Xi hails ‘resilient’ economy in bullish New Year speech

China’s factory activity decline deepens

BEIJING: President Xi Jinping said Sunday the Chinese economy had grown “more resilient and dynamic” in 2023, despite financial figures continuing to disappoint as the post-COVID recovery stalls.

He also promised in a bullish New Year’s address to the nation that China would “surely be reunified”—a reference to the self-ruled island of Taiwan, which Beijing claims as its own and has pledged to seize. Xi has endured a challenging 2023 at the helm of the world’s second-largest economy, with his administration struggling to sustain an economic rebound since rapidly dumping its onerous zero-COVID policy a year ago.

But Xi said on state broadcaster CCTV the economy had “weathered the storm” and become “more resilient and dynamic than before”, hailing the promotion of “high-quality development” and emerging industries such as electric vehicles, lithium batteries and solar panels. He said next year “we must... consolidate and enhance the positive trend of economic recovery, and achieve long-term economic stability”.

Yet he also acknowledged some hardship, saying “some companies are facing operating pressure (and) some people are encountering difficulties in employment and living conditions”.

“All of these things concern me greatly,” he said. “Our goal is both ambitious and yet very simple. In the end, it is to help people live better lives.”

Record youth unemployment and a persistent debt crisis in the crucial property sector have hemmed in China’s growth this year. Official figures released on Sunday showed a decline in nationwide factory activity deepened in December, the third straight month of contraction.

Analysts have said Beijing may struggle to achieve its stated annual growth target of around five percent, the lowest such ambition in years.

Xi briefly mentioned Taiwan, weeks before the democratic island heads to the polls on January 13. Beijing has escalated its pressure campaign against Taiwan this year and tensions are high, with independence-leaning candidate Lai Ching-te leading opinion polls. Xi declared in his Sunday speech “the motherland will surely be reunified”. “Compatriots on both sides of the (Taiwan) Strait should be bound by a common sense of purpose to share in the glory of national rejuvenation,” he said.

Xi has said China would never rule out the use of force to bring Taiwan under its control. Taipei officials have repeatedly raised concerns about election interference and misinformation, claims dismissed by Beijing as “hype”. Xi sent new year greetings to Russian President Vladimir Putin earlier Sunday in which he hailed strengthening ties with Moscow in 2023, according to an official foreign ministry readout. The two longtime allies have drawn closer in recent years even as Western countries have turned their backs on Russia over its invasion of neighboring Ukraine.

Xi said “the material and public opinion foundation of our relationship has become stronger”, according to CCTV. “In the face of changes unseen in a century and a turbulent regional and international situation, China-Russia relations have maintained healthy and stable development and moved steadily in the right direction,” Xi said. “Under our joint leadership, political mutual trust between the two sides has further deepened, strategic coordination has drawn closer, and mutually beneficial cooperation has continued to achieve new results,” he was quoted as saying.

Meanwhile, China’s factory activity decline deepened in December, official data showed Sunday, as Beijing rounded off a year marked by its stuttering economic recovery from the pandemic. The official manufacturing purchasing managers’ index (PMI) -a key measure of factory output—stood at 49.0 in December, below the 50-point mark separating expansion from contraction, according to the National Bureau of Statistics (NBS).

The reading signalled a further slump from November’s figure of 49.4 and represented the third straight month of contraction. “In December... the level of vitality in the manufacturing sector somewhat declined,” the NBS said in an official readout. But the recovery has stumbled amid weak consumer and business confidence, an entrenched housing crisis and record youth unemployment, while a global slowdown has weighed on demand for Chinese goods. In recent months, Beijing has announced a slew of targeted measures as well as a sizeable issuance of sovereign bonds to boost infrastructure spending and rev up economic activity.

But the results so far have been mixed, with the PMI only edging into positive territory once in the past nine months. There have been some signs of life, with the world’s second-largest economy growing at a better-than-expected 4.9 percent in the third quarter. But Beijing still faces a tough task to achieve its stated annual growth target of around five percent, itself the lowest such aim in years.