Chinese dictator Xi Jinping held a meeting of the Communist Party of China’s (CPC) political bureau in which 2019 was discussed as an especially “challenging” or “testing” year for communism, particularly due to China’s sputtering economy.
Of course, as the state-run Xinhua news service reported on Tuesday, everyone at the meeting agreed that plucky China did a splendid job of navigating through those turbulent economic waters and looked forward to 2020 as a golden opportunity for a big comeback.
Still, the CPC Central Committee acted like it knew it had serious problems to solve, even as it dashed off glowing press releases:
The top CPC leadership, led by Xi, have been fully aware of the economic conditions and made decisions in a targeted manner.
For example, the CPC Central Committee Political Bureau meeting held in April warned about tightening external economic environment and domestic downward pressure despite upbeat data in the first quarter (Q1) of 2019. GDP growth slowed from Q1’s 6.4 percent to 6.2 percent in Q2.
Amid concerns about mounting downward pressure and whether China can deliver its 6-6.5 percent GDP growth target this year, Friday’s meeting pointed out that the basic trend of steady long-term growth for China’s economy remains unchanged at present and for a period to come.
The latest economic indicators such as factory and service activities, and trade growth all rebounded, pointing to the effectiveness of pro-growth policies and the economy’s resilience.
Thanks to the top CPC leadership’s emphasis on improving people’s livelihood, China has met the annual target of creating more than 11 million new jobs ahead of schedule, and about 95 percent of the country’s poor population will be lifted out of poverty by the end of this year.
Unmentioned in the Xinhua article were such glitches in the Chinese system as the African swine fever outbreak, cynically referred to by some as “pork Ebola,” that has driven up prices of the Chinese staple food by over 110 percent. Consumer prices overall rose in China by 4.5 percent for the year, the highest increase since 2012.
Fortunately, assuming its reports can be believed, the Chinese Ministry of Agriculture said on Monday that pig herds are beginning to increase in size again, so pork prices might have peaked.
Generally speaking, outside analysts see China developing a demand problem as its trade war with the U.S. wore on throughout 2019. Economic growth is approaching 30-year lows despite the back-slapping at Xi’s CPC Central Committee meeting, with particularly dire results for working-poor Chinese who restructured their lives and moved across the country to pursue careers during the boom years.
While Xi’s committee congratulated itself on keeping unemployment low, some analysts see a gathering storm of layoffs coming in China’s manufacturing sector as overseas business drops off. The central government’s strategy of encouraging domestic consumption to make up for lost trade is eroding the historically high savings rate of Chinese households and replacing it with mounting consumer debt. China may no longer have enough government debt capacity to finance the kind of growth policies that sustained its expansion over the past two decades.
Chinese exports shrank in November for the fourth month in a row, although a slight growth in imports was taken as a positive sign of desirable consumer activity. The problem is that, as noted above, Beijing is close to running out of the resources it used to juice consumer spending. 2020 may yet prove to be another “challenging” year for Xi and his advisers, especially if the Hong Kong crisis drags on.