The Financial Times, through the writing of Eleanor Olcott, its China correspondent, is currently at the center of numerous controversies for publishing a chart showing that the number of start-ups in the country plummeted from 51,302 in 2018 to just 1,202 in 2023!
Beyond the heated debate among experts contesting the FT’s sources, it is becoming more and more obvious, month by month, that China is evolving into a place where “trading” dominates at the expense of long-term investment. The evolution of the national stock market is the best proof of this—after being nearly stagnant for months – it surged dramatically in just a few days, enjoying its best period in 16 years.
Special sovereign bond issuances totaling 2 trillion yuan (approximately 283 billion USD). Drastic cuts in mortgage rates, accompanied by nearly free refinancing options, aimed at stopping the hemorrhage in its real estate market. The Chinese government’s recently adopted, absolutely massive stimulus measures have undoubtedly generated widespread excitement within the country. Citizens who do not yet have stock trading accounts are rushing to open one with their bank or local broker.
However, these measures inspire little confidence among non-Chinese investors, unsettled by such volatility, who also cannot rely on official economic data. It is through this lens that the contestation of the above-mentioned figure by the FT should be understood, as China’s official reports on the country’s economic health are either incorrect or delayed by months. Could such failures be imagined in the United States or the European Union? How could a foreign company or venture capitalist dare to invest in an economy whose status cannot even be analyzed due to a lack of reliable data?
This issue raises another, more fundamental question. Is this lack of transparency intentional, aimed at stifling any debate about the country’s economic health? The fact is that this spectacular stock market surge and the astronomical sums injected (or soon to be injected) into the economy impress only the Chinese, as the rest of the world knows they are the result of one man’s will.
The parallel with the zero-COVID policy is inevitable. The recent surprise economic and financial decisions made by Beijing are of the same nature as the abrupt lifting of the draconian Chinese health policy after 22 months of severe suffering imposed on the population. Abrupt, and revealing—if there were still any doubts—of the hyper-centralization of power, where one man can press the ” funny money” or liberate his population from inhumane confinement.
Nevertheless, this nearly 300-billion-dollar stimulus, not counting the costs of real estate subsidies, appear more as a desperate attempt to save face. China, contrary to its commitments at the start of Xi’s reign in the early 2010s, is returning to economic planning, unilaterally imposing disastrous regulations on foreign investments and businesses without any consultation. Driven by its superpower ambitions, Xi has definitively abandoned any policy encouraging domestic consumption in favor of an expansionist industrial policy. Today, China’s formidable production machine is awash in overproduction, with no clear solution, logically fueling tensions with the West.
The “decisive role” (a Chinese concept from the early 2010s) assigned to the market is now a thing of the past. Foreign capital is trickling in, if at all. Chinese authorities and their spokespersons blame geopolitical tensions and Western trade barriers. The few foreign investors still in China take advantage of any stock market rise to liquidate their positions. How can Xi be made to understand that his country’s growth is doomed to falter without liberal reforms?
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