China’s President Xi Jinping has called for patience and resilience as the country undergoes a “national rejuvenation” amid reports of an economic downturn.
In a speech released by the Chinese Communist Party’s (CCP) top theoretical journal, Qiushi, Xi called for China to focus on long-term plans to elevate education, health care, and preparing food supplies sufficient for the country’s population of 1.4 billion people instead of fixating on short-term material wealth.
He also suggested that Western countries are “increasingly in trouble” because of their materialism and “spiritual poverty”, AP reported.
He also encouraged China to “build a socialist ideology with strong cohesion”.
Xi’s speech, which was delivered in February but reportedly released by Qiushi on Aug. 15, emphasised the difficulties of modernisation in a country of China’s size and instead focus on the country’s unique development model— the foundation for economic growth.
It is common for the party journal to release speeches months after they were delivered.
He reiterated his major policy initiatives in the speech as the key to the nation’s development— “common prosperity”, green economy, and socialist values.
“We must maintain historic patience and insist on making steady, step-by-step progress,” Xi said in the speech.
Speculations of economic slowdown
Xi’s speech was released hours after China published July economic data sparking speculations of an economic slowdown.
According to CNBC, the statistics released showed growth that came in under expectations in areas such as retail sales, industrial production, and fixed assets.
Imports have also fallen by 12.4 per cent from a year earlier, with consumer prices dropping by 0.3 per cent in July from a year ago.
According to BBC, the figures signified that China has slipped into deflation.
Meanwhile, the urban employment rate has also increased from 5.2 per cent in June to 5.3 per cent in July. The latest data did not break down unemployment by age.
On Aug. 15, China announced it will suspend the publication of its youth unemployment data, amid reports of increasing unemployment rates for those aged 16 to 24.
Growing property woes
Adding to the economic woes is China’s ongoing slump in the real estate sector.
Prices for new houses have fallen 2.4 per cent from August 2021, while prices for existing houses dropped by 6 per cent, Bloomberg reported, citing government figures.
But Bloomberg suggested that the figures could be far more dire than what was reflected.
It said that prices for existing homes in some cities in China have fallen more than 15 per cent from their peak.
Hangzhou, one of the country’s major economic hubs, is seeing home prices decline by about 25 to 28 per cent from a peak around October 2021.
Outlook of the real estate market remained bleak despite policy signals indicating a shift towards greater support for the real estate industry.
It was reported earlier this month that County Garden, one of China’s largest non-state-owned developers by sales, reportedly missed two dollar bond coupon totalling US$22.5 million (S$30.5 million).
Evergrande developer filed for bankruptcy
The news sparked fear that developers in the country are slipping into repayment troubles.
Just yesterday (Aug. 17), China Evergrande Group filed for bankruptcy protection, more than two years after it defaulted on its debt.
The petition, which was filed in New York, sought to protect the company’s U.S. assets from creditors as it undergoes restructuring.
At the end of 2022, Evergrande reported liabilities totalling US$335 billion (S$454 billion).
“No deflation for the Chinese economy”
Concerns about China’s sluggish economic growth and deflation were dismissed by the National Bureau of Statistics (NBS) spokesperson Fu Linghui on Tuesday (Aug. 15) at a press conference.
“There is no deflation for the Chinese economy,” Fu asserted, as quoted by Qiushi.
Fu emphasised that the data indicates a stable economic outlook and that consumer price growth will gradually return to a reasonable level.
“Despite pressures and challenges, we have many favourable conditions for the sustained economic recovery and high-quality development,” Fu said.
“The economy will maintain stable performance in the second half with better development quality.”
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