Key Takeaways:
- Chinese President Xi Jinping faces unprecedented opposition to his rule
- The growing economic crisis in China has highlighted his failure as a leader
- Several people have called on him to resign from his post
YEREVAN (CoinChapter.com) — President Xi Jinping continues to lead the country.
He secured his third term after scoring a total victory at the 20th Party Congress in mid-October to remain the general secretary of the Chinese Communist Party (CCP). However, his term has been a complete failure, as the Chinese economy will indicate.
Since he retained office, Chinese citizens have voiced their concerns about the country’s situation. Several protests and large-scale demonstrations indicate that Xi Jinping’s empire is crumbling.
Calls for Xi Jinping to resign
Xi Jinping has been the most powerful leader in China since the 1980s. Yet, until recently, his rule has largely gone unchallenged.
Earlier this year, reports suggesting he was kept under house arrest to prevent his return to power made global headlines. However, Xi was able to wiggle himself out of the crisis and once again positioned himself as the leader of his party.
But now he faces a bigger challenge from a force larger than the CCP. The public in China wants Xi to step down.
As CoinChapter earlier reported, the country’s Zero Covid policy has resulted in the deaths of many citizens, including children. In addition, Xi’s government’s prolonged lockdown and senseless, regressive policies have hurt the Chinese economy.
Protests have broken out against Xi’s rule in several Chinese cities, resulting in harsh crackdowns by law enforcement agencies. Amid all this, the Government decided to extend the lockdown after several new cases of Covid 19 emerged.
The decision caused widespread discontent. In the southern city of Guangzhou, protesters took matters into their hands. They defied the lockdown and flooded the streets. Videos emerging from the city show angry citizens clashing with health workers.
A building fire on November 24 in Urumqi, the capital of the far western region of Xinjiang, killed at least ten people and injured many residents. The Chinese once again blamed the regressive lockdown measures which had delayed firefighters from reaching the victims.
In Shanghai, police used pepper sprays to drive away protestors and resorted to mass arrests. In videos that emerged from the protests, demonstrators can be heard shouting, “Xi Jinping, Step down. CCP, Step down.”
Xi Jinping’s embarrassing failure has also highlighted the cracks emerging from centralized control.
Xi Jinping’s China faces an unemployment crisis
For the authoritarian leader of China, his grip on power seems more important than improving the situation in his country. Inflation in the United States and Europe, major importers of Chinese goods, is already hurting Beijing.
As consumers cut spending in anticipation of a prolonged recession, Chinese exports are taking a hit. As a result, the country’s exports to the European Union fell by 9% in October after registering a slight growth in the previous month.
Within the same period, China’s exports of household appliances fell by more than 20%. The world’s second-largest economy also registered an 18% drop in toy exports and an additional 11% in that of shoes, according to CNBC.
“High inflation erodes the purchasing power of consumers overseas. As monetary policy will go deeper into restrictive territory, the risk of economic recession overseas will rise, considerably weighing on global demand. Thus, China’s exports may come under pressure,”
CNBC quoted Hao Zhou, chief economist at Guotai Junan International, saying.
Barclays cut its forecast for China’s economic growth in early November 2023. According to its analysts, China’s exports will drop by 2% to 5% next year. This would bring the GDP forecast to 3.8%. In September, the bank had cut its forecast to 4.5%.
Data from Trading Economics shows that unemployment remained at 5.5% in October.
According to Jörg Wuttke, president of the EU Chamber of Commerce in China, as many as 16 million jobs depend on the European market. So the drop in export to Europe threatens Xi Jinping with a massive unemployment crisis.
If the Communist Party Leader does not implement temporary measures, the next wave of protests might sweep power off his hands.
The unemployment crisis is particularly severe among the youth. There are as many as 21 million unemployed youths in various towns and cities of the country.
China faces a major debt crisis, and the property market crash
The Chinese housing crisis, coupled with the Zero Covid policy, has plunged the local Government into unprecedented debt.
According to reports, local administrations face up to $8 trillion of debt. The amount is a result of the Local Government Financing Vehicles (LGFV), which China has used to pay for infrastructure projects.
