My Take | Why everyone frets about China
- A slew of new and even radical policy changes, introduced in the past year alone, is enough to cause concerns even among Beijing’s most sympathetic observers and diehard supporters
Henry Kissinger recently complained that the United States didn’t have a coherent policy towards China. Implicitly, he meant that those in charge in Washington didn’t understand the country. Perhaps that’s true. But it is also true that many Chinese themselves are perplexed and confused by Beijing.
Under President Xi Jinping, there has been a sea change in many policies at different levels of state, society and economy. And that’s what scares people, even those who are sympathetic to China and its leadership. People don’t like change because that means uncertainty. They will naturally question whether the changes will be for the better or worse. But who can tell when some policies aimed at the short term, such as liberalising the coal pricing market system, may have lasting consequences while other grandiose visions such as “common prosperity” may or may not pan out.
Just consider the policy changes Beijing has introduced this year alone, which admittedly has been more frantic than previous years.
There is the crackdown on Big Tech, which includes discouraging mainland companies from listing in the US and tightening data collection and security. That completely messed up the post-IPO (initial public offering) valuation of ride-hailing company Didi Chuxing in New York and subjected it to harsh regulatory scrutiny. All that followed the cancellation of the IPO of fintech company Ant Group at the last minute in November last year, in Shanghai and Hong Kong.
Beijing wants to switch to a “green” economy and achieve decarbonisation. But that has contributed to a coal shortage and energy rationing across the country. In turn, coal pricing has been temporarily liberalised. Economic growth is expected to be negatively impacted for the rest of the year.
“De-risking” is not new to Xi, as Beijing has long realised the economy depends too much on an inflated real estate market; the developers are too leveraged and many local governments – which sell land to developers – are deep in debt. As early as 2007, former premier Wen Jiabao had warned that the trajectory of China’s economic growth was “unstable, unbalanced, uncoordinated and unsustainable”.
