As concerns about the Chinese economy are increasing due to the real estate recession, sluggish consumption, and signs of overseas companies leaving China, President Xi Jinping has been showing ‘economic emphasis’ every day recently. In particular, Hong Kong’s South China Morning Post (SCMP) reported on the 27th that he will stay in the economic capital of Shanghai for three days starting on the 28th and visit the Shanghai Futures Exchange and information technology (IT) companies.
Until now, the Chinese president was in charge of foreign affairs, security, and national defense, leaving the economy to the prime minister. The reason why President Xi broke this tradition and took care of the economy directly is because major economic indicators such as consumption and production have recently been sluggish, and major foreign companies doing business in China are leaving due to the U.S. regulation of semiconductors in China, leading to the decoupling of the Chinese and Western economies. (decoupling) There is an assessment that this is not unrelated to the increased concerns. This reflects the will to revive the economy in order to allay domestic and international criticism of his long-term rule and suppression of opposition.
According to SCMP, this is President Xi’s first visit to Shanghai in two years since 2021. Shanghai, with a population of about 25 million, is home to major American companies such as Tesla, General Electric (GE), and Walt Disney, and is the largest foreign investment base in China. This year is also the 10th anniversary of the creation of the Shanghai Free Trade Zone (FTZ).
At the 10th group study of the Central Political Bureau of the Communist Party of China on the 27th, President Xi emphasized the ‘open economy system’ and ordered, “We must improve the foreign relations legal system to protect intellectual property rights and protect the legitimate rights and interests of foreign investment companies.” These are all things that Western companies have been ordering from the Chinese authorities for a long time. It can be interpreted as a statement made in consideration of the fact that Japan’s Mitsubishi Motors recently announced its withdrawal from the Chinese market, and major American companies such as Apple, Dell, and Hewlett-Packard (HP) have all moved their production bases outside of China to reduce their presence in China.
According to the official Xinhua News Agency, President Xi also repeatedly emphasized the importance of the ‘Changjiang Economic Belt’ at the Politburo meeting held on the same day. Starting from Shanghai, the plan is to unite 11 provinces and municipalities in the Changjiang area, including Yunnan Province, which has slow economic development, into one economic bloc. President Xi announced this idea in 2014, but it has not yet made much progress.
The renewed emphasis on establishing the Changjiang Economic Belt is interpreted as a determination to secure economic stimulus through large-scale investment in this area. In a situation where consumption is extremely depressed despite the re-opening (resumption of economic activities), the government has expressed its intention to revive the economy through large-scale investment.
Last month, President Xi also visited the People’s Bank of China for the first time since taking power in 2012. Analysis suggests that he is likely to have ordered economic stimulus measures, such as interest rate cuts, from the leadership of the People’s Bank of China.
However, some analysts say that President Xi is actually postponing policy decisions other than the economy ahead of Taiwan’s presidential election in January next year and the US presidential election in November of the same year. SCMP reported that the 3rd plenary session of the 20th Communist Party of China Central Committee, where the priorities and directions of major national policies are decided, appears to have been postponed.
The Central Committee, the highest power body of the Chinese Communist Party, is newly formed every five years. Usually, new leadership is elected at the 1st and 2nd plenary sessions, and specific policies are prepared at the 3rd, 4th, and 5th plenary sessions. The 6th and 7th plenary sessions prepare for the next party convention to select the next leadership.
The SCMP said, “The postponement of the third plenary session is a signal that more time is needed to prepare for the agenda to be discussed at the meeting,” and added, “We believe that there is no need to rush the third plenary session, where President Xi is facing several challenges at home and abroad, where important decisions will be made.” “It was done,” he analyzed. In particular, there are interpretations that China’s policies on the U.S. and Taiwan may change depending on who wins next year’s Taiwan and U.S. presidential elections, so important policy decisions are being delayed on purpose.
Mark Jones is a world traveler and journalist for News Rebeat. With a curious mind and a love of adventure, Mark brings a unique perspective to the latest global events and provides in-depth and thought-provoking coverage of the world at large.