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A cyclist in Shanghai rides past a banner featuring an image of Chinese President Xi Jinping on Monday. Photo: Qilai Shen/Bloomberg

Coronavirus crisis will ultimately strengthen Xi Jinping and Chinese Communist Party despite economic turmoil, US analysts say

  • Another prediction: likelihood of China meeting the purchasing goals of the phase one US trade deal this year is ‘somewhere between zero and zero’
  • ‘The state expands to deal with the crisis and then remains at a new expanded level even after the crisis fades away’

The likely outcome of the coronavirus epidemic is not only that Chinese President Xi Jinping remains in power, but also that the Communist Party emerges bigger and stronger despite the current economic challenges, long-time China watchers said on Thursday.

China’s responses in the first few months of the outbreak resulted in some criticism of Xi, and multiple signs have pointed to negative economic growth in the first quarter. But, after the crisis fades, “it’s very unlikely that there’s any significant or overt political challenge to Xi Jinping,” said Jude Blanchette, who holds the Freeman Chair in China Studies at the Centre for Strategic and International Studies (CSIS) in Washington.

“This is a leader who has consolidated extraordinary amounts of power … his value proposition is that he will be able to fix China’s governance system to be able to deal with black-swan events like the one we’re dealing with now and other challenges China is facing.”

He added: “I think where we should be spending most of our time looking is what will the new shape of the party state look like in response to or as a result of its actions to deal with the coronavirus.”

Blanchette predicted a stronger Communist Party in the wake of the outbreak because such an outcome “is a cyclical and structural feature of crises internationally – that the state expands to deal with the crisis and then remains at a new expanded level even after the crisis fades away”.

He said the crucial task for China now, after state media indications that the contagion is more or less under control, is to stabilise employment and restart the economy.

But global economic fallout from the outbreak remains significant, including hitting targets outlined in the phase one trade deal with the US.

The likelihood of China meeting the agreement’s purchasing goals and increasing US imports this year is “somewhere between zero and zero,” said Scott Kennedy, a senior adviser and trustee chair in Chinese business and economics at CSIS.

“These were unrealistic targets to begin with … as everyone has already said, Chinese consumption has fallen significantly. And China is not going to be expanding consumption so quickly that they can increase American exports – or, imports from the United States by US$70-some billion. And so it would be even surprising if China met its imports from the United States of last year of about US$130 billion,” Kennedy said.

Last month, China said it would cut in half additional tariffs on US$75 billion of American products that were imposed late last year – including a 10 per cent tariff reduced to 5 per cent and a 5 per cent duty cut to 2.5 per cent – in an effort to implement the phase one agreement.

The coronavirus epidemic will likely jeopardise China’s goal of doubling its gross domestic product (GDP) at the end of 2020 from that of 2010. The target would have required this year’s growth to be about 6 per cent.

Kennedy said there was “absolutely no way” China would be able to hit that “with any degree of reality” this year.

China brushes aside ‘temporary’ impact of virus as economy stutters

In a meeting of China’s top policymaking panel on Wednesday chaired by the Chinese leader, Xi described the current status of epidemic prevention and control as “complicated” and called for bringing economic and social development back to normal as soon as possible.

The Caixin purchasing managers’ index (PMI) fell to 26.5 in February from 51.8 in January after major disruptions in the official and private manufacturing sectors.

Xinhua news agency reported on Wednesday that capacity in enterprises above designated size has reached about 80 per cent in 21 provinces. However, along with the positive signals from state media, there are also reports saying companies are faking electricity usage numbers to make it look like the economy is growing because of pressure from local authorities.

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This article appeared in the South China Morning Post print edition as: Health crisis will strengthen Xi and party, experts say