Xi Jinping’s hunger for power is hurting China’s economy
rubber-stamp parliament, is under way in Beijing. The top leaders and thousands of delegates will attend for a week. So far the signals are not reassuring.
They suggest that China lacks a robust plan to deal with its economic slump and that some of its targets are fanciful. Power is being concentrated even further in the hands of President Xi Jinping. Start with the economics.
In a speech to the assembly China’s prime minister, Li Qiang, unveiled a gdp growth target of around 5% in 2024. He also laid out a long-term blueprint under the slogan “new productive forces". This emphasises shifting from a bloated property sector, debt-financed investment and basic manufacturing to high-productivity industries, such as green energy, artificial intelligence and digital services.
China’s rulers believe they have been appropriately tough about the property crisis, disciplined at responding to the slowdown, and have a coherent vision. But look closer and the picture falls apart. The target exceeds the average of economists’ growth forecasts, of 4.6%.
To hit it, China needs more stimulus. Yet the fiscal-deficit target of 3% for 2024, which will be augmented by long-term bond issuance and other off-budget funds, is too small. Mr Li also set a de facto ceiling for inflation of 3%, in line with past practice.
But unlike before, China now faces a deflationary crisis: consumer prices fell by 0.8% year on year in January. China used to set targets and beat them. Now its targets are semi-detached from reality.
To reinvigorate its economy China needs to harness the private sector. Private investments are half of the national total but fell by 0.4% in 2023, largely because of the property slump. But given its unstable regulation and official
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