By now, readers who closely follow China news should be getting used to the negative economic headlines in recent months, but this week brought a few more.
The world’s second largest economy grew 4.6% between July and September, below the pace of the second quarter, at a pace that is unlikely to help the country reach the 5% growth target set at the beginning of 2024.
We have already discussed the reasons for this phenomenon and the repercussions for global financial health a few times in this space. In the factual news it was also noted that the Chinese launched in September a robust package of tax incentives that may have an effect, but whose results will not be felt in the short term.
So I want to focus on a narrative that has been common, as the news accumulates — that leader Xi Jinping does not know how to manage the economy as well as his predecessors.
The perception is not exclusive to Western analysts, as even in China the leader of the Communist Party was the target of comments in this regard. There may be some truth to this, but my perception is not that Xi is a bad economic manager: he just doesn’t care about it to the same extent as other issues.
On more than one occasion, Xi has already made allusions to this effect. During the pandemic, when he refused to reopen the country and was committed to a zero Covid strategy, he said he was willing to sacrifice economic growth to preserve “people’s lives and physical health.”
He recommended to unemployed urban youths to “swallow the bitterness” and open up to more modest roles in the countryside. He frequently criticizes excesses of wealth, even creating regulations that punish ostentation on social media. Xi also said that he is more interested in “common prosperity” than “letting a few get rich first” — two contrasting slogans that mark a structural change in the Communist Party.
No, Xi Jinping is not in a hurry to overtake the United States nor does he insist on China being an economic superpower. He is interested in making China a strong country — and historically, money has not always been fundamental to this objective.
If we look to the past, the Song Dynasty can serve as an example. Imperial China almost always enjoyed riches, but few dynasties enjoyed as much money as the Song who ruled between the years 960 and 1279 AD — during this interval, the kingdom prospered both scientifically and culturally.
But the Songs were never strong. On the contrary, its structural dysfunctions, such as the difficulty of applying a cohesive political culture and repressing corruption, made the government a constant prey for northern dynasties such as the Liao and Jin. In general, its territory was much smaller than that of predecessors such as the Han and Tang dynasties.
Whether or not this is the Chinese leader’s historical example, the fact is that Xi Jinping is revered within the Communist Party not for growing GDP, but for having spared the party from similar failures that would invariably lead to its extinction in the long term. For this achievement, he will continue to be respected: even if he sacrifices the gains of a middle class that has become accustomed to getting rich.
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