My Take | China could see restored economic confidence in 2024 if Beijing makes the right moves on reform
- The confusion and fear, along with the proliferating attitude of ‘lying flat’ among certain Chinese social groups, is a product of damaged confidence
- The word ‘reform’ should be read as market-oriented liberalisation, deregulation and growth of the private sector – not the opposite
The year 2023 was not too bad for the world’s second largest economy. China managed a broad recovery after three years of draconian zero-Covid policy. With little doubt, the government will publish a headline growth rate in line with the target of “about 5 per cent” for 2023, completing its “key performance indicator”.
But doubts linger about the country’s longer term prospects. It is easy to find anecdotal evidence of pessimism, or even defeatism, on China’s heavily-censored social media platforms. In the final weeks of 2023, an article circulating widely on the Chinese internet was an essay about “history’s garbage time”, a phrase coined to describe certain dark periods in Chinese history when outcomes were determined and nothing could be done to alter that course. While the article was about past dynasties, it struck a chord among some readers who felt despair and helplessness at the present circumstances.
The inconsistency between “a good macro story” and numerous bad “micro stories” on the ground is gaping. For those who lost jobs in 2023 or those who invested their life savings in property projects that may never get completed, it will be tough to convince them that the future remains bright.
2024, therefore, will be a critical year for Beijing to restore confidence among its people. In addition to cyclical policies such as more fiscal spending, China has to dig deeper to change people’s perceptions.
To begin with, the Chinese authorities must re-emphasise economic development as the only “central point” of their work and put this message out through policies. For decades, China’s central government, local authorities and common folk have been on the same page in seeing development as the priority. But in recent years development has become just “one of the goals” that may be subject to change depending on other objectives. The de facto downgrade of development in the ranking of what is important could cause disruption to economic activities and dampen confidence.
