

East Asia
Power Politics amidst the Pandemic: How COVID-19 pitted China against the West
The transitioning world order is not a debatable streak anymore and the liberal world order led by the liberal hegemon has almost met its preordained fate. In this new era of great power competition, the status quo power United States of America (USA) has found a perfect revisionist nemesis in China which – after making dramatic economic rise during the past 03 decades–asserts its due prominence and demands substantial role in the international system. Although the geostrategic competition between the two giants was already unfolding in various spheres, the outbreak of COVID-19 again pitted the two giants in a direct confrontation, and this time the USA has found its traditional allies – which were earlier circumspect in confronting China – standing alongside.
Notwithstanding the fact that the highly contagious virus does not distinguish among its victims and has flattered the humanity as a whole, the vicious reality of power politics stormed in to undeniably overshadow if not overwhelm the global response to the pandemic.
The trade of barbs between China and its peer, the USA did not accompany the outbreak. In fact, after China announced the outbreak and later imposed a lockdown – categorized by West as “draconian” – to contain the spread, President Trump was all praise for his Chinese counterpart and the government for their dealing with the novel virus. Despite the media reports about the initial missteps by the local government of Wuhan and amidst allegations that the country may have attempted a cover-upin the early phase and is withholding information which may have allowed the infection to spread throughout the world, alarm bells did not ring in the Western capitals. Arguably, it was the period when the First World had yet to see a massive outbreak of their own and a few of them might have been amused to watch the “biggest economic miracle” of the 21st century meet its own fate.
The conjectured amusement did not last too long and thanks to globalization, the virus took weeks to reach Europe. As the First World stood oblivious and unprepared to tackle such a prodigious crisis, the disastrous aftermath was always on the cards. The virus raged through Europe killing thousands and ultimately wreaked havoc in the USA which to date is the primary hit.
As the Western countries started facing the brunt, the praise for China’s actions abruptly changed into reproach calling out the country for its initial cover-up and withholding of information. Interestingly, none other than President Trump himself – the person who had praised China’s response just weeks before – led the assault with his Secretary of State, Mike Pompeo categorized as“face” of the USA’s tough approach towards China by China Global Television Network (CGTN). The blame-game soon turned into a vicious information war to control the narrative about the COVID-19; ultimately, leading towards the pressures of economic repercussions and demeaning each other in the crudest way possible, for all intents and purposes constituting a virtual “Cold War”.
Undoubtedly, the COVID-19 outbreak was initially mishandled by China and the country’s contagion outbreak detection system – developed in the aftermath of the SARS outbreak in 2003 – failed to detect the outbreak in its initial phase. To add is the complex nature of the Chinese bureaucratic model whose representatives in Wuhan – possibly to avoid political instability – reprimanded and muzzled the doctor who initially reported cases of a pneumonia-like disease in December 2019. Nonetheless, as the spread became overwhelmingly palpable, the authoritarian Chinese government swung into action and imposed brutal lockdowns, which at the end became the primary reason for the country’s obvious victory over the virus.
As China was able to significantly control the menace at home, it embarked upon “health diplomacy” which consist of dispatching relief, medical equipment, and assistance to some of the worst sufferers of the pandemic. Shrewdly, China was trying to fill the void created by the US withdrawal and the recipients of aid did not hesitate to shower their “Chinese friends” with praise and gratitude.
The US Federal Government’s response, on the other hand, was lack lustre and lethargic. President Trump initially downplayed the threat; next, he peddled dubious and unverified medical treatments to the virus; following were the spats of President with his own governors and finally, he tried to dodge the responsibility. Devoid of leadership at the federal level and without a coherent plan to combat the virus, the US health system faced overwhelming setbacks and casualties till now has touched 77,000 which President Trump fears reaching as high as 100,000.
However, humanitarian loss is only one aspect and economic devastation caused by the virus is even overpowering. The US economy shrank by 4.8% in the first quarter of 2020 and is estimated to contract by 11% in 2020 while the unemployment rate has reached as high as 14.7% – economic demolition not seen since the great depression.
