President Xi Jinping, in his New Year’s Eve speech, acknowledged the financial struggles faced by businesses and job seekers in China, marking a significant departure from his usual New Year messages.
This admission comes at a crucial time for the world’s second-largest economy, grappling with a structural slowdown, weakened demand, rising unemployment, and a dent in business confidence.
President Jinping acknowledges China’s economic challenges
Xi, addressing the nation, openly stated, “Some enterprises had a tough time. Some people had difficulty finding jobs and meeting basic needs.”
It’s noteworthy that this is the first instance since 2013 that Xi has directly mentioned economic challenges in his annual New Year’s messages.
This acknowledgment reflects China’s pressing issues, including a decline in factory activity, rising unemployment, and weakened business confidence.
Factory activity decline and economic indicators
The National Bureau of Statistics (NBS) released its monthly Purchasing Managers’ Index (PMI) survey just hours before Xi’s speech.
The data revealed a decline in factory activity in December, reaching the lowest level in six months.
The official manufacturing PMI dropped to 49, indicating contraction for the third consecutive month.
China’s manufacturing sector’s struggles in 2023
China’s massive manufacturing sector struggled throughout 2023, facing challenges such as a prolonged property downturn, record-high youth unemployment, weak prices, and financial stress at local governments.
Despite a brief pickup in economic activity in the first quarter of the year, the manufacturing PMI contracted for five months until September, only to dip below 50 again.
Government measures and entrepreneurial concerns
Beijing, in response to economic challenges, rolled out supportive measures in 2023, with promises to intensify fiscal and monetary policies in 2024.
However, the government’s increased control over the economy and crackdown on businesses, citing national security concerns, have raised alarms among entrepreneurs and deterred international investors.
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This move follows Beijing’s crackdown on Big Tech, with Ma officially ceding control, marking a significant event in China’s economic landscape.
Xi Jinping emphasizes Taiwan reunification in New Year’s address
In his New Year’s address, Xi reiterated China’s stance on Taiwan, emphasizing the goal of reunification.
These comments, coming just weeks before Taiwan’s presidential elections, underscore the geopolitical tensions. Xi’s commitment to reunification and his broader goal to “rejuvenate” China globally highlights the strategic importance of Taiwan in his vision for China’s future.
Navigating economic uncertainties and political aspirations
Xi’s candid acknowledgment of economic challenges, coupled with geopolitical posturing, sets the tone for China in 2024.
Balancing economic recovery, addressing concerns within the business landscape, and navigating political ambitions will be essential as China strives to overcome the hurdles posed by both internal and external factors.