However, the economic slump caused by Covid-19, and the subsequent government clampdown on excessive borrowing by developers, has left local Governments with large debts.
According to Dealogic, more than 60 property groups in China will have to pay about $13.3 billion in bond payments before the end of 2022. The Financial Times reported that this is equivalent to 13% of their over $100 billion outstanding obligations to international bondholders.
Evergrande Group, China’s largest real estate developer, has already defaulted on its bonds. The company had borrowed over $300 billion and has since promised a restructuring of the company.
In Summer, another Chinese real estate company, Shimao Group, defaulted on $1 billion.
About 4,000 small and medium-sized banks in China, with nearly $14 trillion in assets, risk facing a meltdown.
“If a large number of small banks fail together, such an event could produce a chain reaction threatening the stability of the financial sector. Their counterparties and lenders, especially bigger banks, could suffer massive losses,”
political scientist and China expert Minxin Pei argued in a piece for Nikkei Asia.
CoinChapter reported that China’s economy faces a fiscal shortfall of $1 trillion.
Job cuts in the Chinese tech sector
Xi Jinping’s draconian crackdowns and zero-COVID policy have hurt the country’s tech sector. As a result, giants such as Alibaba Group and Tencent Holdings have resorted to major layoffs to save funds.
Smaller tech companies, such as Xiaohongshu, have also fired many employees amid the crisis.
In August, Tencent disclosed it had fired over 6000 employees. Earlier last month, the company announced a fresh round of layoffs.
According to local reports, many workers from the sector are now changing careers. An alarming rate of professional workers is now forced to work as street vendors. Many sell dumplings as means of earning a living.
The job cut in the tech sector is not without cause. Major global investors have begun pulling their funds out of China. Tencent, for example, saw its investors withdraw more than $7bn worth in the second half of this year alone.
Japan’s Softbank also pulled out a large amount of cash from Alibaba. In addition, Berkshire Hathaway, Warren Buffet’s firm, announced it is selling its stake in electric vehicle maker BYD.
The fact that the United States is also cracking down on Chinese firms does not help Xi Jinping in the ongoing crisis.
With the drop in the country’s exports already snatching away many jobs, the cuts from the tech sector reveal Xi Jinping’s failures as he tries to assert himself in his third term.
Recommended: China’s real estate implosion leads to ‘toxic nationalism’ divergence.
China is losing its manufacturing dominance
Xi’s Zero Covid policies have hurt the backbone of the Chinese economy. It has slowly begun losing its manufacturing dominance as the prolonged lockdown has hurt its ability to meet global demand. As a result, other Asian neighbors have begun biting into its global market share.
According to data from transport economics firm MDS Transmodal, which CNBC quoted in a recent report, the country has lost ground in key consumer categories, including clothing and accessories, footwear, furniture, and travel goods. In addition, its share in exports from minerals and office technology has also declined.
Data released by the National Bureau of Statistics (NBS) revealed China’s industrial profits fell 3.0% in the first ten months of 2022 from a year earlier.
In the first ten months of 2022, profits for manufacturers fell a whopping 13.4%. According to the NBS, the official manufacturing purchasing managers’ index (PMI) came in at 48.0 for November. This figure was 49.2 in October.
The economic prospects of the country seem bleak. In September, Goldman Sachs cut its 2023 GDP growth forecast for China to 4.5% from 5.3%. The Japanese financial giant Nomura also cut its forecast to 4.3% from 5.1%.
In the third quarter of 2022, China’s economy managed a meager growth of 3% despite the official target of around 5.5%.
Severe drought and extreme heat waves have also impacted the economy. Factories are unable to run air conditioners and have to cut down work hours. In addition, the electricity grids in various parts of the country cannot meet such high demands.
The Chinese economy is bleeding from all sides. So even if Xi Jinping ends the Zero Covid policy today, it will be many months before the Chinese economy can recover.
Since he took power for his third term, he has done nothing to alleviate the situation. On the contrary, with civic unrest growing daily and the economy in shambles, experts would argue that he has already failed.