A devastated economy – as opposed to a robust one, which President Trump would have marketed to win a second term in the office – is a nightmarish scenario for the Republican incumbent. Amidst his declining popularity at home, President Trump intensified his attacks on China calling the COVID-19 as “Chinese virus” and peddled unsubstantiated theories that the COVID-19 was leaked from a Chinese lab – a claim even contradicted by his own intelligence community and members of Five Eye intelligence-sharing partnership. The US Secretary of State, Mike Pompeo also touted the virus leakage theory – only to backtrack later on – joining President Trump and both the high-ranking officials claimed that they have seen evidence to the claim. Regardless of China’s own initial shortcomings to deal with the virus, the mudslinging by President Trump and his top foreign policy aide clearly had any angle of safeguarding the declining popularity of GOP by finding a scapegoat abroad.
Imitating the response of their ally across the Atlantic, European countries at the outset also downplayed the threat and approached the calamity without apt preparation marked by overconfidence and procrastination. Resultantly, Europe became the second epicentre of the pandemic with the United Kingdom leading the count with thousands of deaths.
The initial reaction in Europe was also anti-China flare-up and as opposed to the past – when the Western countries used to maintain an equilibrium between the USA and China and evaded directly confronting China – this time the USA found cronies among its traditional allies in Europe against China. The criticism of China’s initial mishandling of the virus only softened after it lobbied extensively in European Union and pressurized some members to account positively about its COVID-19 response.
Australia – another US ally and exporting about 38% of its products to China – joined the party and called for an inquiry into the outbreak of COVID-19; a call that regularly reverberates in the Western press also along with demands of compensation from China for the damage caused by the virus.
The intense information campaign was then augmented by calls for economic coercion. As the fate of phase one trade deal between China and the USA hanged in limbo, President Trump threatened to cancel the strenuously reached contract if China does not abide by its promises – a condition which China may not be able to meet given the slowness of its economy by the virus. Furthermore, a proposal to cancel the US debt obligations of US$1.1 trillion towards China was also discussed in White House prompting Chinese media to impart the USA about the repercussion of such a move.
In response, China’s “Wolf Warrior” diplomats also did not mince words and departing from their traditional way of conducting diplomacy in a circumspect and calculated way, pushed hard against the West for trying to “demean China”. The unusually aggressive Chinese diplomatic behaviour was surprising for many and conveyed the impression that China may be offhandedly repudiating the Deng Xiaoping dictum of “hide your strength and bide your time”. Chinese State media resorted to derision for the countries criticizing and questioning China’s initial response, and personal attacks were made against the high-ranking US officials. Some of their diplomats based in the Western countries – who recently flooded the twitter with their presence – attracted the ire of their hosts owing to their reckless comments. Lijian Zhao – a deputy spokesperson for the Chinese Ministry of Foreign Affairs – went as far as to peddle a conspiracy theory that COVID-19 may have been brought by the US Army to Wuhan – an observation that would earn him widespread criticism.
Shrewd business-oriented China also dragged-in the economics and Chinese Ambassador to Australia threatened to reconsider his country’s business relations with Australia if the later continues to push for the inquiry into the origins of the pandemic. These were the latest unveiled threats by China after intimidating some of the Western countries with “consequences” for their questioning of China’s human rights record.
On the face of it, China was augmenting medical aid with an aggressive diplomatic campaign and economic coercion, which in turn would benefit the beleaguered Xi regime to incite nationalist sentiments at home and thus, fortifying the domestic support base in the wake of the crisis, which irrefutably has dented the Chinese economy and has aggrieved masses. May be useful at home, the aggressive Chinese diplomatic blitz is damaging the country’s international standing and the carrot in the “health diplomacy” now seems to be overwhelmed by the stick in belligerent rhetoric and intimidation.
Undeniably, the COVID-19 crisis deepened the divisions between China and the West, especially the EU nations, and given the recently enlarged trust deficit, the relations between the deeply entangled economic partners may never restore to pre-COVID-19 state. With the USA, China is already engaged in a geostrategic tussle for global dominance, and “Wolf Warrior” diplomacy marked by aggression and bellicosity does not seem to be convincing wherewithal to woo the traditional allies of the geostrategic peer.
