The People’s Republic of China (PRC) celebrated the 75th anniversary of its establishment on Tuesday. The Chinese Communist Party (CCP) has managed to stay in power for 75 years, even though it has been responsible for the loss of tens of millions of people through its missteps during that time.
Chinese President Xi Jinping (習近平) might be wondering how long this can go on.
“The road ahead cannot be smooth. There are bound to be difficult and dangerous obstacles. We may face major tests of strong winds and waves or even a terrifying storm,” he said at a National Day celebration on Monday evening.
He was actually talking about himself. Maybe he should also ask himself whether this is a result of bad luck or his dictatorship and ignorance.
China’s economic downturn was caused by the bursting of its housing bubble. Its real-estate market accounts for about 25 percent of GDP and is one of the major sources of revenue for its local governments. China’s problem of unfinished properties first broke out about two or three years ago, with owners of these uncompleted properties cutting off their mortgage payments in order to protect their rights.
Meanwhile, the falling housing prices have turned such properties into a negative asset for some owners. As the middle class is the main force of internal consumption in China, this has led to a decline in the domestic economy. The Chinese government’s indecision has continued to exacerbate the problem.
At the moment, China’s financial institutions are trying hard to cut interest rates and to offer various incentives for the “destocking” in the housing market. However, Japan’s Nomura Securities Co has suggested that China should prioritize a policy of “guaranteed housing delivery” by good construction companies over the government policy of acquiring unsold homes, because the number of unfinished buildings is 20 times the number of finished, but unsold homes.
If this problem remains unsolved, how can China’s economy recover? The Chinese National Bureau of Statistics announced that the profit of large industrial enterprises rose 4.1 percent in July, but fell 17.8 percent in August.
The latest data on China’s stagnant economy show that the emergency measures launched by the authorities — such as issuing consumer vouchers in certain regions and providing 1,000 yuan (US$142) in cash to the disadvantaged — were implemented only after severe economic pressure. This has also exposed Xi’s lie that Chinese people have “cast off poverty.”
Recent media reports said that seven young Chinese killed themselves by jumping off a bridge together in Beijing’s Hai-dian District (海淀). Meanwhile, a Chinese man fatally stabbed three and injured 15 in the street of Shanghai. Such cases reflect China’s social unrest.
Xi has hollowed out China’s treasury, while Chinese people’s wealth has shrunk. However, at the opening of the Forum on China-Africa Cooperation last month, Xi announced that China would provide 360 billion yuan in funding over the next three years to support Africa’s development.
This is exactly the thinking of Empress Dowager Cixi (慈禧) of the Qing Dynasty, who once said more than a century ago that “it is better to give gifts to foreign allies than family slaves.”
More than a century later, this has become the thinking in the new era of Emperor Xi.
Paul Lin is a political commentator.
Translated by Eddy Chang
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