Sunday marked the conclusion of the Chinese Communist Party’s congress with the historic confirmation of Xi Jinping’s third five-year term as leader.
The spotlight was also on Li Qiang, his newly appointed second-in-command.
As a loyalist to Mr. Xi, he is now on track to become Premier and has been tasked with managing the second-largest economy in the world.
Meanwhile, China delayed the release of a set of economic data from the previous week until Monday.
China’s economy faces numerous domestic and international challenges, including Beijing’s zero-Covid policies and the trade conflict with the United States.
What have we learned in the past week about the state of the nation’s economy?
Slow growth
On Monday, Hong Kong stocks declined and the Chinese yuan depreciated against the U.S. dollar due to heightened concerns that Mr. Xi will continue his ideology-driven policies at the expense of economic growth.
The benchmark Hang Seng index fell more than 6 percent as Alibaba and Tencent shares listed in Hong Kong plummeted. The Shanghai Composite index closed 2% lower in mainland China.
Meanwhile, official data revealed that China’s economy grew 3.9% from July to September of last year, exceeding expectations.
It represented a significant rebound from the 0.4% growth seen in the previous three months when Shanghai was in lockdown.
During the congress, the release of the statistics was delayed without any explanation. This prompted some China watchers to speculate that it may indicate economic weakness.
“The 20th Party Congress revealed no new economic policy directions. Uncertainty exists as to whether China’s economic strategy as a whole will yield the desired level of growth “The East Asian Institute at the National University of Singapore’s Bert Hofman told.
However, while the latest growth rates may appear impressive compared to the majority of Western nations, they are significantly below the rate of expansion China has experienced for decades and are still a long way from the March target of 5.5% for 2022.
Since then, the Politburo, the main policymaking body of the ruling Chinese Communist Party, has signaled that this goal may not be met, as major cities have been placed under complete or partial lockdown.
New deputy commander
Some analysts believe that Mr. Xi’s selections for the Politburo Standing Committee – China’s version of a cabinet – demonstrate that he values loyalty over expertise and experience.
Li Qiang was his choice for the new second-in-command of the party.
Even though he lacks experience working in the central government, he is projected to become China’s premier the following year and assumes responsibility for controlling China’s economy.
Additionally, Li Qiang is only five years away from the typical retirement age for Chinese presidents.
Nonetheless, he has been intimately involved in managing the local economy of Zhejiang province and Shanghai, and he played a crucial role in establishing a big Tesla plant in Shanghai.
“Considering this, Li Qiang would be an ideal contender for the position. As he is also a staunch supporter of President Xi, the decision-making process will likely be much more efficient than in the past, if the decisions made are the correct ones “Dan Wang, chief economist of Hang Seng Bank China stated.
Nick Marro of the Economist Intelligence Unit (EIU) remarked as follows: “During Xi’s third term, the formerly balanced relationship between the premier and president will continue to deteriorate. But the degradation of these internal checks and balances would exacerbate policy drift’s risks and consequences.”
The Premier is the second-in-command of the ruling Communist Party of China. By coordinating the operations of government ministries and the central bank, they play a crucial role in governing the economy.
Li Qiang’s predecessor, Li Keqiang, who is considered a moderate voice, has been in the role for nearly a decade and is scheduled to step down in March of next year when his current term expires.
Zero-Covid to remain
Before the congress, there was optimism that China might relax its zero-Covid policy, which has impeded economic growth.
A day before the event, a spokeswoman for the Communist Party, Sun Yeli, expressed support for the policy and stated, “We firmly think that the light is on the horizon and that endurance is the key to success.
Mr. Xi repeated these remarks in his opening address. He stated that Beijing had launched a “people’s war to stop the virus’s spread” and “safeguarded the health and safety of the people to the greatest extent possible.
Yun Sun, the senior fellow at the think tank Stimson Center in Washington, DC, believes that China will soon begin the “gradual process” of abandoning zero-Covid.
“It is common knowledge that China intends to reopen, which will boost the expansion of international trade. China is attempting to strike a balance between expansion and regulation. It is neither nor, “She stated.
Meanwhile, Hang Seng Bank’s Dan Wang opines, “There is widespread agreement that this strategy will last for the long haul.”
The Chinese government has virtually no tolerance for a fatality rate greater than zero that is directly attributable to Covid,” she said.
Not going it alone
In addition, there are rising concerns that China will move to isolate itself from the global economy.
Mr. Marro from the EIU stated that China’s “fracturing relations” with the United States are one of its greatest obstacles.
Recent US export limits represent an existential threat not only to China’s technological goals but also to a portion of China’s domestic technology industry. It will be difficult for China to overcome these obstacles, as many of them stem from… fundamental disparities about human rights and democratic ideals “he noted.
The economic management team for Xi’s next term must be highly qualified and experienced in economic management and reforms, according to Mr. Hofman.
However, Mr. Xi stated on Sunday that his nation was dedicated to remaining open to world trade.
“China cannot develop without the rest of the world, and the rest of the world needs China as well.”
“After more than four decades of unwavering efforts toward reform and opening up, we have accomplished two miracles: rapid economic growth and long-term social stability,” he added.