Undoubtedly, China has made remarkable rise during the past few decades and has virtually shaken the international system but it may be too early for China to acquire the wherewithal to act as a global hegemon. The USA may be in a retreat and the West may be facing a decline, but by virtue of globalization, the two sides are so deeply interconnected and interdependent that even a little downsizing of economic relations will be more devastating for China than the West. The trade war with the USA already slowed the pace of Chinese economic growth and if a retrenchment happens with the West also, it will be business-oriented China taking most of the brunt.
China’s own geopolitical venture, Belt and Road Initiative (BRI) – disguised as a benign scheme focusing on geo-economics – is in its initial stage of implementation and China has yet to erect its own world order parallel to the liberal one led by the USA. China has certainly expanded its influence in the BRI host countries and there are bright prospects of BRI turning into a Chinese led bloc; but can those countries substantially compensate for the economic partnerships at this moment if a retrenchment vis-à-vis the West happens, remains a big question mark.
Given the aforementioned limitations of China with respect to its economic relationship with the West, a more preferable and prudent approach will be to deal with the Western criticism with unyielding but discreet diplomacy while maintaining the “fighting spirit”. Unveiled economic threats and insensitive derision for other countries –as opposed to the previously exercised policy of delicately balancing between diplomatic and economic relationship – will only result in a backlash, as happening in the current scenario. Resultantly, the Western world will turn even warier of China and the dragon’s aims to strengthen its economic relations and create space for itself into the Western tech market will receive jolting shocks. The resultant state of affairs will be in complete contrast to the liberal policy of engagement which the western world adopted towards China; ultimately leading towards China’s ascendance to the world stage and will effectively push the world on a path to de-globalization.
East Asia
Chinese State Council report on human rights violations in the U.S. and around the world 2023

On Tuesday, March 28, 2023, the Chinese State Council Information Office issued a report on human rights violations in the United States of America during the year 2022, following the hosting of the United States of America and US President “Joe Biden” for the (Second Democracy Summit) activities on Tuesday, March 28, 2023, at the invitation of many countries of the world, with the exception of all Arab countries except Iraq, Russia and China. Therefore, the report of the Chinese State Council issued by its Information Office on the same day issued a stern warning to Washington to promote democracy with concrete measures instead of dividing the world into opposing camps. The Chinese report issued by the State Council, under the title: Headlines of Human Rights Violations in the United States of America in 2022, said that the year 2022 witnessed a historic setback for human rights in the United States, according to a report broadcast on the “Chinese CGTN news channel” on its website.
Here came the comment of the spokeswoman for the Chinese Foreign Ministry “Mao Ning” calling on the United States of America to stop interfering in the affairs of other countries, under the pretext of what is called democracy. Confirming China’s completely rejecting position regarding the so-called (American Democracy Summit) that was held in December 2021 and Washington’s division of the world into two camps according to its whims between a democratic ally of Washington and an authoritarian ally of Russia and China, while the United States ignores its shortcomings, especially with the insistence of the United States once again. To hold the so-called (democracy summit) under the slogan of supposed democracy, laying openly ideological lines to divide the whole world, and at the same time pushing towards division among the countries of the world, by not respecting the spirit of democracy. The thrust of the Chinese criticism of the first and second American Democracy Summits was the rejection of this American model prepared in advance for democracy, for the absence of a single approved democratic model. The most accurate Chinese and all other countries excluded from the Conference of American Democracies, especially all Arab countries, is that there are many different models of democracy according to the circumstances of each country separately, as well as everyone’s agreement at the present time that development is everyone’s top priority. Hence, the democratic process promoted by Washington and the current Biden administration should not necessarily follow a specific model, as there is no single model that can be followed for this democracy. Also, according to their point of view, American-style elections do not make democracy. It is important that elections accompany the development of civil society, besides the democratic process needs a long time that may reach decades, or even generations, and that democracy needs education and knowledge, economic modernization, responsible and independent media, and support for children’s and women’s rights. Here, although democracy can be encouraged from the outside according to the American perception itself, it is better to build it from within and from its children in order for it to continue and grow.
