Xi Jinping’s hunger for power is hurting China’s economy

system becomes ever more closed, set-piece public events offer one of the few remaining windows into decision-making. The most important such annual gathering, of the, is under way in Beijing. The top leaders and thousands of delegates will attend for a week. So far the signals are not reassuring. They suggest that China lacks a robust plan to deal with its economic slump and that some of its targets are fanciful. Power is being concentrated even further in the hands of President Xi Jinping.

To reinvigorate its economy China needs to harness the private sector. Private investments are half of the national total but fell by 0.4% in 2023, largely because of the property slump. But given its unstable regulation and official paranoia, the government has no good way to repair confidence among gloomy entrepreneurs. Multinational investment is at a 30-year low. Investors are so disillusioned that the valuation discount on Chinese shares compared with American ones has reached 54%.

Amid this malaise the political choreography suggests Mr Xi is ever less willing to share power even with his hand-picked subordinates. In his speech Mr Li mentioned his boss more often than previous premiers did. And breaking a convention dating back to the 1980s, Mr Li will not be allowed to conduct a press conference at the congress. That had been the only opportunity for ordinary people to hear such a senior politician respond to questions. Now even this small nod to transparency has gone.

Although the meeting is a domestic affair, it can affect China’s relations with America. With the race for the White House so uncertain, China’s rulers are trying not to stir up controversy. Mr Li’s speech mentioned the “peaceful development” of relations with Taiwan and downplayed exports as an engine of growth, presumably to avoid provoking protectionists abroad.

Yet there were plentiful clues that China’s regime sees itself in a long-term cold war. Defence spending will rise by 7% this year, above most forecasts for nominalCentral-government spending on science is soaring. As the meeting began China signed a new defence agreement with the Maldives, raising tensions in the Indian Ocean.

Source: Financial Digest (financialdigest.net)

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