The Golden decade loses its lustre
Paralysis in decision-making and declining exports ahead of leadership change overshadow dying days of Hu-Wen era
On Friday when the Hang Seng index shed 1.3 per cent to close below the 20,000 level and Shanghai shares closed 1 per cent down to end at the lowest close since March 2009, Premier Wen Jiabao landed in Guangdong, one of the mainland's exporting powerhouses, for a two-day inspection. It may just have been a coincidence but Wen's trip highlighted Beijing's rising concerns over the state of the economy.
This was the second provincial tour Wen undertook in just 10 days. On August 14-15, he went to Zhejiang, a major manufacturing hub. The health of the two key provincial economies has been long seen as barometers of national economic activity.
Usually, such inspection tours by central government leaders are promoted as fact-finding missions and an opportunity to engage ordinary people, but in reality they are highly scripted affairs in which local officials try to present the best aspects of their cities, as news of the trips is splashed on newspapers and TV across the nation.
But coverage of Wen's latest two trips revealed a grim economic outlook.
In its coverage on Saturday night of Wen's visit to Guangdong, national broadcaster CCTV said that exports from major coastal provinces had slowed considerably since July.
Following meetings with businessmen and officials, Wen acknowledged that the latest export orders showed China's exports would face greater uncertainty in the third quarter.
Earlier, in Zhejiang, he was more explicit in warning that the economic hardship would continue for some time.
In both locations, Wen said his trips were aimed at talking up confidence in the economy, reminiscent of his similar confidence-boosting trips in 2009 when the country was hit by the global financial crisis.
But this time, the premier may find it harder to be convincing, not least because Beijing has run out of magic levers to kick-start the economy, unlike three years ago when it launched a 4-trillion-yuan (HK$4.9 trillion) stimulus package that quickly steered the economy back on its feet.
More importantly, the mainland's once-in-a-decade leadership transition has contributed to paralysis in decision-making. As mainland leaders undertake intense horse-trading to pick candidates for the new leadership line-up to take power later this year and early next year, all the major economic decisions have been put on hold.
Indeed, as Wen is set to retire in March next year, his lame-duck days have already begun. Anyone expecting any major initiative to boost the economy will be duly disappointed: there are unlikely to be any in the near future, given the worsening international and domestic economic outlook. The job will be left to the new leaders.
That means that the mainland's economic growth is very unlikely to show a major rebound until at least early 2013.
Earlier this year, Wen and other mainland economic planners were believed to have expected an uptick in the economy in the third quarter, which could have provided sound support for the leadership change and a satisfactory ending to the 10-year rein under Wen and President Hu Jintao, already hailed as the "golden decade" in state media.
Now their illustrious decade is heading for a lacklustre end.