The Chinese point of view is that the principle of promoting American democracy does not take into account any reliance on the cultural, political and religious specificities of China and countries, and therefore what applies to China in its rejection of American democracy applies to the rest of the other regions, such as Latin America, Eastern Europe, and East Asia and others. Here came the confirmation of the (Chinese State Council) report on the pseudo-American democracy, that it interferes in the internal affairs of other countries under the pretext of pseudo-democracy. The United States of America must understand that we need to implement real democracy, reject pseudo-democracy, and promote the democratization of international relations. Also, what the world needs today is not the so-called (American Democracy Summit), which creates problems and confrontation internationally, but we need solidarity and cooperation that can actually solve the problems facing the entire international community. Hence, China called on the United States to stop directing accusations against other countries and to stop interfering in the internal affairs of others under the banner of what is called democracy. Especially since American interests have become the first determinant of the American vision of spreading democracy in the world, especially the Middle East region and the Arab world, and not according to an objective or rational American vision.
Accordingly, the success of the democratic transition in a country like Spain, for example, did not eliminate terrorist operations by separatist organizations from the Basque region, just as the Israeli claim to democratize its political system did not prevent extremists and settlers from attacking the Palestinians, and their democracy was not a deterrent when their former prime minister was assassinated. Yitzhak Rabin, and that democracy did not prevent them from attacking the Palestinians or interfering in intelligence, through the Israeli Mossad itself, in the affairs of other neighboring countries, just as many bombings took place in the United States of America, London, New Zealand, France, and other democratic Western countries through terrorist elements that arose under a purely democratic system, according to the same American and Western perception. Also, despite the liberation of Iraq from the dictatorial regime according to the concept of American military intervention in Iraq or Afghanistan to spread the American system of values, many incidents, terrorist acts and explosions occur there continuously. Also, the real reason for the spread of terrorist acts in Iraq, Afghanistan and many countries of the whole world is the same rejection of the American presence and interference in these countries and their internal affairs. This confirms the failure of imposing American democracy according to its suspicious purposes and perceptions around the world.
Here, we must respond strictly here to the United States of America regarding its interference in the affairs of other countries under the pretext of democracy by using the mechanism of American violence that is internationally criminal, which is known as the case of “Abu Ghraib prison in Iraq” by leaking pictures and videos from inside it related to the heinous crimes committed by the Americans in the name of democracy. What really stopped me in this regard were the investigations launched by the European Parliament against the United States of America to verify the existence of secret prisons affiliated with the CIA in several European countries. Indeed, an official European report was issued on June 7, 2006, accusing 14 European countries of complicity in a way Directly or indirectly with the CIA to detain individuals and forcibly imprisoned by Washington in the heart of secret prisons inside Europe or illegally transfer them to other countries when the truth about American crimes is discovered and exposed.
Perhaps what can be seen in this context is that the American intelligence game to interfere in the affairs of other countries through the game of democracy, i.e. dividing countries into democratic and authoritarian ones, such as (the game of periodic statements provided by the US State Department through its embassies around the world regarding the state of democracy in countries the other), and providing the American diplomatic missions with new elements related to propaganda for the American-style democratic transition by following intelligence methods to recruit some to spread and promote that American democracy by spreading chaos in those countries through American recruited elements. As well as the mechanism of using international conferences by the United States to put pressure on non-democratic countries. Here, the US Information Agency, which was merged years ago with the US State Department itself, is one of the most prominent bodies that promote American democracy, in addition to using other economic means and mechanisms, such as linking between democratization and aid.
