Economic slowdown

China’s stagnant economy

 

The once extraordinary rate of Chinese economic growth is slowing. In 2014, China’s GDP grew at an official rate of 7.4 percent, slightly less than the stated goal of 7.5 percent. Although more recently monthly data have been more robust, the trend towards slowing growth seems inexorable. A decelerating Chinese economy, coming at a time of global economic uncertainty (especially in the eurozone), could have dramatic economic implications throughout the world. However, the repercussions of a Chinese economic slowdown would not be limited to the economic sphere. Given the incredible importance of economic growth to political stability – both within China itself and East Asia in general – adapting to a dampened Chinese economy will be a pivotal challenge in the Asia-Pacific. While an official GDP growth rate of 7.4 percent would be the envy of most major economies, this figure represents China’s lowest economic growth since 1991. And of course, economic data from China’s National Bureau of Statistics is not completely trusted by all observers. Local officials (and the central government itself) have a vested interest in exaggerating their economic performance. Capital Economics, a London-based research group, monitors the Chinese economy by looking at the five factors of electricity output, freight shipmen, construction, passenger travel, and cargo volume. According to this China Activity Proxy, recent annual growth is closer to 5.7 percent.

Political communication in China

Political communication in China

Regardless of the statistical specifics of the Chinese slowdown, this development poses some degree of political risk for the Chinese state. For more than two decades economic growth has been the major factor in ensuring political stability in China. Many Westerners forget that the massive protests that rocked Beijing and other Chinese cities in 1989 coincided with the biggest economic crisis of the post-Mao era, with annual inflation of 30 percent leading to panic buying throughout the country. Since 1990, China has been governed by a social contract in which the material lives of ordinary citizens improve dramatically while the Party keeps a monopoly on political power. Rising wages and standards of living helped ensure political stability. Historically most revolutions, including the recent upheavals in the Middle East, only reached critical mass when a majority of a country’s people lost hope in the economic capabilities of the governing political structure. Recent initiatives by the Chinese state can be understood in light of these economic concerns. Since coming in to power in 2013, the administration of President Xi Jinping has launched several populist measures. Posters throughout the country combine traditional Chinese themes with Communist Party slogans to promote the “Chinese Dream.” Xi’s campaigns against lavish banquets and other government waste led to a significant drop in the price of high-end liquor soon after his rise to power. Perhaps most important has been a massive anti-corruption campaign, which has netted thousands of corrupt officials, from minor bureaucrats to the massively powerful former head of internal security.

Images by Europesworld