Economic Issues Overshadowed by Optimism, Zhongnanhai's Anxiety and Inaction

These elderly individuals are unable to afford pork priced at 20 yuan per jin. (Video screenshot)

[People News] The government work report from the Communist Party of China's two sessions has set this year's economic growth target at 4.5% to 5%, a record low in decades, which contradicts the party's recent optimistic economic rhetoric. Recently, state media even called for a 'counterattack' against the so-called 'collapse theory' of the Chinese economy, aiming to suppress voices that expose the economic reality. Experts suggest that this indicates the authorities' avoidance of the current economic challenges; the government work report failed to propose effective solutions to economic issues, instead promoting a 'confidence theory' that gives the impression of inaction and unrealistic optimism. Other experts have noted that this reflects the anxiety of Beijing's leadership regarding the economic narrative; the authorities are politicising economic issues, making it increasingly difficult to trust the Communist Party's official statistics.

Prohibiting Collapse Theories, the Communist Party Chooses Inaction.

On March 16, the Communist Party's media outlet 'Qiushi Net' published a commentary criticising external media for discussing the 'collapse theory' and 'threat theory' concerning the Chinese economy, arguing that such narratives mislead some producers and consumers, thereby affecting the effectiveness of macroeconomic control and the stable operation of the economy. The article calls for enhanced expectation management, asserting that 'confidence is more important than gold', promoting the 'narrative of China's economic optimism', and emphasizing the need to strengthen external communication and guide international public opinion, while promptly countering claims such as 'China's economy has peaked', 'China has excess production capacity', and 'foreign capital is withdrawing from China'.

According to The Epoch Times, Sun Guoxiang, a professor in the Department of International Affairs and Business at Nanhua University in Taiwan, indicated that the article from the party media reflects a growing anxiety among the leadership of the Chinese Communist Party (CCP) regarding the economic narrative. 'When official media focus not on how policies can enhance the economy but rather on countering theories of collapse, it suggests that Beijing's primary concern is not the economic performance itself, but rather how the outside world interprets the Chinese economy, and whether these interpretations could further affect investment confidence or even the legitimacy of the CCP regime.'

Sun Guoxiang identifies three key signals from the article. First, the CCP continues to regard economic issues as highly politicised. When confronted with external scepticism, Beijing's initial response is often to tighten control over public opinion rather than to enhance information transparency. 'This serves as a reminder that analysing the Chinese economy should not be limited to growth rates, foreign trade, and investment figures.' Secondly, the article serves as a clear indication that the pressures on the Chinese economy are indeed ongoing. Thirdly, 'the most vulnerable aspect of China (the CCP) at present may not be a specific economic indicator, but rather the overall structure of confidence.'

Wang Guochen, a deputy researcher at the First Research Institute of the Chinese Academy of Economic Research, noted that this year's government work report during the Chinese Communist Party's "Two Sessions" is lacking in innovation, totalling only 9,083 words, which marks a new low since Xi Jinping took office. This indicates that the Beijing authorities are leading a trend of 'lying flat,' as the overall economy enters a period of historical stagnation. He remarked, "Xi Jinping does not care much about economic growth!" The Beijing authorities are avoiding the current economic challenges while continuing to make grand promises, failing to address immediate issues and instead focusing on future aspirations. The report suggested issuing 1.3 trillion yuan in ultra-long-term special government bonds by 2026, along with an additional 300 billion yuan in special government bonds, proclaiming, "Print money until it appreciates, and create another economic miracle for China!" However, countries around the world, including the Beijing authorities, are expressing pessimism about China's economic outlook, signalling that Xi Jinping's regime has officially abandoned current economic stimulus in favour of future hopes. The trend of 'lying flat' has now reached the central government level.

While the authorities promote an optimistic narrative, public consumption is on the decline.

Since the end of 2022, when pandemic lockdown measures were lifted, Cai Qi, the head of the Chinese Communist Party's propaganda department, has repeatedly stressed the need for the propaganda sector to "sing the bright tune of the Chinese economy." In stark contrast to the official narrative of sustained economic growth, the general public in China is experiencing a decline in living standards and a downgrade in consumption.

Zhao Jian, president of the Xijing Research Institute, published an article titled "The Mystery of Economic Temperature Difference" on Caixin.com at the end of December last year. The article highlighted the stark duality in China's economic performance, with a significant perceived temperature difference. It was quickly removed from the platform.

During this year's Two Sessions, Chinese Premier Li Qiang presented a government work report on March 5, in which he revised the GDP growth target for 2026 down to between 4.5% and 5%. This marks a decrease from the previous years' expectations of around 5%, highlighting considerable pressure on China's economic growth.

In recent years, the Chinese Communist Party (CCP) has increasingly suppressed outspoken scholars who expose the true state of the economy. Notably, Gao Shanwen, the chief economist at Guotou Securities, recently left his position. He had previously stated at the end of last year that the actual GDP growth figures for China over the past two to three years might be around 2%, in stark contrast to the official figures that are close to 5%.

Lin Song, a PhD in Political Science from the University of New South Wales in Australia, told The Epoch Times that the CCP's transition from promoting optimistic narratives to demanding rebuttals against claims of economic collapse reflects a growing urgency. This urgency arises from the fact that the three-year pandemic period has passed, and the economy in mainland China is increasingly faltering. Xi Jinping has initiated numerous unfinished projects, including high-speed rail stations in underdeveloped areas that have already been abandoned, and many new buildings have been left incomplete. The unemployment situation is dire, with many individuals from lower socioeconomic backgrounds struggling to survive. While the CCP aims to promote optimistic narratives and counter claims of economic collapse, the reality of an economic downturn raises significant questions about how it can effectively respond.

The Gan Jing World blogger 'Lin Yuan @ Shidai Wanhua Tong' expressed in a post: 'The so-called response to public opinion means that the Chinese people, who are suffering from poverty, are not allowed to identify as poor, and their cries of distress must not disrupt the illusion of prosperity that the Communist Party of China has constructed through its propaganda machinery.' 'The economy cannot be fundamentally rescued, and the difficulties faced by people's livelihoods are a stark reality. Regardless of the methods the authorities employ to steer public opinion, the brainwashing effect of the state media's propaganda has significantly diminished compared to the past. No matter how appealing the visuals on CCTV may be, they cannot fill the empty stomachs of the people who are complaining.' △