Also, my strict and sharp response to the United States of America – and as a living witness internationally to what was done against me by Washington, because I am one of the most public critics of those American policies – is the United States of America’s use of the mechanism of preventing media or media appearances and following the American policy of silencing the mouths of all Critics of it, the United States of America is working through its embassies to periodically and comprehensively list all critics of those American policies in the various media in their countries, especially specialists in Chinese and Russian affairs around the world who are close to the countries of China and Russia to prevent them from appearing in the media and muzzling their mouths, or trying to hold Deals with them to change their convictions and thinking in terms of China or Russia in order to criticize them according to a pre-prepared American agenda, which I was a living witness to, while keeping the names of all its parties who exerted pressure against me in favor of Washington.
The game of American interests in spreading democracy in the Arab region also stops me here, by exerting pressure on many Arab countries to take fundamentally non-democratic measures, whether military or security, against certain forces, parties, elements and groups that Washington does not want. With the various American embassies asking some Arab governments and others around the world to intervene to prevent their newspapers from directing criticism of the United States of America – just as it happened and is constantly happening to me and many of my colleagues from China’s friends around the world – and to give direct American directives through their respective embassies, to limit its critics in the Arab region, as a witness to what they did specifically, to force their regimes to stop publishing what the US administration considers incitement to violence and hatred, in reference to the criticisms directed by the Arab media of the aggressive Israeli policy in the region and the fact that Washington turned a blind eye to it in the first place.
Accordingly, any Arab or Islamic country that raises the slogans of freedom and democracy as it wants and that Washington promotes does not intercede for it, because of the pressure of the United States of America on it mainly in order to reduce the margin of freedom of opinion and expression in order not to criticize the American and Israeli interests, which is what is happening realistically and practically in the homeland The Arabs turn a blind eye to the practices of the Israeli occupation and its aggressive policies regionally and internationally. This proves Washington’s neglect of any freedom of expression or democracy when it comes to its utilitarian and narrow interests, or the interests of Israel. This is what happened to me personally and many of my colleagues who specialize in Chinese affairs around the world, mainly friends of China and its ruling Communist Party, have been subjected to. This proves the American policy of silencing mouths towards researchers and academics around the world who are not loyal to the interests and claims of American democracy.
Finally, the note worth mentioning to me and the Chinese remains, is the refusal of the State Department of the United States of America to comment on the approved criteria for inviting some countries or excluding others, with the statement of the US State Department contenting itself with saying that “Washington does not seek to determine which countries are democratic or not”. This in itself is absurd. Also, international relations are not based at all on morals and values as promoted by the US administration and President Biden, but rather are based on power and interests. Therefore, the adoption of US policy for the issue of spreading democracy worldwide may impose restrictions on its foreign policy and national interests globally. Also, working through the United Nations to support democracy should be the only international criterion for judging the success of any democratic transition experience or not, so the goal of the United Nations, as an intergovernmental organization representing all countries of the world, should be to support democracy in the world away from the utilitarian and narrow interests and policies of American.
East Asia
Japan-Indian Equalizer of China’s Rise

The two-day visit of Japanese Minister Fumio Kishida to New Delhi on March 2023 suggests that political and geopolitical events are actively performed in the Indo-Pacific region. A military-political alliance or at least close, deep cooperation in the political, economic and military-technical areas is gradually and very systematically developing between Japan and India. The parties have a long history of connections, and we witness an incremental systematic deepening of these contacts. Now we are talking about interesting agreements in the infrastructure of the economy, trade and military-technical cooperation. It is especially worth mentioning the general military training, which is still in an air format. Still, I think it will soon be in other military cooperation areas. It has been said in commentary by Georgi Asatryan, Ph.D., political scientist, expert for ASOF (California), former associated professor for the Moscow State University, and senior lecturer for Plekhanov Russian University of Economics, political scientist Georgi Asatryan.
Of course, we need to say that India and Japan have certain competitive relations with the Asian superpower China. And in this regard, they are deepening cooperation to restrain the ambitions of a growing China. Here again, it is worth mentioning Japan’s security strategy, which was adopted in December, and as many as three key instruments were revised. This is the national security and defence strategy and the Japanese military construction program. A big part is given to cyber security, economic security, diversification of economic relations, and infrastructure relations.
