The Chinese Communist Party’s congress ended on Sunday with the landmark affirmation of Xi Jinping’s third five-year term as leader of the party.
The focus of attention was also on Li Qiang, the man named as his new number 2.He is a Mr. Xi loyalist who is now en route to become Premier and take charge of the second-largest economy in the world.
Meanwhile, China announced a set of economic figures that had been delayed from the previous week on Monday. China’s economy is facing a number of domestic and international challenges, which include Beijing’s zero-Covid policies as well as the trade war with the United States.
How much have we discovered about the nation’s economy over the past week?
Slow transformation
On Monday, Hong Kong stock dropped and China’s currency, the yuan, fell against the United States dollar amid renewed fears that Mr. Xi will pursue ideology-driven policies at the expense of economic growth.
The Hang Seng index dropped upwards of 6% as Hong Kong-listed shares in Chinese technology behemoths Alibaba as well as Tencent plummeted.
The Composite index of Shanghai fell 2% in mainland China.
In the meantime, official data indicated that China’s economy grew 3.9% per year from July to September, exceeding expectations.
It was a significant improvement from the 0.4% growth seen in the previous 3 months, when Shanghai was shut down.
The figures’ release was delayed during the congress, without any explanation given. Some China watchers speculated that this could indicate economic weakness.
“The twentieth Party Congress did not announce any new economic policy instructions. It stays to be seen whether the general economic strategy will produce the type of growth that China seeks “According to Bert Hofman of the National University of Singapore’s East Asian Institute.
Notwithstanding, while the newest growth figures appear to be high in comparison to many of the Western economies, they are significantly below the rate of expansion seen in China for decades and remain well short of the 5.5% goal set in March.
And since, the Politburo – the Chinese Communist Party’s ruling body has indicated that the goal may be missed as a result of partial lockdowns enacted in major cities.
New Number 2
According to some observers, Mr. Xi’s selections for the Politburo Standing Committee, China’s equivalent of a presidential cabinet, demonstrate that he values loyalty over experience and expertise.
Li Qiang was his preference for the party’s new number 2.
Despite his lack of experience in central government, he is presumed to become China’s Premier next year and eventually take on the role of handling China’s economy.
Li Qiang is also only 5 years away from reaching the traditional retirement age for top Chinese leaders.
He has, nevertheless, been deeply involved in the management of the local economies of Zhejiang province as well as Shanghai, and he was instrumental in the establishment of a massive Tesla production plant in Shanghai.
“Taking this into account, Li Qiang would be an excellent candidate for the position.
He is also a great proponent of President Xi, which means the decision-making process will most likely be far more efficient than before, assuming the decisions are correct “According to Dan Wang, chief economist at Hang Seng Bank China.
According to Nick Marro of the Economist Intelligence Unit (EIU), “Under Xi’s third term, the deterioration of the previously harmonious relationship between Premier and the President will continue.
However, the deterioration of these internal checks and balances will exacerbate the consequences and risks of policy drift.”
The Premier is the leader of China’s ruling Communist Party.
They play an important role in economic management by coordinating the activities of government ministries as well as the central bank.
Li Qiang’s predecessor, Li Keqiang, a more conservative voice, has been in the role for nearly a decade and is now set to retire when his existing term is up next March.
Zero Covid
Prior to the congress, there have been hopes that China would relax its stringent zero-Covid policy, that has stifled growth economically.
Sun Yeli, a communications director for the Communist Party, expressed support for the policy a day before the event began, saying, “We strongly believe that the light is ahead and resilience is victory.”
Mr Xi echoed these sentiments in his opening statement. He claimed that Beijing had launched a “people’s war” to halt the virus’s spread and had “guarded the people’s safety and health to the maximum extent possible.”
According to Yun Sun, senior fellow at the Stimson Center research institute in Washington, DC, China will eventually start the “incremental process” of ditching zero-Covid. “It is well understood that China intends to reopen, which will stimulate trade growth. China is attempting to strike a balance between control & growth. It is not an either/or situation “She told the BBC.
In the meantime, Hang Seng Bank’s Dan Wang believes “there is a common opinion that this legislation will be in place for the long term.” “There is pretty much no tolerance for the Chinese government to see a higher-than-zero number of deaths that is primarily determined by Covid,” she said.
No Lone Endeavors
There are also growing fears that China will isolate itself from the world economy.
According to Mr Marro of the EIU, one of the most significant challenges China faces is its “deteriorating relations” with the United States. “The recent US export controls threaten not only China’s technological ambitions, but also sections of its domestic technology sector.
It will be difficult for China to overcome these obstacles, given that many of them are related to fundamental differences in human rights as well as democratic values “He continued.
“With the problems ahead, it is clear that the economic management team for Xi’s next term must be highly skilled and knowledgeable in economic management as well as reforms,” Mr Hofman said.
Mr Xi, however, stated on Sunday that his nation was dedicated to remaining open to world trade.
“China cannot grow without the international community, and the international communit needs China as well.”
“We have created two miracles, rapid economic growth as well as long-term societal cohesion after over 40 years of unwavering efforts toward reform and opening up,” he appended.
