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China’s Xi Jinping, Secure in Power, Faces Deepening Economic Challenges

China’s Xi Jinping, Secure in Power, Faces Deepening Economic Challenges

His challenge will now be to show he can just as deftly manage an economy that has weakened considerably this year.

Chinese markets tumbled on Monday after Beijing rolled out a party leadership packed with Xi loyalists, and the government said China’s economy expanded by 3.9% in the third quarter of 2022. While the figure was above economists’ forecasts, that left growth for the first nine months of the year at 3.0%, putting China on pace to miss its official full-year target of 5.5% by a large margin.

Other data released Monday showed sluggishness in domestic demand, slumping exports and home prices that fell at their steepest level in more than seven years in September.

Excluding 2020, when China and the world were reeling from the initial outbreak of Covid-19, this year is almost certain to be the country’s slowest year of growth in a generation.

All that has focused attention on whether Mr. Xi, having cemented his role as China’s leader for another five years at a party conclave concluded this past weekend, will now pivot toward more assertive moves to reignite growth.

Steps he could take include easing the country’s tough zero-Covid rules, which have forced lockdowns and slowed business activity, and more support for the country’s ailing property market, including possible bailouts of distressed developers.

Many economists believe he will take a different approach, giving priority to political objectives—including bigger roles for inefficient state-owned enterprises in the economy and a continued emphasis on strict Covid-control measures—instead of more pragmatic steps to ensure a strong recovery.

China’s tough zero-Covid rules have forced lockdowns and slowed business activity.



Photo:

hector retamal/Agence France-Presse/Getty Images

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