5-11 November 2023

Weekly newsletter tracking high-level policy signals sent by China’s top leaders. For more information, visit About Five Things.

Commentary

The most widely circulated story in China’s official media last week was about Xi Jinping touring areas hit badly by flooding last summer around Beijing and in neighbouring Hebei province.

His visit followed the announcement at the end of last month that much of the proceeds from an Rmb1 trillion government bond issuance would go on building flood prevention infrastructure and disaster relief projects.

Along with other schemes being pushed to replace sub-standard housing and boost the building of social housing, clearly an important goal of China’s leaders is putting a floor under the country’s construction and property industries.

At the same time, China is also seeing heavy investment in manufacturing, most of it in the form of loans from state bans to state-owned companies, but also with a lot of money going to renewable energy, electric vehicles and other clean-tech firms, most of which are private.

As well as moving China towards its 2060 net-zero carbon emissions target, this funding also advances the desire of its leaders to make their country a world technology leader, maintain its position as the world’s leading manufacturer, keep expanding its exports on the back of that, and overall keep the economy expanding.

Despite the large sums of money involved, though, the outcome will be a pale imitation of China’s golden growth years in the 2000s: the property sector can only continue to adjust downwards and its manufacturing output – already around 34% of the world’s total – cannot rise much further.

A general awareness of this has led to much talk recently about replacing China’s reliance on investment for growth with a greater role for consumption.

Doing this, however, will not be easy. Curtailing investment alone would simply reduce growth, while it is far from obvious how consumption can be increased.

The most common suggestion is that increasing social welfare would decreasing people’s wish to save and so free up money to spend on goods and services.

However, such a large-scale shift would take at best several years to have an impact while begging the question about how it would be funded. Local governments are already overburdened with debt, while the centre is already grappling with a rising budget deficit – officially of nearly 4% of GDP, but probably more like 7%.

For now, clearly, China’s leaders clearly want to stick with tried and tested policies such as more spending on infrastructure and further support for manufacturing, despite much of that construction investment going into non-productive projects or over-invested industries where profitability is or will be a struggle for many companies.

Top-ranked articles for 5-11 November 2023
% = percentage of publications monitored carrying the article

1. Continue efforts in post-disaster recovery and reconstruction, Ensure that the broad masses of the people live and work in peace and contentment through the winter
再接再厉抓好灾后恢复重建 确保广大人民群众安居乐业温暖过冬Xinhua News Agency, 10 November 2023
Chinese / Machine translation / 49%

2. Comprehensively promote the construction of a beautiful China; Improve the supervision system and mechanism of natural monopoly links
全面推进美丽中国建设 健全自然垄断环节监管体制机制Xinhua News Agency, 7 November 2023
Chinese / Machine translation / 47%

3. Xi Jinping delivers video speech to opening ceremony of Wuzhen Summit of 2023 World Internet Conference
习近平向2023年世界互联网大会乌镇峰会开幕式发表视频致辞Xinhua News Agency, 8 November 2023
Chinese / Machine translation / 37%

4. Xi Jinping sends letter to 6th China International Import Expo
习近平向第六届中国国际进口博览会致信Xinhua News Agency, 5 November 2023
Chinese / Machine translation / 34%

5. Xi Jinping meets with representatives from units selected for national “Maple Bridge-style work method”
习近平会见全国“枫桥式工作法”入选单位代表
Xinhua News Agency, 6 November 2023
Chinese / Machine translation / 32%

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