Xi Jinping Acknowledges China's Economic Challenges as He Welcomes 2024
President Xi Jinping's New Year's Eve speech highlights the challenging economic situation in China with struggling businesses, job scarcity, and a notable manufacturing downturn The address also touches on the tough stance towards Taiwan
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Xi has never before addressed economic challenges in his annual New Year's messages since he began giving them in 2013. This is significant as the world's second-largest economy is currently facing a structural slowdown characterized by weak demand, rising unemployment, and a decrease in business confidence. In a televised speech, Xi acknowledged the "headwinds" the country is facing, admitting that "some enterprises had a tough time" and "some people had difficulty finding jobs and meeting basic needs."
Xi emphasized that these thoughts were foremost in his mind and added that the goal was to solidify and enhance the progress of economic recovery. Prior to Xi's statement, the National Bureau of Statistics (NBS) released its monthly Purchasing Managers Index (PMI) survey, revealing a decrease in factory activity to the lowest level in six months for the month of December.
The NBS statement reported that the official manufacturing PMI decreased to 49 last month, a drop from 49.4 in November. This marks the third consecutive month of contraction, as any reading below 50 indicates a decline in the manufacturing sector.
Manufacturing downturn
The nation's considerable manufacturing industry had been struggling throughout 2023. Following a brief surge in economic activity in the initial quarter of the previous year, the official manufacturing PMI declined for five consecutive months until September. It then fell below 50 once again.
Chinas economy has faced a series of challenges in the current year, such as a prolonged property downturn, record high youth unemployment, persistently low prices, and increasing financial strain on local governments.
An unfinished apartment building in Xinzheng City, Zhengzhou, China's central Henan province, seen on June 20, 2023.
Pedro Pardo/AFP/Getty Images/File
Beijing is working hard to rejuvenate economic growth and boost employment. They implemented numerous supportive measures last year and have promised to increase fiscal and monetary policies in 2024. However, their more centralized approach to the economy, which prioritizes the party-states control over economic and social matters at the expense of the private sector, has unsettled entrepreneurs. The government's crackdown on businesses in the name of national security has also deterred international investors.
The Peoples Bank of China announced on Saturday that it has approved an application to remove controlling shareholders at Alipay, the popular digital payment platform operated by Jack Mas Ant Group. This move signifies M has officially given up control of the company he helped to create. In January of last year, Ma, who also co-founded Alibaba Group, stated that he would be relinquishing control of Ant as part of his departure from his online businesses. His companies were among the first to be targeted in Beijings extensive crackdown on Big Tech, which the Communist Party felt had become excessively influential.
Tough on Taiwan
Xi further promised that the Chinese mainland would eventually "reunify" with Taiwan, reaffirming Beijing's longstanding position on the self-governing island democracy, with a forceful statement preceding a pivotal election in the region.
"Xi emphasized the inevitability of China's reunification and called for unity among all Chinese people, regardless of their location, to contribute to the rejuvenation of the nation. These remarks, made in the context of Chinese modernization and development, were delivered just before Taiwan's upcoming presidential elections on January 13 and were more direct than his previous New Year address."
Xi then expressed, "The individuals residing on both sides of the Taiwan Strait are part of a single family. I genuinely wish for our fellow citizens on both sides to collaborate in unison to cultivate ongoing prosperity for the Chinese nation."
Xi has prioritized the unification of Taiwan as a key aspect of his broader objective to restore China to a position of global influence and prestige. The Communist Party of China asserts ownership of Taiwan, despite never having governed it, and has not dismissed the possibility of resorting to military action to achieve control over the island.
Taipei has accused the party of running influence operations ahead of the election, where current Vice President Lai Ching-te, a candidate openly loathed by Beijing, has been seen as a frontrunner.
