According to the Xinhua News Agency, the official media of the Communist Party of China, Li Qiang presided over the first executive meeting of the new State Council (National Standing Committee) on March 14, and the new State Council began to fully perform its duties.
The meeting emphasized that the State Council is first and foremost a political organ that must maintain the authority of the Party Central Committee and its centralized and unified leadership.
Observers believe that, from the above statements, we can see that under the CCP’s one-party dictatorship, the unity of the party and the government has become a trend.
Li Qiang’s promise at the first press conference
At a press conference on Monday (March 13), Li Qiang tried to show his pro-business side, trying to restore people’s confidence in the sluggish economy, promising to treat private and state-owned enterprises equally and protect corporate property rights “in accordance with the law” and other interests of entrepreneurs.
The New York Times reported on March 14 that the CCP is under tremendous pressure to revive the economy, and nearly three years of “clearing” restrictions (including large-scale nucleic acid testing and centralized isolation) have curbed growth. Prolonged lockdowns of entire cities have locked hundreds of millions of people in their homes, disrupted factory production and left consumers and businesses with little confidence to spend.
Even after the “clear-to-zero policy” was lifted last December, many entrepreneurs remain wary of new investments. Some have even left China as the domestic operating environment for private companies has deteriorated.
Although Li Qiang, the new Premier of the Communist Party of China, made many promises to private enterprises and foreign businessmen at his first press conference, he did not provide specific measures on how to revive the economy.
Even when Li Qiang admits that it will not be easy to achieve the goal of 5% economic growth this year, he still does not forget to boast about the huge size of the Chinese market, complete industrial system, abundant human resources, solid development foundation, etc. Advantage.
The comments drew attention from Li Qiang, who, unlike his predecessor Li Keqiang, is seen as a close ally of Mr. Xi. Xi Jinping, who presides over the Communist Party’s expanding role in daily life, prefers to emphasize national security over economic growth.
Many Chinese business leaders have been concerned that Xi Jinping’s emphasis on national security has become a reason for the Communist Party to become more involved in the affairs of private companies and why private companies are under strong pressure to cooperate with the military under a policy of so-called “military-civilian integrated development.”
But Xi appears to have updated his view, emphasizing that national security is fully consistent with economic development.
The New York Times reported that Chinese Communist Party leaders introduced a number of measures to appease companies and investors during the nine-day meeting of the National People’s Congress. Xi Jinping, who has sought to strengthen the Communist Party’s control over the economy and private enterprises, told business leaders that the Communist Party views private entrepreneurs as “one of our own.”
Many Chinese cities, subways, airports and hotels are bustling again, although some signs of China’s economic recovery have emerged. But youth unemployment remains stubbornly high and the housing market remains sluggish. Chinese factories, the engine of China’s trade with the world, are facing weakening demand from the U.S. and Europe.
The construction industry, another pillar of the Chinese economy, has been sluggish due to a slow-moving collapse in the property market, further weakening demand for steel, cement and other materials.
China’s personal and business confidence plummets
Chen Zhiwu, a professor at the School of Economics and Management of the University of Hong Kong, told the Wall Street Journal in February this year that in the past (2022) year, the confidence of Chinese individuals and businesses has dropped sharply.
One challenge for the Chinese government after lifting strict zero-clearing restrictions is that Chinese people borrowed less and saved more last year, and it’s unclear how long it will take before they can spend as much as they want again.
Liu Ligang, head of Asia-Pacific economic analysis at Citi Global Wealth Investments, said the generation of Chinese recovering from the coronavirus outbreak may have similarities to the generation of Americans emerging from the Great Depression, whose savings Willingness may last for a long time.
Frozen three feet is not a day’s cold
Losing confidence in the CCP system is not formed in a day or two. As early as January 2019, Chen Tianyong, a real estate developer in Shanghai, immigrated to Malta. After arriving at his destination, he shared a 28-page long article on social media explaining why he left China.
The New York Times reported at the time that Chen Tianyong publicly said what many entrepreneurs in China said privately: the leadership of the Communist Party of China has mismanaged the Chinese economy, and the Chinese entrepreneurial class is losing confidence in the future of the country.
