Money Week

Xi Jinping’s inflexible empire

From lockdowns to Ukraine, Beijing’s priorities are exposing its shortcomin­gs. Jasper Spires reports

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China’s zero-Covid policy “has become a dead end from which the Communist Party has no quick exit”, says The Economist. “It is one of a trio of problems faced by China this year, alongside a misfiring economy and the war in Ukraine.” Despite a reputation for swift action,

Xi Jinping’s authoritar­ian government is struggling to address all three issues – and with good reason. “You may think they are unconnecte­d, but China’s response to each has a common root: swagger and hubris in public, an obsession with control in private, and dubious results.” The problem is made worse by the need for everything to “follow the script” in the run-up to the party congress in the second half of the year, at which Xi is expected to extend his time in office for another five years. “China’s actions reflect an authoritar­ian system… that struggles to calibrate policy or admit when it is wrong.”

Back to bartering

China has been here before, says Li Yuan in The New York Times. In 1958, Mao Zedong ordered the disastrous “Four Pests Campaign”, in which efforts to eliminate grain-eating sparrows led to famine after the insect population exploded due to a shortage of predators. “The fear in China now is that the zero-Covid policy has become another Mao-style political campaign that is based on the will of one person… and that it could end up hurting everyone.” With drones roaming the streets of Shanghai to keep people indoors and businesses shut, “the approach has put hundreds of millions of lives on pause, sent tens of thousands to makeshift quarantine camps and deprived many non-Covid patients of medical treatments”. The harm includes food scarcity in China’s richest city. “Even the moneyed class is facing food-supply shortages… Some set alarms for the different restocking times of grocery delivery apps that start as early as 6am… Neighbours resorted to a barter system to exchange, say, a cabbage for a bottle of soy sauce. Coca-Cola is hard currency.”

Lockdowns and slowdowns

Meanwhile, the economy is beginning to stagnate. Premier Li Keqiang “issued a third warning about economic growth risks in less than a week”, says Bloomberg. He suggested that “pro-growth measures should be brought forward and accelerate­d, including tax and fee cuts” and that local government­s should “tailor targeted supportive measures according to local conditions”, but the situation is unlikely to change. As virus outbreaks spread, factory activity falls. Home, car and even excavator sales (a leading indicator for constructi­on rates) have all markedly dropped. “The poor outlook and strict adherence to a no-tolerance strategy has prompted some economists to cut their economic growth forecasts for the year to well below the government’s target of around 5.5%.”

Surrounded by sycophants

Finally, there is foreign policy. China has sided with Russia over the latter’s invasion of Ukraine – a decision that has “further hurt relations with America and Europe”, says The Economist. This stance reflects the parallels between Russia’s aims in Ukraine and China’s designs on Taiwan, says Hiroyuki Akita in Nikkei Asia. But it’s impossible to know what lessons Beijing is learning. “Chinese leaders may now realise how hard it would be to forcibly occupy Taiwan after seeing the dismal performanc­e of the Russian military in Ukraine”, as well as the economic damage it is suffering. “If such sanctions push the Chinese economy into a downturn, the Communist government would lose public support.”

This might make an invasion of Taiwan less likely – but only if policymake­rs have an accurate view of the situation. “Everything is based on the assumption that Xi receives accurate informatio­n and reliable analyses from his military and other sources. If, like Russian president Vladimir Putin, Xi is surrounded by sycophants who feed him only ‘good news’, the world could face a very dangerous China.”

 ?? ?? The president’s not for turning
The president’s not for turning

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