And, of course, neither India nor Japan calls China an enemy or a threat. But there is an understanding that we are talking about a strategic challenge, and all this is aimed at preventing China. It is also worth noting that the USA is invisibly present in this group, and Japan has a significant agreement with the USA. In fact, it is a military alliance outside of NATO. In January 2023, Biden and the Japanese minister met. A complete joint statement was published where it was noted that this union does not have certain borders and that the union of the USA and Japan is ready to resist any threats these countries face. And, of course, Taiwan’s sovereignty is important for Japan.
For India, this is less essential. But in any case, the parties are actively building advanced relations within international organisations such as QUAD, which includes Japan, India, Australia, and the United States. Within this framework, a particular security structure is being created in the Indo-Pacific and the Asian region, which should restrain the excessive ambitions of a growing authoritarian China. It should be noted that the Indian and Japanese leadership are achieving some success in this matter. There is quite serious progress, which is permanent and visible in all areas of relations between these countries.
The goal of India-Japan cooperation is to stabilise the Indo-Pacific region by restraining Chinese behaviour. Geography shapes their responses differently, with Japan focusing on maritime capabilities, and India on the land. There are differences, too, in the fact that fellow Quad members Japan and Australia are formal military allies of the US, while India is not. But what is shaping the new initiatives and orientations are fears of China and in this, Japan and India provide the two key lynchpins of the free and open Indo-Pacific.
In December, the Kishida government revised three key documents relating to its security perspective in the region. These were the new National Security Strategy, the National Defense Strategy and the Defense Buildup Program. Taken together, these are addressing new domains and challenges, including space, cybersecurity and economic security. The new documents said that Japan was “facing the most severe and complex security environment since the end of World War II.” A major concern was that China could attempt to reunify Taiwan by force in the coming decade. Tokyo does not quite yet designate China as a “threat”, its chosen designation is “the greatest strategic challenge that Japan has ever faced.”
But perhaps the most significant development was the sentence in the Biden-Kishida joint statement January 2023 which said that not only had the alliance never been stronger but that the allies “strongly oppose any unilateral attempts to change the status quo by force or coercion, anywhere in the world.” More than anything else, this statement marks the change in Japan’s global posture. But ties between the two on the economic front are way below their potential and India has a lot of catching up to do with China. As The Economist has pointed out, China accounted for 24 percent of Japan’s imports and 22 percent of its exports, while India accounted for 0.8 percent of Japan’s imports and 1.7 of its exports.
East Asia
Will Xi Jinping Continue the Wealth Crackdown in his Third Term?

Of the 445 people who lost their billionaire status last year, the majority, almost 230 were from China, According to the recently released Hurun Global Rich List for 2023. Beijing’s crackdown on major tech companies which began in 2021, continues to hurt the country’s super rich. Tencent owner Ma Huateng lost three points and was placed at 31 on the list. Jack Ma Yun, founder of China’s e-commerce giant Alibaba Group Holding, dropped 18 points to 52nd place from 34th a year earlier. ByteDance owner Zhang Yiming is down by 11 points alongwith CATL chairman Robin Zeng Yuqun whose worth dropped by 13 points. Others leading Chinese entrepreneurs to drop on the superrich list included Netease CEO Ding Lei who was down 9 points and placed at 46th place tying with He Xiangjian co-founder of Midea, one of China’s largest appliance makers who fell 11 points.
Earlier this month Xi Jinping formally began his term as President for an unprecedented third time. Frustrations over lingering COVID-Zero policies, censorship, economic stagnation and hardships, led to rare yet legitimate protests in China which ultimately only led to a deepening crackdown on dissenters. Amidst increasingly antagonistic international relations, wherein Chinese companies are facing harsh scrutiny both domestically and by the US had curbed corporate enthusiasm .
