End of China's Golden Age Risks Political Peril for Xi

Summary

The Chinese economy is facing significant challenges, including a real estate collapse and a trade war with the US. This situation presents unique difficulties for economic officials and President Xi Jinping. Real disposable income growth has slowed under Xi, reaching levels not seen since the late 1980s. A comparison of GDP growth and social freedoms shows a decline in both areas since Xi's tenure. Economic protests, driven by issues like unpaid wages and property pressures, are rising. Interviews with various individuals reveal widespread economic struggles and a growing sense of frugality among the populace.

Takeaways

• 📉 The Chinese economy has faced significant challenges, including a real estate collapse and a trade war with the US.
• 🤔 President Xi Jinping cannot rely on economic strength to maintain support, unlike his predecessors.
• 📈 Real disposable income growth in China has slowed to the lowest rate since the late 1980s under Xi Jinping.
• 🏠 The property crisis is severely impacting household wealth.
• 📊 An analysis of IMF GDP growth data and freedom metrics shows a correlation between economic growth and social freedoms over the past 40 years.
• 🕵️‍♂️ During the Mao Zedong era, both economic growth and freedoms were very constrained.
• 🌱 Economic and social freedoms expanded significantly under Deng Xiaoping's reform and opening-up policies.
• 📉 Growth began to slow and social freedoms started to erode under Hu Jintao.
• 🔄 Under Xi Jinping, China has seen a return to constrained freedoms and slower economic growth, similar to the Mao Zedong era.
• 🔍 Despite higher living standards under Xi, the reduction in freedoms reflects Beijing's response to post-boom challenges.
• 📊 80% of protests in China last year were related to economic issues, such as unpaid wages and property pressures.
• 🗣️ Interviews with individuals across different income levels revealed widespread economic challenges and disillusionment.
• 📉 Many businesses and individuals are struggling with debt and uncertainty, affecting their economic decisions.
• 🧩 The social contract of delivering growth for stability is being questioned as economic protests rise.
• 📉 Political scientists refer to this as 'performance legitimacy,' where economic prosperity underpins the legitimacy of the Communist Party.

Q & A

What are the main economic challenges currently facing China?

China is facing several economic challenges, including a real estate collapse and a trade war with the US.

How has the growth of real disposable income in China changed over time?

The growth of real disposable income has slowed under President Xi Jinping, reaching the slowest rate since the late 1980s.

What datasets were used in the analysis presented by Rebecca Chan Wilkins?

The analysis used the IMF dataset on Chinese GDP growth and various metrics from the Varieties of Democracy project on social freedoms.

How did social freedoms and economic growth evolve in China from the Mao Zedong era to the present?

Under Mao Zedong, both social freedoms and economic growth were very constrained. During Deng Xiaoping's era of reform and opening up, both freedoms and growth expanded significantly. This trend continued under Jiang Zemin but began to slow under Hu Jintao. Under Xi Jinping, growth has slowed further and social freedoms have become more constrained.

What does the data from Freedom House in China indicate about the nature of protests in 2023?

The data shows that 80% of protests in China in 2023 were linked to economic issues such as livelihood, unpaid wages, and property pressures.

What was the experience of Mr. Wang, a commodity trader, during the economic challenges in China?

Mr. Wang initially experienced boom years leading up to COVID-19, during which he bought a Tesla Model X and a pricey apartment. However, the last few years have been tougher, with razor-thin profit margins and factories hesitant to lock in long-term contracts due to uncertain demand.

How has the economic downturn affected personal decisions among the Chinese populace?

People are canceling or postponing major life decisions, such as having children, due to economic uncertainty and financial strain.

What is the concept of 'performance legitimacy' in the context of Chinese politics?

Performance legitimacy refers to the idea that the legitimacy of the Chinese Communist Party is underpinned by its ability to deliver economic growth and prosperity, ensuring social stability.

Are the economic protests in China coordinated or widespread?

No, the economic protests are not coordinated or nationwide. They are limited and sporadic in nature.

What is the overall sentiment among people in China regarding the future economic outlook?

There is a sense of disillusionment and concern among people, with many preparing for a tougher era of frugality ahead.