During his New Year’s Eve address, Chinese President Xi Jinping openly acknowledged the economic challenges facing the nation, a departure from his annual messages since 2013. This revelation arrives at a crucial juncture for the world’s second-largest economy, grappling with a structural slowdown characterized by weakened demand, escalating unemployment, and a battered business confidence.
In a televised speech widely circulated by state media, President Xi conceded to the “headwinds” confronting the country. He remarked, “Some enterprises faced hardships, and some individuals encountered difficulties in finding employment and meeting basic needs.” Demonstrating a keen awareness of these issues, he pledged to consolidate and strengthen the momentum of economic recovery.
- read more:
- A powerful earthquake strikes Japan, forcing residents to flee several coastal areas
- Putin called the attack on Belgorod a “terrorist act”
President Xi’s acknowledgment aligns with the latest data from the National Bureau of Statistics (NBS), revealing a decline in factory activity in December, reaching its lowest point in six months. The official manufacturing Purchasing Managers’ Index (PMI) dropped to 49, below the expansion threshold of 50, marking the third consecutive month of contraction.
The manufacturing downturn has persisted throughout 2023, with a brief uptick in the first quarter followed by five months of contraction until September, and a subsequent dip below 50.
China’s economic challenges in 2023 include a prolonged property downturn, record-high youth unemployment, persistently weak prices, and mounting financial stress at local government levels. In response, Beijing has implemented various supportive measures in 2023 and pledged to intensify fiscal and monetary policies in 2024.
However, the government’s increasingly statist approach, emphasizing party-state control at the expense of the private sector, has unnerved entrepreneurs. Additionally, the crackdown on businesses under the guise of national security has deterred international investors.
In a significant move, the People’s Bank of China recently approved the removal of controlling shareholders at Alipay, signaling a shift in control from Jack Ma’s Ant Group to official channels.
President Xi also addressed the longstanding issue of Taiwan, pledging the mainland’s reunification with the self-ruled island. This statement, ahead of Taiwan’s crucial presidential elections on January 13, reinforces China’s commitment to its territorial claims despite growing tensions. Xi’s assertion underscores his broader goal of positioning China as a global power, even as the Taiwan Strait remains a focal point of geopolitical tensions.
