HASubside the consecration of Xi Jinping, the 20e congress of the Chinese Communist Party (CCP), from October 16 to 22, stood out for the poverty of its proposals in the face of the economic tensions that are accumulating in China. Beijing seems to limit itself to blaming the lack of enthusiasm of the local authorities, thus sparing itself introspection as to the articulation of its many, often conflicting objectives.
Growth, social stability, budgetary rigor, forced greening, cleaning up of the financial sector, fight against corruption, allegiance to Xi Jinping, job losses by the millions in steel and coal, etc. The litany of imperatives set by Beijing in previous decades was already enough to make the local authorities in China pale in comparison to the implementation of central policies. Especially since Beijing has added, pell-mell, technological autonomy, social ambitions, the regulation of the digital sectors, the treatment of the real estate bubble, the securing of supplies and ideological probity. Not to mention the pandemic…
This long list is not without a certain theoretical coherence. Beyond adjustments over time, a “new development model” had indeed been presented at the previous congress of the PCC, in 2017. It is akin to a new attempt at an economic “third way”, with the ambition of reconciling the best of market forces and state intervention. The public authorities establish the industrial and economic orientations, while ensuring “governance by law”, clear and stable, a generous social system for workers and a relative stability of the economic cycle. In the wake of party-state orientations, market forces efficiently allocate resources among multiple competing actors. The whole must make it possible to operate the shift towards consumption and innovation, to the detriment of investments, with the aim of catching up with the advanced economies.
Multiple injunctions
Five years of deployment of this beautiful ambition have given rise to an impressive dynamic of reforms. But significant points of tension have emerged, in particular due to conflicting objectives, which have deeply weakened the Chinese economy.
Restrictions on indebtedness and public finances have hampered the construction of a social system, beyond the fight against extreme poverty, forcing households to maintain an abnormally high savings rate which has continued to burden the dynamics of domestic consumption and, by extension, the profitability of existing assets. The Chinese economy has thus been maintained in its excessive dependence on external demand and investment.
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