China is trying to win over Westerners and private companies
LIt is a gray-haired 71-year-old man who is about to retire from the highest level of economic policy-making in China. He must have many regrets, especially the defeat of his country’s economy by the now-abandoned struggle to crush covid-19, and the recent rapid spread of the disease. But Mr Liu smiled with obvious pride as he recalled how members of the world’s elite at the World Economic Forum in Davos had responded to his delegation’s optimistic comments a few days ago. “All kinds of people said, ‘Hey, China is back again!’ ‘” he told a television reporter.
Mr Liu, who is one of China’s four deputy prime ministers and a trusted adviser to Chinese leader Xi Jinping, was polite. It was he, not his partner, who stole the show. Among the gathered businessmen, his speech on January 17 was well received because of the fragility of the world economy. “If we work hard enough,” he said, “China’s economy will see a big improvement in 2023.” He pledged “more focus” on supporting private industry – which has been troubled particularly with Mr Xi’s drive over the past two years to tighten control over technology companies and his use of Marxist-sounding language more quickly. For those worried about China’s barriers to foreign companies, Mr. Liu had soothing words: “China’s national reality says that opening up to the world is a necessity, not a convenience. We need to open it wider and make it work better.”
There was nothing remarkably new in what Mr. Liu said at Davos. But their volatile tone prompted speculation among foreign observers that, in addition to scrapping the “zero-covid” policy, Mr Xi has decided to tone down some of the rhetoric that caused jitters in the among businessmen at home and abroad, to reduce pressure on private entrepreneurs. and prevent further deterioration of his country’s ties with the West. China’s state-controlled media has promoted this line of thinking. After attending the forum, Mr. Liu met with the US treasury secretary, Janet Yellen, in Zurich for their first face-to-face meeting since she took office two years ago. One Chinese news agency said it was “another sign of an ice-breaker between the world’s two largest economies”.
China may find it necessary to change its approach on a range of issues, both economic and diplomatic. At 3%, per annum GDP Growth last year was the second slowest since the death of Mao Zedong in 1976. American efforts to block the flow of cutting-edge technology to China are hampering Mr Xi’s ambitions for regional supremacy technology As geopolitical tensions have increased, and covid has exposed the vulnerability of supply chains linked to China, Western companies have become much more worried about relying on the country as the source of all widgets. China’s cozy ties with Russia, and its refusal to condemn its invasion of Ukraine, have poisoned China’s relationship with Europe, an area it has long sought to win in an attempt to weaken America’s alliances.
China likes to use Davos as a place to bash foreigners. In 2017, nearly five years after taking power and starting to spread cracks of discontent across the West, Mr. Xi turned himself in. He was the first director general in China to attend the forum. The audience heard a picture of China as a champion of globalization and a leader of efforts to combat climate change. America’s president-elect, Donald Trump, seemed determined to lead in the opposite direction. That made it easier for Mr. Xi to score points.
But recently there have been certain trends. One of them was Mr. Xi’s decision to meet with his American counterpart, Joe Biden, on the sidelines of a GTop 20 in Bali in November. Since August, China has barely spoken to America because of a visit to Taiwan by Nancy Pelosi, then the speaker of the US House of Representatives (China claims the island and hates ties official with foreigners). Antony Blinken, the US secretary of state, is expected to visit Beijing in February, the State Department says. It was the first such visit by America’s top diplomat since 2018. Also next month, films by Marvel Studios, a Hollywood company, will be shown in Chinese cinemas, ending a four-year ban undefined China.
China is sending out feelings to other Western countries as well. While in Bali, Mr. Xi met with the Prime Minister of Australia, Anthony Albanese. It was the first one-on-one meeting between the two countries at that level since 2016 – Australia having offended China on multiple fronts, including by calling for an independent investigation on where covid came from. As of early this year, China appears to have eased a two-year ban on Australian coal imports. And Mr Xi has increased the pace of diplomacy with Europe. In November he hosted a visit by the German chancellor, Olaf Scholz. French President Emmanuel Macron is expected to follow suit early this year.
Soothing the private sector
As for the economy, the tone is also changing. In the official account of the Communist Party’s annual closed-door meeting in December to discuss economic policy, the Central Economic Work Conference, there was far less ideological language from Mr Xi and no rail against the “improper expansion of capital”. systematic”, which fintech companies had previously been. accused of committing a crime. They said China should “vigorously develop the digital economy”. The Asia Society Policy Institute, a New York think tank, said the speech was perhaps Mr Xi’s “most definitive and authoritative statement on the political and ideological legitimacy of the private sector” since he came to power.
In recent weeks, the government has also backed away from its two-year effort to prevent a real estate market boom by imposing strict limits on lending by developers. The sector is still in dire need of an overhaul, but businessmen are relieved to return to a more cautious approach. The campaign had been hampering sales.
But it would be wrong to conclude that Mr Xi himself has changed, or that he is politically weaker. China’s chaotic departure from zero-covid – a policy with which it was closely associated – may be to blame among some of the Chinese public and elite. But the country’s political machinery is still working as it did at the party congress in October, where Mr Xi received an unprecedented third five-year term as general secretary and a reshuffle of the Politburo that surrounded him with loyalists.
Across the country, officials continue to deliver speeches with false references to Mr. Xi and his leadership. China is still flexing its muscles around Taiwan. Even as they try to mend fences with Western countries, Chinese envoys continue to use the derisive language about the West that has become a hallmark of diplomacy under Mr Xi. In Davos, Mr. Liu may have said what his audience wanted to hear about the Chinese economy. But his call to end “cold war” thinking was a stumbling block in America. In China’s view, America is its top seller. He twice referred to Mr Xi’s idea of a “community with a common future for mankind”. This means, of course, a new world order in which criticism of China is taboo.
Mr Xi will try to use two major political events this year to boost public and business confidence in the economy and in support of non-state companies. The first is the annual session of the country’s parliament, which is expected to be held in March. Outgoing Premier Li Keqiang will deliver the keynote address. It is likely to be similar to the language of the December labor conference. In the autumn the Central Committee of the party, with 376 members, will meet. According to tradition, at this stage of China’s political cycle, he should focus on the economy. Expect reform to be the key word.
But cynicism will abound, too. A year after taking power Mr Xi presided over a similar meeting of the Central Committee. His communication with vague words encouraged talk of reform that soon began to look empty as he aimed to promote the party’s control over business, and to prepare state companies in particular.
Four years later, Mr. Xi had his chance as a Davos man. But the later years of his rule saw more crises at home – particularly in Xinjiang and Hong Kong – a downward spiral in relations with the West and growing desperation among entrepreneurs. private and foreign investors. “Some of this is just a bit of wishful thinking,” said Andrew Small of the German Marshall Fund of the United States, a research center. “And I think, on the Chinese side, they’re aware that wishful thinking is something they can take advantage of. ” ■