Chen Tianyong said that for the entrepreneurial class, leaving China is the best way to fight against Communist Party rule. Although the government has imposed strict capital controls in recent years, they will at least manage to take some assets with them when they leave.
The New York Times reported that for more than a generation, China has been driven by optimism: despite all its problems, tomorrow will still be better than today. The prevailing opinion in China today is best summed up by a popular internet buzzword from Wang Xing, founder and chief executive of online delivery and food delivery company Meituan-Dianping: 2019 could be the worst year in the past decade The worst year of the year, but the best year in the next ten years.
A broader concern among many entrepreneurs is that China will not pursue the economic and political liberalization it needs. Instead, since Xi Jinping took power in the Communist Party in 2012, the party has tightened its grip at every level of Chinese society.
Few are predicting a collapse in China’s economy, but concerns about the country’s long-term prospects are growing, and pessimism is so high that some business people are beginning to compare China’s possible future with that of another country whose economy is tightly controlled by the government. Compare: Venezuela.
Pei Minxin, a professor at California’s Claremont McKenna College who often deals with business people, said, “People in the private sector know very well that once the government no longer needs them, they will be slaughtered like pigs. This is not a respect. A government of laws. It changes as it says.”
“In the eyes of some senior officials, even people like Ma Yun and Ma Huateng are just small businessmen,” Chen Tianyong said in an interview.
The “big profit tide” of China’s wealthy started several years ago and has not stopped until now. This seems to be a slap in the face to Li Qiang’s attempt to appease private enterprises.
Nikkei reported on March 14 that after border restrictions were lifted, China’s capital outflow in the name of tourism seems to increase this year, with nearly 40 million people entering and exiting China in the first two months.
While most travelers go abroad to inspect, dine, shop and relax, it could also be an opportunity to bypass China’s strict capital controls. According to Natixis, China’s tourism spending figures are often inconsistent with those of destination countries and global data sources, and this discrepancy reflects the flow of funds by Chinese individuals abroad.
“It shows that capital left China in the name of tourism but ended up using it for other purposes,” said Gary Ng, a senior economist at Natixis.
A report by Natixis Bank estimates that figure to be around $68 billion in 2020, even with the sharp drop in international travel caused by the coronavirus pandemic. Now that tourism is rebounding, outflows are expected to rise again.
Wealthy Chinese have been looking for opportunities to flee their funds since the border reopened, the report said. Immigration law firm Henley and Partners noted that in the days following Jan. 8, inquiries from high-net-worth individuals rose 340 percent from the previous week.
Other data suggest that there are now more affluent households and there may be a need for money transfers.
Wealth managers and advisors interviewed by Nikkei Asia said they were seeing growing demand for wealth planning solutions, as well as advice on setting up family offices in places like Singapore.
As one insurance agent put it, tourists from mainland China routinely turn to Hong Kong to buy insurance products, “As a safe haven for funds, in Hong Kong, people can buy insurance products with US dollars, while in mainland China they can only buy these products with RMB .”
Today, what Wang Xing predicted seems to be becoming a reality. Although 2019 is bad, it will be the best year in the next 10 years.
At present, the CCP has just concluded the “two sessions”, and the new leadership of the CCP is facing unprecedented political and economic challenges.
Li Qiang, China’s new premier, devoted much of his speech to reporters on Monday (March 13) to allaying the concerns of entrepreneurs and foreign investors.
Li Qiang’s remarks echo Xi’s recent efforts to assuage private sector concerns about the party’s political direction, the Wall Street Journal reported. Xi Jinping has previously delivered a wide-ranging speech emphasizing the important role of private enterprises in the Chinese economy.
Still, some analysts say businesses and investors want to see the rhetoric translated into concrete action before being convinced.
Yue Su, a China economist at the Economist Intelligence Unit, said Li had not taken the opportunity to make new, strong policy initiatives.
Su Yue said the lack of institutionalized measures meant that even if Li Qiang projected an image of a pro-business premier, confidence would not be restored immediately.