Security is Still China's Top Priority, Not the Economy
Nikkei Asia
The following is an excerpt from Diana Choyleva's op-ed in Nikkei Asia. Diana is a Senior Fellow on Chinese Economy at the Center for China Analysis (CCA) at the Asia Society Policy Institute (ASPI).
Next week, China's annual National People's Congress (NPC) session will convene in Beijing. Full of pageantry, the NPC is usually a time for the Communist Party to signal action on economic growth to thousands of provincial officials in attendance.
This time, though, local officials can expect to hear a mixed message that prioritizes security over growth — a formulation that is bound to weigh on the economy over the coming year.
"Security" has been the mantra for Communist Party chief Xi Jinping since he took power in 2012 and he has doubled down on it since beginning his third term as general secretary in 2022.
For Xi, security does not just mean tight control over popular unrest as is common to authoritarian governments. It also encompasses financial, economic and infrastructure security, a conceptual package that Beijing hopes will ensure China's central place in the world economy and the Communist Party's hold on power.
But Xi's focus on security has so far held back economic development and will remain a drag on activity this year, even if his administration rolls out new growth policies during the NPC.
China's most innovative companies are under increased regulatory scrutiny, private entrepreneurs and well-off urbanites are depressed, the U.S.-led Western world is restricting China's access to its markets and knowhow and foreign investors are leaving China.
In a macro sense, plenty of other factors are slowing down the Chinese economy, too. These include a significant hangover of bad debt at the corporate and local government level and overcapacity in both manufacturing and infrastructure which discourages additional investment.
On the demand side, Chinese consumers remain cautious after the bruising years of COVID lockdowns and the hit to their incomes and wealth from Xi's redistributive policies.
China watchers like myself look to provincial people's congresses, which are held in January and February, for clues to the party's emerging priorities.
