Recovery, Recovery, Recovery! China Is Trying to Recover Its Economy
Yixu Zhou, Online, Staff Writer
April 3rd, 2023
The power and legitimacy of modern China largely stems from its impressive economic achievements. However, after three years of harsh pandemic policies, people's confidence in the economy has been shattered. China's economy is now on the brink of a recession, which undoubtedly deals a blow to the legitimacy of the governance established over the past few decades of reforms and opening up of the economy.
To rebuild trust with entrepreneurs and foreign capital, the party's pursuit of new legitimacy cannot be limited solely to the economic level. With the end of the 20th Party Congress, the political situation has stabilized. A new round of anti-corruption campaigns has begun, with corruption in the financial and energy sectors being a central concern. The most notable case is that of Liu Liange, the former chairman of the Bank of China, who is currently under investigation for corruption (1). However, these actions alone are not enough to rebuild confidence in the domestic economy. Even more notable than the crackdown on corruption in the financial and energy sectors are the arrests of high-ranking officials with significant local power. For example, Yin Meigen in Jiangxi Province, Sun Shutao in Shandong Province, and Li Zaiyong in Jiangxi Province all held important positions and governed their respective provinces for years (2). Rumours among the public suggest that they have been engaging in wrongdoing in their regions for many years.
The removal of these local powers sends a more obvious signal than the crackdown on corruption in the financial and energy sectors. It indicates that the central government is determined to restore the economy and that local powers that hinder economic development will no longer be tolerated. This also conveys a message that the party is gradually shifting its sources of legitimacy from economic development to seeking a better legal system in order to gain support from the people (3). A more complete legal system in China not only means fairer law enforcement, but also provides protection for private entrepreneurs to defend their property against corrupt government officials when necessary. According to a Harvard study, private enterprises contribute approximately 60% of China's GDP, 70% of its innovative capabilities, 80% of urban employment, and 90% of new jobs. Given the critical role of private enterprises in China's vitality, growth, and stability, many find it difficult to understand the Chinese government's recent push to prioritize national power over private enterprises. However, there are signs that this approach is changing (4). Meanwhile, Jack Ma, the founder of Alibaba Group Holding Limited, has returned to mainland China. His return, as mentioned earlier, comes at a time when China's leadership is seeking to regain the confidence of entrepreneurs after years of regulatory crackdowns and Covid-19 control measures targeting private enterprises in the country (5).
"For a period of time last year, there were some incorrect discussions and comments in the society, which made some private entrepreneurs feel worried," the new Chinese Premier Li Qiang said in his first press conference, "From a new starting point, we will create a market-oriented, legalized and internationalized business environment, treat enterprises of all types of ownership equally, protect the property rights of enterprises and the rights and interests of entrepreneurs." (6) Although the Chinese government has announced slogans and policies to revive the economy, it remains unclear whether these measures are effective in practice. The success of China's economic recovery depends not only on the government's rhetoric, but also on its ability to implement effective and consistent policies. Unfortunately, the Chinese government has not been successful at implementation in recent years, which raises doubts about the future of the country's economy. Therefore, it is crucial to observe whether the Chinese government can truly act on its advertisements and implement policies that can revive the economy. Merely relying on slogans and documents is not enough; practical and consistent action is necessary. Only then can China's economy recover and prosper in the long term.
Bibliography
1. Zekun Yang. 2023. “Former Chairman of Bank of China under Disciplinary Review.” Www.chinadaily.com.cn. March 21, 2023. https://www.chinadaily.com.cn/a/202303/31/WS6426d1c0a31057c47ebb7c42.html.
2. “China Communist Party Anti-Corruption Website.” n.d. Fanfu.people.com.cn. Accessed April 1, 2023. http://fanfu.people.com.cn/.
3. Zhang, Taisu. 2023. “Xi’s Law-And-Order Strategy.” Foreign Affairs, February 27, 2023. https://www.foreignaffairs.com/china/xis-law-and-order-strategy.
4. Cunningham, Edward. 2022. “What Is the Future of China’s Private Sector?” Www.hks.harvard.edu. 2022. https://www.hks.harvard.edu/faculty-research/policy-topics/international-relations-security/what-future-chinas-private-sector.
5. Lu, Keith Zhai and Shen. 2023. “Alibaba Co-Founder Jack Ma Returns to China after a Year Away.” WSJ. March 27, 2023. https://www.wsj.com/articles/alibaba-co-founder-jack-ma-returns-to-china-after-a-year-away-9b2779d1?mod=Searchresults_pos6&page=1.
6. CNN, Laura He. 2023. “China’s New Premier Tries to Reassure Private Sector amid Widespread Concerns about Future.” CNN. March 13, 2023. https://www.cnn.com/2023/03/13/economy/china-new-premier-private-sector-yi-gang-intl-hnk/index.html.