Nearly a half-century after the late leader Deng Xiaoping launched China’s ascent as a manufacturing powerhouse, the party is doubling down on leader Xi Jinping’s blueprint for technology- and national security-focused development. Economists say it’s unclear if that will fix the chronic problems dragging on the economy, including a weak job market, massive local government debts and a prolonged slump in the property industry.
While those problems are mostly domestic headaches, the health of the world’s second-largest economy has an impact way beyond its borders, affecting business activity, financial markets and job opportunities across the globe.
On Monday, the government reported that the economy grew at a 4.7% annual pace in the last quarter, down from 5.3% in January-March. In quarterly terms, it slowed to 0.7% from 1.5%.
China’s people are keeping a tight rein on spending, wary over job losses, the minimal social safety net, costs for education and other risks. Economists say that without fundamental reforms that allow workers to retain more of the nation’s wealth, consumer demand is likely to remain subdued.
Apart from leaving many in China feeling much worse off, the crisis cost millions their livelihoods, causing layoffs in many other industries as demand dwindled for cement, construction, appliances and home furnishings.
The party has made improving the business environment, trying to counter a downturn in foreign investment following the shocks of severe anti-virus policies during the pandemic. But it continues expanding its hold on companies and financial institutions. Raids by authorities on offices of foreign companies, arrests of foreign business people and have left foreign businesses wary about the risks of running afoul of ever-tightening national security regulations.
Others are urging the government to pay subsidies to families, especially those with children. But such stimulus payments or other handouts are unlikely: in his calls to build “common prosperity,” Xi has condemned what he called “the trap of ‘welfarism’ that encourages laziness.” ELAINE KURTENBACH, BANGKOK, MDT/AP
