Instead of benefiting ordinary Chinese, profits from the trade surplus have been recycled through the buying of US sovereign debt. Therefore, they benefited American consumers and borrowers, at least until the last global financial crisis. In the past decade, though, US-China relations have been going through a painful and dangerous retrenchment.

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As Michael Pettis, a noted economist at Peking University, wrote recently in this newspaper, “As the productivity benefits of additional investment declined, China’s high investment level would necessarily lead to a rising debt burden.

“This is what eventually happened to every country that has followed this growth model: a period of rapid, sustainable growth was followed by a period of still-rapid but unsustainable growth, driven by surging debt. This started to happen to China at least a decade ago.”

Slower growth also means lower exports, and vice versa. The threat of unemployment in manufacturing catering to exports has been mitigated in the past by inflating real estate and overinvesting in infrastructure, so workers can find new jobs in those sectors. But that route has long reached its limits. Market bubbles in one and indebtedness in the other have created a vicious circle. Local governments which usually sell land to developers to finance infrastructure projects have been mired in heavy debt, while the real estate sector has essentially collapsed, thanks to a mixture of central government policy and market conditions.

Pettis has argued “China must sacrifice GDP growth to rebalance its economy”. In fact, it isn’t even a choice. At least since the administration of Hu Jintao and Wen Jiabao, that has been recognised as inevitable. Slower growth or even a potential contraction is the new reality, and new growth has to be consumption-driven. The question is how much and how long must the pain be before that goal is achieved.

Dialectical materialism meets mainstream economics

Like the “old left” of Maoism, China’s New Left is well-schooled in historical materialism and Marxist dialectics. Therefore, at least for the well-educated, they offer a social and economic critique in response to the excesses or “contradictions” of the liberal-economic market opening of China in some measure since the 1990s.

Marketisation and privatisation – much of which were spearheaded by state-owned enterprises in sectors controlled by key “Red” party families in the 1990s and beyond – had polarised the privileged urbanites and the exploited peasants, most of whom ended up as unregistered workers. As a socialist country, China has experienced one of the widest gaps between the rich few and the many poor in the world, an embarrassing phenomenon which has also pitted the rich coastal provinces against the poorer and underdeveloped northwest. The country may have eliminated extreme poverty, but it still has substantial above-subsistence poverty.

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Deng Xiaoping famously declared, “Let some people get rich first.’’ His has been the ultimate experiment in “trickle-down” economics, which exceeded even the wildest dreams of Ronald Reagan and Margaret Thatcher, and which lately has led to the impending demise of Prime Minister Lis Truss in Britain before she could even put it into practice. Even the (world) capital markets realise it doesn’t work or at least it’s not worth the trouble.

It has long been taken as a given that perpetual high growth is the only way to justify the performance legitimacy of one-party rule in China. But in a dialectical reversal, what the leftists have argued instead is that unbalanced growth has reached its limits, and the lopsided enrichment of the few, including countless corrupt officials, is delegitimising the party.

Historical materialism teaches that thoughts are the results of real or concrete conditions in society. The New Left may be seen as an inevitable response to the “contradictions” of an overheated and slowing economy and fractured society.

The leftists have long railed against exploitation of the poor at home and abroad as the Chinese economy converged with the global capitalist order under globalisation. Social inequality and injustice engendered by the neoliberal economic agenda must be rectified.

Paradoxically, those leftist goals are mostly compatible with what’s happening to the Chinese economy: slowing growth, declining exports, scaling back the ownership of US sovereign debt or Treasuries, partial decoupling, especially with the US, and realignment with the Global South and alienation from the West.

In leftist terms, it means greater self-reliance, redistributing wealth, boosting social services, especially underfunded and inadequate pensions, and moderating financial repression and boosting consumption.

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While it has been painted as Xi’s purge of enemies and intimidation of potential threats in the foreign media, his anti-graft campaign since taking office against corrupt officials has been popular in the country. And it falls broadly in line with the leftist programme. Likewise, his crackdown on overextended developers in real estate, and overly rich tech billionaires and their powerful empires. On a more positive note, there is Xi’s committed drive to develop the western provinces, including Xinjiang, to redistribute wealth and development across the vast regions.

Consumption as an economic driver means allowing more financial services for savers to earn higher yields and more money to spend. Opening the wealth management sector to foreign competitors, including Wall Street, would make sense, despite rising tensions with Washington.

Much has been made of Xi’s expected third term, especially by the foreign press. But in light of the adverse conditions facing China today, someone else in his shoes would pursue a similar course of action.