24 August 2019
President Xi Jinping said China's economy is shifting to a “new normal” of slower but more stable growth. Photo: Reuters
President Xi Jinping said China's economy is shifting to a “new normal” of slower but more stable growth. Photo: Reuters

APEC: Xi Jinping’s ‘new normal’ is the new Peking order

At the opening session of the APEC summit over the weekend in Beijing, President Xi Jinping gave what state media called the clearest picture yet of the Chinese economy’s “new normal”, a state of the union of sorts that both described China’s rocky year and what Xi intends to do about it.

But for China’s neighbors and western nations, China’s “new normal” agenda may signal it’s time to be even more wary of the Middle Kingdom than usual.

Xi told world leaders that China’s economy is shifting to a “new normal” of slower but more stable growth and has the resiliency to overcome any bumps in the road.

“Indeed there are risks, but not that formidable,” Xi said in a speech. “Resilience best equips the Chinese economy against risks.”

Xi had previously used the term “new normal” in May, during an inspection tour in Henan province, to describe China’s need to adapt to below-average growth.

In the 35 years between 1978 and 2013, annual growth of the Chinese economy averaged close to 10 percent. However, with growth decelerating to 7.7 percent in 2012 and 2013, a Xinhua editorial simply declared, “The good old days cannot last forever.”

Momentum in the world’s second-largest economy has slipped this year amid slower growth in investment and a slumping real-estate market, noted the Wall Street Journal.

China’s gross domestic product grew by 7.3 percent year over year in the third quarter, its slowest pace in five years, down from 7.5 percent growth in the second quarter, fueling concern that China could miss its annual growth target of about 7.5 percent.

To downplay concerns, Xi seemed comfortable with the notion that China will miss its 2014 growth target, saying that annual growth above 7 percent still puts China’s economy among global leaders in speed and size.

Perhaps to reassure the world about the health and vitality of the Chinese economy, Xi touted the “new normal” for international investment, imports and tourism.

China’s outbound investment will exceed US$1.25 trillion over the next 10 years, while China will import more than US$10 trillion worth of goods and send more than 500 million tourists abroad over the next five years, Xi said, according to News Corp.

“For the Asia-Pacific and the world at large, China’s development will generate huge opportunities and benefits and hold lasting and infinite promise,” Xi said.

Xi’s statement notwithstanding, WSJ notes that these projections aren’t a huge increase from current Chinese levels.

From many accounts, the centerpiece of China’s international investment is its new “Silk Road” strategy, which a Foreign Policy report describes as a sprawling set of trade and infrastructure agreements proposed by Xi Jinping, which aims to foster free trade—and bolster Chinese soft power—with China’s neighbors to the west and southeast.

Just days before the APEC summit, Xi announced the establishment of a US$40 billion Silk Road infrastructure fund, focusing on building “roads, railways, ports and airports across Central Asia and South Asia”, according to Reuters.

In his speech on Sunday, Xi said China’s Silk Road plans would boost growth and improve infrastructure across the region to help fulfill an “Asia-Pacific dream”, according to WSJ.

“With the rise of its overall national strength,” he said, “China has the capability and the will to provide more public goods to the Asia-Pacific and the whole world.”

We’ll have to see how this plays out over the coming months, as many of China’s neighbors don’t exactly see eye to eye with the Middle Kingdom.

China has long sought to extend its influence in Asia through aid and investment, and to gain access to Central Asian energy resources, said WSJ. Some efforts now under way are rebranded versions of earlier projects.

Xi’s speech also confirmed that doing business in China isn’t going to get any easier for multinational companies.

While China has long presented unique challenges for businesses, the regulatory and legal environment has been especially perilous in recent months, with authorities pushing companies to cut prices and punishing them with large fines, said the New York Times.

GlaxoSmithKline, Volkswagen, Chrysler, Mead Johnson, Samsung, Johnson & Johnson and other companies have been hit with multimillion-dollar fines this year, while Microsoft, Daimler and Qualcomm are under investigation.

Surveys by business organizations like the American Chamber of Commerce in Beijing and the US-China Business Council show that foreign business people are increasingly concerned that they are becoming the targets of anti-monopoly campaigns—that the government is strong arming them, said Business Insider.

In one survey 60 percent of the respondents said they felt foreign business is less welcome in China than it was before.

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A strategist and marketing consultant on China business

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