[The warnings are a clear signal that China’s leaders are becoming increasingly worried about the cooling economy and the ongoing trade war. The world’s second-largest economy decelerated to its slowest rate of growth since 1990 last year, according to official statistics. The true rate is probably even lower.]
By
Anna Fifield
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A
police officer stands guard in front of a portrait of former Chinese leader
Mao Zedong at Tiananmen Square in Beijing on Tuesday. (Giulia Marchi/Bloomberg News) |
BEIJING
— Chinese leaders are
becoming increasingly alarmed about the coincidence of its economic slowdown
and the trade war with the United States, with a state mouthpiece on Friday
exhorting hundreds of top Communist Party cadres to maintain their “energetic
and tenacious spirit of struggle.”
Top officials attended a surprisingly long
four-day study session this week, which ended with senior official Wang Huning
telling them to get ready to deal with “major risks.”
“We should strengthen our sense of
responsibility and purpose, and go all out to fend off and defuse major risks,”
Wang told the cadres, according to reports in the state media.
At the start of the study session, President
Xi Jinping said that China must be vigilant about “black swans” — improbable
events with severe consequences — and “gray rhinos,” or threats that have been
ignored.
He warned of “unpredictable international
developments and a complicated and sensitive external environment” — an oblique
reference to the trade war.
The warnings are a clear signal that China’s
leaders are becoming increasingly worried about the cooling economy and the
ongoing trade war. The world’s second-largest economy decelerated to its
slowest rate of growth since 1990 last year, according to official statistics.
The true rate is probably even lower.
In a sharp change from even three months ago,
when economic officials were insisting everything was fine, China’s leaders now
appear to be “somewhere between alarmed and prudent,” said Andrew Polk of
Trivium China, a consulting firm.
“Any outside observer can see that the
Chinese economy is facing challenges and that the trade war is taking its
toll,” he said. “If they were saying that everything was hunky-dory, then we
would be worried. The challenges are intense and this is forcing them to
acknowledge them, to draw a fine line between conveying confidence and saying
we recognize the risks.”
Meanwhile, Chinese economic czar Liu He is
expected to meet with U.S. Trade Representative Robert E. Lighthizer in
Washington next week to try to make progress on a deal to resolve the trade war
before the March 1 deadline set by President Trump.
The trade war isn’t the cause of China’s
slower growth — weakening demand at home and a broader global economic slump is
— but it isn’t helping. It is far from clear if an agreement can be reached
that would address some of the United States’ concerns about structural
problems, like industrial espionage and non-tariff barriers, economists say.
“I think we are prepared for the talks to
fail,” said Mei Xinyu, a researcher at the Commerce Ministry’s International
Trade and Economic Cooperation Institute. “We are willing to have the talks but
we don’t compromise on matters of principle.”
The official pronouncements are certainly
full of fighting spirit.
At the end of this week’s study session, the
first in 18 months, Wang told the cadres to be on guard.
“We must boost risk prevention consciousness
in preparation for worst-case scenarios: Take the initiative and stay at the
ready,” he said, saying China could be “moderately prosperous” this year.
This is a sensitive year for China. The
government will mark the 70th anniversary of the founding of the People’s
Republic of China in October — Wang said it should be celebrated with
“brilliant exploits” — and is also watching for any efforts to mark the 30th
anniversary of the Tiananmen Square massacre on June 4.
The People’s Daily, the official newspaper of
the Central Committee of the Communist Party, used military metaphors in a
column exhorting members to prepare for worst-case scenarios.
“All of us should keep the warrior spirit and
stay active and responsible,” it said. “To shoulder political responsibility,
we must have an energetic and tenacious spirit of struggle . . .
and young cadres must do their job with real swords and spears.”
Mei, of the Commerce Ministry think tank,
said that the statements did not suggest alarm but showed that the party was
trying to “nip the problems in the bud.”
“The current state of domestic economy is in
line with our expectations,” he said. “This study session is not only targeting
the economic risks but all kinds of risks,” he said.
Outside analysts were less euphemistic.
“Xi and the leadership are concerned heading
into 2019 and are preparing the cadres for lots of struggles,” wrote Bill
Bishop, publisher of the influential Sinocism newsletter. “The Year of the Pig
looks like it will be an especially nasty, brutish year,” he said, referring to
the upcoming lunar year.
Liu Yang, Wang Yuan and Lyric Li contributed
to this report.
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