Xi Jinping's Concerns Amid China's 75th National Day Celebrations
As China approaches the monumental occasion of the 75th anniversary of the founding of the People's Republic, the atmosphere is tinged with a complex mix of national pride and underlying economic trepidation. In late September, a vibrant floral installation, standing 18 meters tall, was erected in Tiananmen Square, adorned with symbols of prosperity like giant peaches and gourds. This public display encapsulates the celebratory spirit of the event, yet, in private, President Xi Jinping is wrestling with deeper anxieties—worries reminiscent of a Soviet-style collapse that haunt his leadership.
China's Communist Party has experienced a longer reign than the Soviet Union, which raises the stakes for Xi. Recent months have seen a bleak economic landscape emerge. Young professionals face challenges securing employment, and many white-collar workers have endured layoffs and pay cuts. Entrepreneurs struggle to navigate an increasingly stringent financial environment, while the middle class sees their wealth dwindle amid falling housing prices. The pervasive sentiment of despair is captured in the phrase “the garbage time of history,” reflecting a mood where many feel that the prospects for improvement are dim.
Unlike the buoyant atmosphere surrounding the 2019 National Day celebrations, which ignited conversations about China potentially overtaking the U.S. as the world’s largest economy, the current discourse has shifted. Now, concerns dominate regarding how China can sidestep the pitfalls of Japan's economic stagnation following its own real estate bubble collapse. Amid these economic uncertainties, Xi Jinping has finally initiated a stimulus package aimed at rejuvenating confidence in the world's second-largest economy.
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In a bold move, the People's Bank of China rolled out measures to counteract deflation, making borrowing more accessible for both households and businesses. The announcement of cash handouts to struggling citizens and subsidies for recent graduates demonstrates a recognition of the urgent need for intervention. Following these policies, there was a notable surge in the stock market, showcasing a brief optimism before the national holiday.
Yet, while the stock market rebounds, economists warn that stimulating the market does not equate to addressing the real economic issues at hand. Households across China have endured substantial wealth loss, primarily due to a collapsing housing market, estimated to have cost families a staggering $18 trillion. Experts like Logan Wright caution that without significant structural reforms—including enhancing social safety nets and diversifying economic models—China’s long-term growth prospects remain perilously uncertain.
The real estate sector, integral to both the economy and household wealth, faces formidable challenges. Many cities have begun easing restrictions on home purchases, yet with a surplus of unsold properties, the outlook remains grim. The decline in population growth exacerbates these problems, suggesting that the nation may be at a crossroads.
Moreover, China's youth, once brimming with hope, now face a reality starkly contrasting their parents' experiences. They are increasingly disillusioned, grappling with a competitive societal landscape that fosters feelings of burnout and resignation. This discontent could pose a threat to the Communist Party's historical legitimacy, as the youth unemployment rate climbs, reaching alarming heights.
As the nation prepares to celebrate its 75th birthday, Xi Jinping is keenly aware of the delicate balance between showcasing national strength and addressing the mounting economic challenges. The narrative of national rejuvenation, once a rallying cry for progress, now hangs in the balance as the country faces a future fraught with uncertainties. The festivities will unfold amid this backdrop of mixed emotions, with citizens torn between pride in their national achievements and the sobering realities of their economic struggles.
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