In his New Year’s Eve speech, President Xi Jinping acknowledged the struggles faced by China’s businesses and the challenges job seekers encounter in finding employment.
For the first time since he commenced delivering annual New Year’s messages in 2013, President Xi acknowledged economic challenges during his recent address. These comments come at a pivotal moment for China’s economy, contending with a structural slowdown characterized by diminished demand, increased unemployment, and waning business confidence.
In his televised speech, Xi acknowledged the “headwinds” confronting the nation, candidly stating, “Some enterprises faced hardships. Some individuals struggled to secure jobs and meet basic needs.”
“These concerns weigh heavily on my mind,” Xi remarked, sentiments that were extensively circulated by state media. He also emphasized the imperative to fortify and bolster the ongoing economic recovery.
Shortly before Xi’s address, the National Bureau of Statistics (NBS) released its monthly Purchasing Managers’ Index (PMI) survey, revealing a decline in factory activity for December, reaching its lowest point in six months.
The official manufacturing PMI recorded 49 last month, down from November’s 49.4, as reported by the NBS.
Typically, a PMI score above 50 indicates expansion, while any score below reflects contraction. December marked the third consecutive month of contraction in the manufacturing PMI.
Manufacturing downturn
Throughout 2023, China’s substantial manufacturing sector experienced persistent weakness. Following a brief surge in economic activity in the initial quarter of the year, the official manufacturing PMI showed contraction for five consecutive months until September, later dropping below the 50-point threshold once more.
The nation’s economy grappled with a range of issues during the year, including a prolonged decline in the property sector, notably high levels of unemployment among the youth demographic, persistently subdued prices, and escalating financial strain among local governments.
Beijing has been working fervently to reinvigorate growth and stimulate employment, unveiling a series of supportive initiatives last year and committing to bolster fiscal and monetary policies in 2024.
However, its increasingly centralized approach to the economy, prioritizing the party-state’s oversight of economic and social matters over the private sector, has unsettled entrepreneurs. The government’s crackdown on businesses in the name of national security has also deterred international investors.
Recently, the People’s Bank of China revealed its approval of an application to replace controlling stakeholders at Alipay, Jack Ma’s Ant Group’s ubiquitous digital payment platform. This move officially marks Ma’s relinquishment of control over the company he co-founded.
Indeed, Jack Ma, who co-founded Alibaba Group, announced in January last year his intention to step away from Ant Group as part of his broader disengagement from his online ventures. His enterprises were among the initial subjects of Beijing’s remarkable crackdown on Big Tech, viewed as having amassed excessive power according to the Communist Party’s perspective.
Tough on Taiwan
In a recent address, President Xi Jinping reiterated China’s steadfast commitment to the eventual reunification of mainland China with Taiwan, echoing Beijing’s longstanding perspective on the self-governing island democracy. Xi’s remarks, delivered in a segment dedicated to outlining China’s future development plans, struck a resolute chord, emphasizing the collective purpose shared by all Chinese citizens on both sides of the Taiwan Strait and their role in propelling the resurgence of the Chinese nation.
These comments surfaced just ahead of Taiwan’s crucial presidential elections scheduled for January 13, marking a more assertive tone compared to Xi’s previous New Year’s addresses. Previously, Xi highlighted the familial bond between the people on either side of the Taiwan Strait, expressing a sincere hope for joint efforts toward the enduring prosperity of the Chinese nation.
For Xi, the reunification of Taiwan remains a pivotal component of his broader vision to restore China’s global prominence and influence. Despite China’s Communist Party claiming Taiwan as its sovereign territory, historical control has never been established, leaving the region a source of tension. Beijing has not dismissed the potential use of force to reclaim the island, contributing to escalating tensions between the two entities.
Amid these complexities, Taipei has accused Beijing of conducting influence campaigns in the lead-up to the election. Vice President Lai Ching-te, a candidate openly at odds with Beijing’s stance, has emerged as a prominent contender. This situation underscores the intricate and sensitive nature of relations between China and Taiwan, amplified by Xi’s resolute declaration and the political dynamics surrounding the impending election.