China Girds for Tough Times
Historically, China has carried out its most important reforms in times of crisis. The mandate given by the Communist Party's 20th National Congress and President Xi Jinping to his closest allies is in keeping with this pattern.
HONG KONG – Last month, the world’s attention was focused on the 20th National Congress of the Communist Party of China (CPC). Beyond the headline-grabbing developments – especially President Xi Jinping’s confirmation for a third term in power – the Congress delivered a sobering report in which Xi argued that, amid unprecedented external and internal challenges, the Party and the nation must prepare for tougher times ahead.
In his first two terms, Xi focused, first, on consolidating power and rooting out corruption. In terms of social and economic policy, his main priority was eradicating absolute poverty and building a “moderately prosperous society” (xiao kang). But over the next five years, Xi will plan a dramatic shift in Chinese policy, making improved national security, rather than economic development, the primary goal of his administration. The economy is to serve national security by achieving self-reliance in key technologies and materials – for example, semiconductors – as part of Xi’s Made in China 2025 strategy.
China’s economy is, of course, being buffeted by significant headwinds. In the third quarter of 2022, economic growth remained sluggish, at 3.9%, not least because of the zero-COVID policy, which has meant lockdowns for many cities and regions. The real-estate market is increasingly precarious, and the stock market reached record lows after the Congress. Unemployment is on the rise.
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