When Xi Jinping took power a decade ago, China had just overtaken Japan to become the world’s second largest economy.
It has grown at an extraordinary pace since then. With an average annual growth rate of 6.7% since 2012, China has experienced one of the fastest sustainable expansions of a major economy in history. In 2021, its GDP It reached nearly 18 trillion dollarsIt makes up 18.4% of the global economy, according to the World Bank.
China Rapid technological progress It also made him a strategic threat to the United States and its allies. It’s steadily Pushing American competitors out of long-term leadership positions in sectors ranging from 5G technology to artificial intelligence.
Until recently, some economists have been anticipation That China will become the world’s largest economy by 2030, toppling the United States. Now, the situation looks much less promising.
As Xi prepares for His second decade in power, faces growing economic challenges, including an unhappy middle class. If he is not able to get the economy back on track, China will face a slowdown in innovation and productivity, along with growing social discontent.
“For 30 years, China has been on a path that gives people great hope,” said Doug Guthrie, director of Chinese initiatives at Arizona State University’s Thunderbird School of Global Management. adding The country is “in deep trouble now”.
While Xi is one of the most powerful leaders China and its ruling Communist Party have seen, some experts say he cannot claim credit for the country’s impressive progress.
“Xi’s leadership is not a causation of China’s economic rise,” said Sonia Uber, a professor at Bocconi University in Italy who studies the Chinese economy. “Xi was able to take advantage of the continuous entrepreneurial movement and the rapid development of the private sector [sector] Previous leaders have launched the economy.”
Instead, in recent years, Xi’s policies have been so It caused some severe headaches in China.
Beijing’s sweeping crackdown on the country’s private sector, which began in late 2020, and its unwavering commitment to the non-spreading coronavirus policy have hit the economy and job market hard.
“If anything, Xi’s leadership may have dampened some of the country’s growth dynamic,” Uber said.
More than $1 trillion has been wiped off the market value of Alibaba and Tencent – the crown jewels of China’s tech industry – over the past two years. Sales growth in the sector slowed, and
Tens of thousands of employees They were laid off, which led to a high rate of youth unemployment.
The real estate sector has also come under attack, infecting some countries Biggest Home Developers. The collapse in real estate – which accounts for up to 30% of GDP – has led to a widespread and rare among the middle class.
Thousands of angry homebuyers They refused to pay their mortgage on troubled projects, fueling fears of systemic financial risks and forcing authorities to pressure banks and developers to defuse the turmoil. That wasn’t the only manifestation of discontent this year.
In July, Chinese authorities Violently disperse a peaceful protest by hundreds of depositors, who were demanding the return of their life savings from rural banks that did so Millions of dollars in frozen deposits. The banking scandal not only threatened the livelihoods of hundreds of thousands of customers, but also highlighted the The deteriorating financial situation of small banks in China.
“Many in the middle class are disappointed with recent economic performance and disappointed with Xi’s rule,” said David Dollar, senior fellow at the John L. Thornton China Center at the Brookings Institution.
According to analysts, the Weaknesses in the financial system are a result of the country’s unbridled expansion of debt in the past decade, and the The form needs they change.
“China’s growth during Xi’s decade in power is attributable primarily to the overall economic approach adopted by his predecessors, which focused on rapid expansion through investment, manufacturing and trade,” said Neil Thomas, senior analyst for China and Northeast Asia at Eurasia Group. .
“But this model has reached the point of dramatically diminishing returns and increasing economic inequality, financial debt and environmental damage,” he said.
Experts said that while Xi is trying to change this model, he is not doing it the right way, risking the future of Chinese companies with stricter controls from the state.
The 69-year-old leader has launched his crackdown on reining in theunorganized“Private companies have been growing very powerfully. He also wants to redistribute wealth in society, in light of”common prosperity” Goal.
Xi hopes for a “new normal,” in which consumption and services become more important drivers of expansion than investments and exports.
But, so far, these measures have pushed the Chinese economy inward One of the worst economic crises in four decades.
The International Monetary Fund recently cut its growth forecast for China to 3.2% this year, which is a sharp slowdown from 8.1% in 2021. The country’s second-lowest growth rate in 46 years, only better than 2020 when the initial coronavirus outbreak hit the economy.
Under Xi, China has not only become more isolated, but has also seen strained US-China relations. His refusal to condemn Moscow’s invasion of Ukraine, and China’s recent aggression against Taiwan, could alienate the country even Beyond Washington and its allies.
Analysts say the current problems do not yet pose a significant threat to Xi’s rule. He is expected to secure an unprecedented third term at the Communist Party Congress, which begins on Sunday. The priorities presented at the conference will also determine China’s path for the next five years or even longer.
“An economic catastrophe of the magnitude of the Great Depression is likely to create levels of social discontent and popular protest that could pose a threat to Communist Party rule,” said Thomas of Eurasia Group.
“Moreover, growth is not the only source of legitimacy and support for the Communist Party, and Xi has increasingly refined the Communist Party’s nationalist credentials to appeal to patriotism as well as money,” he added.
But to return China to high growth and innovation, Xi may have to bring back market-oriented reforms.
“If he’s smart, he’ll free things up quickly in his third term,” Guthrie said.