching for the right size nail. Regulatory fixes that cross different interest groups and stakeholders are proving harder to find. So we see a nation that excels at getting millions of people out checking temperatures and isolating possible cases, but finds it harder to source or create enough vaccines.

China’s leaders rationalize the country’s slowing growth rate by talking of a switch from “quantitative” growth to “quality” growth. Yet they also talk of maintaining growth at around 5% a year in order to meet their target of doubling GDP between last year and 2035.

With China’s leaders unclear how this circle can be squared, recent weeks have seen a number of leading economists offer their thoughts on possible ways forward. Most prominent was a lecture given by Huang Yiping, a professor of economics at Peking University’s National School of Development to the National People’s Congress Standing Committee at the end of December in which he criticized the clampdown on digital platform `businesses (original in Chinese here; machine translation here). But he is far from alone, with other economists publicly discussing the need to increase domestic demand, boost private consumption, reinvigorate the property market, etc (some of the most interesting views on offer are very usefully itemized by Pekinology’s Zichen Wang here).

For now, the government’s messaging continues to be situated in the CPC’s traditional mould. As an article in Seeking Truth magazine about an “important” speech (original in Chinese here; machine translation here) noted:

It is necessary to closely link with the historic achievements and historical changes that have been made in the cause of the party and the country since the 18th National Congress of the Communist Party of China, link with the extremely unusual and extraordinary journey we have gone through in these years, link with us in deepening reform and opening up, and promoting high-level development.

This year’s NPC meeting, and the weeks leading up to it, look set to be an interesting period for those wondering about the direction China’s leaders want to take their country.

Top-ranked articles for 15-29 January 2023

% = percentage of publications carrying the article

1. Fulfill duties in a more energetic spirit and play a greater role in serving the overall situation with cohesion以更加奋发有为的精神状态履职尽责  在凝心聚力服务大局上发挥更大作Xinhua News Agency, 16 January 2023Chinese / Machine translation / 52%

2. Best wishes for the New Year to people of all ethnic groups across the country向全国各族人民致以新春的美好祝福  祝各族人民幸福安康 祝愿伟大祖国繁荣昌盛Xinhua News Agency, 16 January 2023Chinese / Machine translation / 52%

3. Xi Jinping elected unanimously习近平全票当选Xinhua News Agency, 19 January 2023Chinese / Machine translation/48%

4. Speech at 2023 Spring Festival Gathering在二〇二三年春节团拜会上的讲话Xinhua News Agency, 20 January 2023Chinese / Machine translation /48%

5. “Seeking Truth” magazine publishes important article by General Secretary Xi Jinping《求是》杂志发表习近平总书记重要文章Xinhua News Agency, 15 January 2023Chinese / Machine translation /46%

6. Xi Jinping delivers video message to Seventh Summit of Community of Latin American and Caribbean States习近平向拉美和加勒比国家共同体第七届峰会作视频致辞Xinhua News Agency, 24 January 2023Chinese / Machine translation /31%

7. Astronauts of Shenzhou 15 wish the motherland peace and prosperity神舟十五号航天员祝祖国国泰民安Xinhua News Agency, 21 January 2023Chinese / Machine translation /18%

8. Impressions of “China Year” around the world“中国年”的世界印象 Xinhua News Agency, 25 January 2023Chinese / Machine translation /15%

9. How to protect your health when visiting relatives and friends in rural areas?农村走亲访友如何做好健康防护？ Xinhua News Agency, 24 January 2023Chinese / Machine translation /15%

10. Chinese citizens’ overseas travel boosts confidence in global recovery中国公民境外游提振全球复苏信心Xinhua News Agency, 27 January 2023Chinese / Machine translation /15%

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