After conducting on-the-ground research in China in the spring of 2024, a China expert discovered that the Chinese people are expressing widespread concerns about the country and its future.
Scott Kennedy, Director of the China Business and Political Economy Project at the U.S. think tank Center for Strategic and International Studies (CSIS), wrote in Foreign Policy, “People repeatedly ask the same question: Why hasn’t the CCP leadership taken more measures to boost the economy and restore confidence? In fact, when people mention the leadership, they are essentially referring to party leader Xi Jinping alone.”
The Chinese economy has not shown significant improvement so far in 2024 and continues to heavily rely on exports. During and after the COVID-19 pandemic, the Chinese economy has been underperforming, with even the rebounds falling short of official expectations in terms of both magnitude and duration. The actual situation may be even worse, with analysts predicting that China’s actual economic growth rate will not exceed 1% to 2%.
Regarding why the CCP has not taken stronger measures to rescue the economy, Kennedy outlined four common perspectives held by people, summarized as the “Four Nots” of the CCP’s political style.
These include: the leader does not know the true economic situation, does not understand how to govern the economy, does not care about the economy’s well-being due to ideology, and does not agree to rescue the economy out of paranoia.
Kennedy explained that the first perspective is that the leader does not know the true economic situation because subordinates only provide him with sanitized positive reports.
Some speculate that Xi Jinping might be unaware of the challenging economic situation because lower-level officials hesitate to deliver bad news, fearing repercussions from him.
Currently, the Chinese populace is worried about the economy being in distress, the collapse of the real estate industry, the chaotic end of the COVID-zero policy, crackdowns on private tech companies, heightened focus on ideology, unrealistic pursuit of technological self-reliance, and escalating tensions with the West.
These concerns are manifesting economically as weak consumer demand, suppressed business investment, and Chinese people looking to relocate wealth and families overseas.
Kennedy mentioned that sources reported that grassroots officials in the Zhongnanhai (central headquarters of the CCP) only submit positive reports to external researchers. Another source stated that the officials controlling the documents sent to Xi Jinping are aligned with security and propaganda agencies, thereby reflecting their biases in his reading materials.
However, most people strongly oppose this view, believing that Xi Jinping and other leaders do not lack information channels in this regard.
The second perspective is that “he (the leader) does not know how to govern the economy.” While the leader receives information, he faces a lengthy list of unsolvable problems. Issues such as the real estate crisis, ballooning local government debt, plummeting birth rates, worsening inequality, unrest in Hong Kong, and escalating tensions with the West and most of China’s neighboring countries have left him struggling to find viable solutions.
According to several of Kennedy’s acquaintances, leadership debated extensively on how to address certain issues in some instances, delaying decisions and the rollout of new policies. For example, leadership regarded the sluggish stock market as a problem in the summer of 2023 but did not introduce new measures until early 2024 after the head of the CCP’s securities regulatory agency was replaced.
Furthermore, the current CCP leadership is comprised of the “B-Team,” with many officials lacking experience working in the central government of the CCP. Policy-making authority has become highly centralized within the CCP, making coordination between bureaucratic institutions and between Beijing and local authorities more challenging.
Some sources suggest that high-level CCP officials lack capacity and make comparisons between the current Premier Li Keqiang and his predecessor Li Keqiang.
The third perspective is ideologically driven: “he (Xi) does not care.” The leader’s primary task is to strengthen the CCP’s power monopoly and his own personal political dominance. His daily agenda primarily revolves around managing security and political issues (including personnel decisions) rather than economic leadership.
Supporters of this view contend that Xi Jinping seems to sacrifice the economy for nationalism and the CCP’s dominance.
In mid-May, the CCP announced an additional 300 billion yuan in secured housing loans to support state-owned enterprises in acquiring existing housing stock, touting it as the most aggressive stimulus policy. However, public opinion widely believes that this relief policy came too late and was inadequate in magnitude.
An economic analyst educated in the West commented on the latest stimulus policy on social media, stating, “It would be so much better to directly give the money spent on housing reserves to ordinary people instead of involving the government, as it is practically ineffective and counterproductive. … The policy details are full of jargon, making the government appear busy over the weekend, but people can see through that it’s just busy work.”
Many economists argue that the fundamental nature of the Chinese economy requires market relief, taking more measures to help real estate developers restructure debt and complete unfinished projects, while boosting confidence among homebuyers through direct subsidies.
However, the CCP leader has been reluctant to implement such measures. The Wall Street Journal cited insiders back in 2023, attributing this reluctance in part to the leader’s preference for a tightening ideological stance.
The fourth perspective is driven by paranoia: “he does not agree.” Those holding this view believe that the CCP prioritizes developing domestic technology and gaining as much control over the global supply chain as possible.
Meanwhile, the CCP leader has proposed the development of “New Three” industries, including electric vehicles and solar panels in the field of new energy.
However, the issue of overcapacity in these Chinese industrial sectors has become glaring. With weak domestic demand and low prices, the only remaining outlet for expanded capacity is the overseas market.
This overcapacity issue has coincided with the collapse of China’s massive real estate industry, as the real estate downturn has suppressed demand for steel and other building materials. However, the New Three industries cannot sustain 25% of GDP—the previous contribution level of the real estate sector to the Chinese economy.
The CCP leader does not acknowledge that China’s low-cost high-tech products saturate global markets, arguing that there is no such thing as overcapacity in China.
Kennedy noted that most interviewees tend to lean towards the fourth perspective, with some believing that the CCP leadership has made a strategic mistake by betting on controlling future technologies and embarking on large-scale industrial policies.
Abandoning liberalization and inadequate concern for families and consumption connotes declining productivity, increasing debt, slowing growth, and heightened tensions with other developed economies.
Some netizens expressed discontent on social media. One wrote, “All kinds of market-saving policies, market-saving funds, are saving developers, saving land finances, saving urban investment companies, saving local governments. Not a single measure is aimed at saving the people, the common folk. On the contrary, they’re all thinking about how to make you take out the money from your pocket and shoulder decades of loans.”
Kennedy stated that the reasons why Xi Jinping has refrained from taking action in these four areas may eventually lead to a major economic crisis under severe conditions and result in a political reckoning.
He pointed out that if the current leader fails to recognize his mistakes and change course, other elite factions may form and replace the current team, or the public might rise up in protests and attempt to overthrow the CCP entirely.
Kennedy emphasized that his informal survey indicates that the discrepancies between various parts of Chinese society and its leaders, as well as the increasing divisions between Beijing and other regions, are intensifying.
“This suggests that the likelihood of bold new actions being taken is minimal. However, the contradictions between the leadership and opposing domestic and international viewpoints portend more tension and conflict in the future,” he concluded.