Opinion | China seeks ways to stimulate economy: Leaders sooth the sentiments of Washington and Westerners
By Augustus K. Yeung
All the world is watching the nation's major political meeting. One burning issue dominates as the 2024 session of China's legislature gets underway this week.
The NPC annual meeting is being closely watched for any signals on what the ruling CPC might do to reenergize an economy – that is sagging under the weight of expanded government controls – and the bursting of a real-estate bubble. A local English-language newspaper remarked.
This is not to say that other issues won't come up. Proposals to raise the retirement age are expected to be a hot topic. Global Times newspaper said last week.
And China watchers will parse the annual defense budget. But the economy issue remains one on most people's minds – in a country that may be at a major turning point – after four decades of growth – that propelled China into a position of economic and geopolitical power.
For many Chinese, the failure of the post-COVID economy to rally strongly last year is shaking a long-held confidence in the future, foreign observers commented.
Westen media share one thing in common: China's efforts to build confidence in its slowing economy will top the agenda of Congress, the nation's legislature. What remains unclear is how the ruling CPC can navigate toward stronger, sustained growth.
Hopes – for a strong consumer-led recovery after severe anti-virus controls ended in late 2022 – have not been fulfilled, reported one Western media platform.
Having anticipated this mood, official Chinese media are prompt to sooth this market sentiment. "We are confident of consolidating and enhancing the recovering – and growing trend of the economy." People's Daily recently wrote in a commentary.
"We are fully capable of turning pressure into a driving force, accumulating and turning advantages into victorious trends, and steering the advance of the great ship of the economy while braving wind and waves," it added.
State media suggest Premier Li Qiang will forecast a 5% growth, on par with last year's 5.2% growth – as opposed to 2.5% of the U.S.
Many people in China are hoping that will mean more government spending said Logan Wright of the Rhodium Group, an independent research firm.
"Everyone will be watching – for whether there is significant fiscal stimulus on offer," Wright said.
"The time to solve the short-term problems and prevent them from becoming long-term problems is now. So, what is the plan?" Wright asked.
China's problems deepened with shocks from the pandemic, when anti-virus controls led some cities into weekslong shutdowns and factories ending up with huge backlogs. Now, instead of soaring prices, China is trying to fend off a potentially debilitating cycle of deflation, or chronically failing prices, some observers said.
Exports, a main driver of growth, dropped in 2023 for the first time in seven years.
Despite official indications that China's yearslong anti-monopoly and data security crackdowns on technology complain – they cannot collect on bills owed to them, and bankruptcies have soared.
Some global companies have been shifting investments to countries like India and Vietnam – to minimize risks from China-U.S. political tensions and the party's tighter domestic controls, they said.
"The lack of transparency created a lot of uncertainty," complained James Zimmerman, a lawyer and former head of the American Chamber of Commerce in Beijing. That's particularly true when it comes to issues of national security, he said, where just conducting research for due diligence can land people in jail. (Source: MDT/AP)
The pattern of Western reporting tends to be self-protective; they say, "there are worries that China may try to export its way out of its troubles."
These worries are raising alarm in the U.S. and Europe, as Chinese banks step up lending to manufacturers of electric vehicles, solar panels and many other industrial products. The issue already features highly in talks between Beijing and Washington.
The Chinese government has been responsive to these concerns. Shortly before the two sessions, Vice President Han Zhang met the American side to alley their fears. He pledged to provide more opportunities for foreign companies to China.
Han told an audience of American businesspeople in Beijing that the government would continue to open up more industries to foreign investment – and create a market-oriented and law-based international business environment.
"China's developments have been made through opening up," he said at an American Chamber of Commerce in China banquet. "We will unwaveringly adhere to a high level of opening-up to the outside world."
Chamber officials portrayed Han's appearance at the annual dinner as a positive signal that the Chinese government is serious – about addressing the concerns of U.S. and other foreign companies about operating uncertainties and other challenges in their market.
Anticipating that the U.S. and China remain divided on a wide range of issues from trade and technology to the war in Ukraine, both Premier Li Qiang and the commerce minister met with a visiting delegation led by Susan Clark, the head of the Washington, D.C.-based U.S. Chamber of Commerce.
"What I think the Chinese were trying to do is to reassure us that they know there are still things on the to-do list that need to get done and to reassure us that they will get done," said the chair of the American Chamber of Commerce in China, Sean Stein, who joined the meeting with Premier Li shortly before Congress convenes.
Despite Western media worries, multinational companies have recently reiterated their confidence in the Chinese economy and their development prospects in the country.
Marc Horn, president of Merck China, said that in 2024, the company will continue to expand its footprint in China – and seize the vast opportunities that lie ahead.
In the medium and long term, he said, "I am optimistic that China's economy will largely benefit from the current ongoing economic reforms – which target a Chinese path to modernization – driven by industrial upgrading, high-tech development and green initiative".
Note: Exports in January-February grew 7.1% from a year earlier, according to customs data released yesterday.
The views do not necessarily reflect those of DotDotNews.
To contact the writer, please direct email: AugustusKYeung@ymail.com
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