Pursuit of Common Prosperity:
A central pillar of the economic miracle that took place in China in the past decade was the conscious decision to unleash the entrepreneurial energies of its business class by destigmatizing the accumulation of wealth. During the years of China’s market reforms (1978-2005) GDP rose by ten times, average wages grew six fold. By 2020 GDP per capita was averaging about $10,000 and China entered an era of wealth and prosperity. This led to a concentration of massive personal wealth. In 2020, mainland China had 626 billionaires, and the total wealth of China’s 400 richest soared to $2.11 trillion, from $1.29 trillion a year earlier. Advancements by technology brands like Alibaba, Huawei, Tencent were driving the global economy. But the Chinese government’s business-friendly record has wavered under leader Xi Jinping and his regulatory crackdowns on private enterprise, as he pursued a campaign of ‘Common Prosperity,’ aimed at driving down inequality by spreading wealth.
The tech sector’s breakneck growth worth some $4.5 trillion exposed market behaviours that raised the eyebrows of the Chinese leadership. Xi Jingping trained his eye on China’s class of billionaire CEOs. China’s cyberspace regulator fined ride sharing app Didi Global just over $1.2 billion for violating cybersecurity and data laws. Aside from this, a personal fine of $147,000 was imposed on Didi’s chairman and CEO Cheng Wei and president Liu Qing, respectively. Didi also saw its plans to list on the New York stock exchange go up in smoke. Regulations imposed on food delivery app Meituan, eroded over $25 billion its stock value. In the financial sector China has resorted to sporadic crackdowns, on cryptocurrency, on peer to peer lending and on fintech giants. Jack Ma, once the poster boy for the rapid rise of China’s technology industry delivered a now infamous speech on October 24, 2020 criticising the government’s financial regulation, claiming that these would stifle innovation. The government responded by suspending the Ant Group’s US$37 billion IPO in Hong Kong and Shanghai. Through 2022 Tencent, which owns 17% of Meituan, was engaging with financial advisers to execute a potentially large sale of its Meituan stake. Recently the Chinese government acquired the “golden share” in units of Alibaba and Tencent Holdings, to gain decision making control.
China also used the now scrapped zero-Covid policy to invade the private spaces of the elite class. Added to the tech crackdown are global monetary tightening, COVID-19 disruptions, a complex political climate resulting in many wealthy Chinese physically relocating to other countries. Platforms such as GitHub are swarming with chat groups discussing exit from China. Singapore, known for its tax-friendly regime, political stability, and widespread use of Mandarin has become a preferred destination. And although Japan doesn’t have the best of relations with the PRC it has welcomed wealthy Chinese with its attractive business investment visas. After his fallout with Chinese authorities Jack Ma moved to Tokyo and was only recently seen in Bangkok. Since the Jack Ma incident several CEOs like TicTok and ByteDance founder Zhang Yiming, online retailer JD.com billionaire founder Richard Liu, founder of e-commerce giant Pinduoduo Colin Huang.
Last year’s rare protests against Chinese leadership in the wake of Xi Jinping’s imposition of a zero-Covid policy that kept many urban residents under strict lockdown were an indication of how difficult life was becoming for ordinary Chinese, to say nothing of businesses operating there.
Growth Target set at 5%:
In 2022, the Chinese economy grew just 3%, missing its expansion goal of around 5.5% by a wide margin. Covid control policies took a heavy toll on a wide range of businesses and activities. At the National People’s Congress, the country’s annual parliamentary gathering, earlier this month a modest GDP target of 5% was announced. In his first press briefing, Chinese Premier Li Qiang, acknowledged China won’t find it easy to meet the goal of expanding GDP by about 5% this year, as the government focuses on delivering stable prices, creating jobs and supplying ample housing. Managing director of Beijing-based boutique investment bank Chanson & Co, Shen Meng feels that the 5% goal is more reasonable as it is “more in line with downward pressures including a weakening in exports and consumption.”
But with economic indicators not looking up, the possibility of achieving the relatively conservative target of 5% growth in 2023 looks difficult. Chinese exports slid by 6.8% by January and February, and imports were down by 10.2% during the same period. Meanwhile, the yuan lost about 8% of its value against a surging dollar in 2022, the biggest annual drop since 1994. In addition to the slowing economy this is also largely due to the Federal Reserve’s aggressive rate hikes. In the past year to end-January, in China, the benchmark Shanghai Composite index lost nearly 11%. The pace of the recovery in Chinese consumer demand has not been as strong as expected.
