Xi Jinping has brought his country a difficult year, predicts Roger McShane.

Even at the moment of his greatest triumph, Xi Jinping had to admit that dark clouds were hanging over China. At the Communist Party Congress, held every five years, in October 2022, he secured an unprecedented third term as party leader. In his speech to around 2,300 party delegates, the “helmsman”, as he is now praised by the state media, spoke about his decade in power, which went largely smoothly.

It has eliminated extreme poverty and its zero-Covid policy has saved lives, Xi said. The party has “effectively fought ethnic separatists, religious extremists and violent terrorists,” he boasted. But he also urged party leaders “to be prepared to brave high winds, choppy waters and even dangerous storms.”

Xi believes foreign powers, led by the US, want to curb China’s expansion. And not without reason. Many Western countries find China’s rise alarming. President Joe Biden’s administration has tried to hamper China’s tech industry with sanctions and export controls.

Xi wants to transform the world order in ways that would please autocrats. He presents China’s authoritarian model as a plausible alternative to the West. And he has more resources at his disposal than any despot in history.

However, China is also weaker than it could be. And that is due to Xi’s own decisions. Now the problems are increasing. And the helmsman will find it difficult to get a grip on in 2023. The worst is the pandemic. With his zero-Covid policy, Xi has cornered his country. He wants to curb outbreaks with local lockdowns and draconian restrictions. Certainly, this policy has saved many lives. But now it’s stifling the economy and frustrating citizens.

There is little sign of easing. A large proportion of the population has not received enough immunization coverage to significantly reduce the risk of serious illness and death. The state has not forced immunization but prefers lockdowns. Nor will he introduce more effective western mRNA vaccines for political reasons. Because the healthcare system has remained weak despite the economic boom of recent decades, China is ill-prepared to deal with the virus.

Calculations lead to fears that an exit from the zero-Covid policy would lead to overcrowded hospitals and hundreds of thousands of deaths. The party is concerned that this could trigger unrest. The same applies to the flagging economy. China grew more slowly than expected in 2022 and will continue to do so in 2023 if the government stays the course.

Young people, including university graduates, face difficulties in finding a job. The housing market, which supports a large part of GDP, is in crisis. But lockdowns and travel restrictions that are disrupting supply chains and eroding confidence are only part of the problem.

Xi has outlined a more socialist, state-controlled economy. He wants the party to have more influence on corporate governance. It has slowed the pace of innovation and dampened private sector momentum by imposing strict regulations on tech firms and cutting China off from the world.

The demographic trend is also pointing downwards. In 1980, the government adopted the one-child policy, believing that the population was growing too fast. Now the opposite threatens. In 2023, China’s current population of 1.4 billion will begin to shrink, and India will become the world’s most populous country. For years, the proportion of ancient Chinese has been increasing, while the number of active workers has been falling. That too has slowed growth and put a strain on young people.

Since 2021 three children are allowed. But young people don’t seem to want extended families. The average fertility rate is well below what would be needed to keep the population stable, let alone increase it.

Some experts believe that because of this, and because of its high debt, China has reached the peak of its power. But Xi, who is set to be confirmed as president in March 2023, is unwilling to change course.

What could that mean? A slower growing China will have fewer resources to challenge the West. But a weak China fearing US economic strangulation could become more dangerous. If China expects a decline and still wants to reshape the world – or conquer Taiwan – then it will have to act while it still can, some observers fear. So soon.

The West should beware of predicting the collapse of the Communist Party. Even a weaker Chinese economy will be among the largest in the world. The state can mobilize enormous resources in strategic areas such as semiconductor or weapons production.

Other countries, including the US, will face their own demographic challenges. China’s continued rise is not inevitable, but neither is its decline.

Roger McShane, Leiter Chinaressort, „The Economist“.

From The World Ahead 2023 magazine, translated by FOCUS MAGAZIN VERLAG GMBH.©2022 The Economist Newspaper Limited. All rights reserved. Neither this publication nor any part of it may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of The Economist Newspaper Limited.

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