Subscribe to China 5

THIS WEEK:

Remarks by Xi Jinping and other leaders highlight official preoccupations, a property giant gets a boost, and Chinese youth remain dispirited about the future.

1. Xi Hails Innovation and Self-reliance at Two Sessions

What Happened: Xi Jinping attended three events during the Two Sessions where he elaborated on his vision for how “new productive forces” can drive China’s development.

• Xi met delegations to the National People’s Congress from Jiangsu and the military as well as members of the Chinese People’s Political Consultative Conference from the environment and technology sectors and a minor political party.

Things to Come: Premier Li Qiang’s government work report brought few surprises, but Xi’s activities at the Two Sessions often foreshadow key political themes in the year ahead.

What Xi Said: Xi outlined a three-pronged industrial policy centered on “upgrading traditional industries, expanding emerging industries, and cultivating future industries,” but cautioned against “rushes and bubbles.”

• He also waxed lyrical about domestic production: “after the founding of New China, we struggled arduously for self-reliance, and developed an independent, autonomous manufacturing base. Just thinking about this truly brings incomparable pride.”

Why It Matters: Xi leaned further into an economic agenda focused on investing in manufacturing and using technological innovation to improve productivity. However, his comments on self-reliance suggest a failure to heed warnings about Chinese overcapacity fueling trade disputes.

By: Neil Thomas, Fellow on Chinese Politics, Center for China Analysis

Learn More: Read What Happened at China’s Two Sessions in 2024? by Christopher K. Johnson, Guonan Ma, Lizzi C. Lee, Li Shuo, Lyle Morris, Rorry Daniels, and Neil Thomas.

2. Vanke Lifeline Undercuts Bankruptcy Threat

What Happened: While Ni Hong, Minister of Housing and Urban-Rural Development, was telling a press conference that “insolvent real estate companies must declare bankruptcy,” regulators were scrambling to prop up Vanke, China’s second-largest property developer.

Not for Speculating: Ni repeated Xi Jinping’s slogan that “housing is for living in, not for speculation” and outlined plans to “promote the stable and healthy development of the real estate market” and prevent systemic risks. He also described a “white list” to direct financing to complete real estate projects so buyers are not left out in the cold.

As Ni Spoke: Regulators were working overtime to ensure Vanke’s access to capital and extend maturities on its debt. Under pressure from declining sales and ratings downgrades, Vanke is the latest major developer, after Evergrande and Country Garden, to face potential collapse.

Why It Matters: China’s extraordinary housing boom seriously distorted the property market and created a complex web of competing interests and incentives on the part of developers, investors, homeowners, and local governments. Fading confidence in the sector could trigger a broader financial crisis and have serious implications for social stability.

By: G.A. Donovan, Fellow for Chinese Political Economy and Society, Center for China Analysis

Learn More: Read China’s Economy Will Continue to Struggle by Nathan Levine in China 2024: What to Watch.

3. Ambassador Talks Up Cooperation with Australia

What Happened: In an address to the Australian Financial Review Business Summit in Sydney, China’s Ambassador to Australia Xiao Qian underscored the importance of continued bilateral cooperation, calling it “deeply significant not just bilaterally but internationally.”

In the Speech: Xiao spoke of the need to reinforce “common ground, mutual respect, and managing differences wisely and maturely,” adding, “our cooperation is mutually beneficial and we should not only continue to consolidate and deepen cooperation in traditional areas such as energy, mining, agriculture, education, and tourism, but also explore cooperation in emerging areas.”

Smoothing Over Rough Ties: This year marks the 10th anniversary of the China-Australia comprehensive strategic partnership, but relations have been tumultuous in recent years, with frictions over trade sanctions, COVID, and detained journalists. A series of high-level visits from Australian officials, including Prime Minister Anthony Albanese in late 2023, seemingly restored a measure of stability.

Why It Matters: Xiao’s comments are the latest sign of Beijing’s desire to keep relations with Australia on the right track. More broadly, it indicates that in some areas China recognizes the need to avoid international isolation and opprobrium.

By: Taylah Bland, Affiliated Fellow on Climate and the Environment, Center for China Analysis

Learn More: Read How Australia’s relationship with China went down, and then up again, and what comes next by Richard Maude.

4. PLA Disqualifies Vendor Over Security Risks

What Happened: The People's Liberation Army (PLA) has disqualified China Far East International Tendering Co. (CFEITC) from serving as a procurement agent due to grave security breaches.

Unsecure Practices: The PLA found alarming lapses in CFEITC's handling of classified information, including sending procurement materials via WeChat and email and storing confidential documents on unprotected computers. This posed “serious risks of leakage”, prompting the PLA to take action.

A Broader Scandal: The disqualification follows a series of investigations by the PLA's equipment management department that led to the removal of several senior military officials.

Why It Matters: The company’s disqualification not only addresses immediate security concerns but also reflects broader efforts to reinforce national security measures in light of escalating geopolitical tensions and heightened concerns about espionage.

By: Jie Gao, Research Associate on Foreign Policy and National Security, Center for China Analysis

Learn More: Read Xi’s Prioritization of Security Will Continue to Weigh on Growth by Diana Choyleva in China 2024: What to Watch.

5. Youth Pessimistic as Unemployment Soars

What Happened: During the Two Sessions, a top trending search on Baidu was an article about universities appealing to graduates to “actively serve national strategies” by “working in small to medium-sized enterprises, at the grassroots level, or by joining the military.”

The Youth Response: The article prompted a furious reaction online. A comment with over 1000 likes said that with the suppression of private and foreign enterprises, students will face unemployment if they do not take the civil service examination or pursue government jobs.

Unemployment Woes: At the end of 2023, the unemployment rate for people aged 16 to 24, excluding students, was 14.9 percent. The challenging job market has led some youth to fall victim to scams such as paying huge fees in hopes of securing employment. Some young people opt to become “full-time children,” doing household chores for their parents.

Why It Matters: The overwhelmingly negative response the article elicited online is a reflection of young people’s profound despair about their future prospects.

• Dissatisfied youth could be a potential destabilizing force; the 2022 White Paper protest mainly involved college students.

By: Gavin Xu, Intern, Center for China Analysis

Learn More: Read One Year on From “White Paper” Protests, Disillusionment With China’s Government Persists by Lynette Ong.