Declining Revenues In Property Sector:
The finances of local entities are already stressed from the burdens of financing years of COVID containment. Although the Chinese government has doled out generous fiscal stimulus, property investment has dropped by 5.7%. China’s crackdown on the property market, meant that the industry shrank 5.1% in 2022. The government sensed that the property sector had become one of the biggest drags on the wider economy. Although it has recently eased funding access for many real estate companies, Moody’s Investors Service forcesats that nationwide sales are likely to decline again in 2023 due to continued sluggish demand. Chinese conglomerate Fosun International, has total liabilities worth $90 billion, an increase of 8% from last year. Amid declining revenues from property sales, it remains to be seen how long the government coffers can float the economy.
Celebrities Under the Scanner:
Even some of China’s most popular media stars find themselves under the scanner of the “common prosperity” campaign to correct wealth inequality. In an effort to rein in the prevailing consumption culture in China, stars like Zheng Shuang, Zhao Wei, internet celebrity Viya, find themselves facing financial penalties and even arrest as in the case of Liu Xiaoqing, one of the most famous actresses in China. Such relentless targeting of media stars who draw traffic and drive up consumption, is making merchants and brands at Alibaba and across a number of its rivals’ platforms nervous.
Tencent Holdings which has spent most of 2022 reeling from the crackdown on the technology sector has seen two quarters of falling revenues. As authorities were focused on solving social problems like gaming addiction among the country’s youth, Tencent suffered from the lack of approval to gaming licences. Although the withholding of licences is now withdrawn, Tencent remains cautious about its posture. As if mindful of the President Xi Jingping’s posture towards technology billionaires, Tencent co-founder President Martin Lau said “We will definitely not reverse back to the relatively unrestrained development path prior to the pandemic,..We will improve efficiency in a discipline-oriented way,” at a recent media event.
Antagonistic International Relations:
The China-U.S. has intensified, with President Joe Biden administration seeking to curb tech exports to undercut the progress of Beijing’s technological and military advances. With several Chinese companies and other organisations on the US Entity List, prohibiting them from using strategic American technologies, the crackdown on China’s chip industry is beginning to bite. A subsidiary of ByteDance TikTok which has over 150 million American users, is under greater scrutiny accentuated by the dramatic congressional hearing of its CEO Shou Zi Chew last week.
Chinese companies are facing equally harsh scrutiny and consequences in other destinations. Amid concerns over China’s involvement in critical UK infrastructure, the UK government has removed China’s state nuclear company out of the nuclear power plant project on the Suffolk coast. In his speech to the Lord Mayor’s Banquet, Prime Minister Rishi Sunak announced that the UK needs to evolve its approach to China and that the “golden era” of relations with China had to end as close economic ties had proved to be naive.
Xi Begins his Third Term:
After receiving a unanimous endorsement from the National People’s Congress, President Xi Jinping was re-elected as president for a third term on March 10, effectively cementing his status as the country’s most powerful leader since Mao Zedong. This was a certainty after the 20th National Congress of the Communist Party of China elected Xi Jinping as party leader for a third term last October. But even as Xi Jinping began his unprecedented third term, the political climate in China remains uncertain. A mix of economic slump and complex policies is making the wealthy rethink their stay in the country. The drive to reign in the economic influence of China’s private sector has diminished private sector expansion and business confidence. The regulatory policies unleashed in the past two years are unlikely to be relaxed anytime soon. Speaking to delegates on March 6, he reminded business leaders of their responsibilities to adhere to the law and support “common prosperity,” clearly indicating that in the campaign to makeover the economy the wealthy might yet be unsparingly targeted. Under President Xi Jinping’s stringent wealth crackdown, there are fears of arbitrary detention, expropriation, or at the least trumped up charges. These anxieties are fueling an emigration trend among the Chinese ultrarich. It is unlikely that with the current economic slowdown the common prosperity campaign will help bridge the gap between the rich and the poor. But meanwhile the brutal crackdown by Xi Jinping will have lasting effects and cause further damage to its economy.
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