Every month brings a “landscape-altering surprise” in China, says Leo Lewis in the Financial Times. We’ve seen Xi Jinping cuff the mighty property sector with a cap on borrowing, sending heavily indebted giants such as Evergrande into a tailspin. Millions of teens have been banned from playing video games for more than three hours a week. Cryptocurrencies have been outlawed and tech billionaires like Jack Ma have been asked to return fortunes to the state.
Beijing’s “campaign against private enterprise” is in part about showing Ma and others “who is boss”, says Lingling Wei in The Wall Street Journal. But it’s much bigger than that. While China’s hybrid “western-style capitalism” has allowed the Middle Kingdom to “catch up” in recent decades, it has also led to “rampant corruption and eroded the ideological basis of communist rule”. Xi wants to “put the country on a different path”. Though he’s an ardent follower of Mao, he isn’t planning on eradicating market forces. His aim is to give the Chinese Community Party “even more control over the economy” than it already has.
Gorbachev accidentally destroyed the Soviet Union while trying to reform it, says Niall Ferguson in Bloomberg. Xi may do the same, albeit in reverse: he is turning back the political clock to Marxism-Leninism “rather than forward to liberalism”. The big problem is just how important real estate is to the Chinese economy: it accounts for more than a quarter of GDP, almost a fifth of the urban labour force and 35% of local government revenues. This “urbanisation on steroids” has led to vast ghost cities – China has enough empty apartments to house an astonishing 90 million people. And it means any slowdown in the real-estate sector will hammer broader economic growth. Nearly three years ago I bet a Chinese economist $3,000 that the country’s economy wouldn’t overtake the US in the next 20 years. “I am sticking with that bet.”
The “bloated” real-estate sector aside, China’s big problem is demographics, says Peter Franklin in UnHerd. To maintain a rapid rate of economic growth, it needs a new generation of “producers and consumers”. But the birth rate has been flattened by decades of the now abandoned one-child policy. Xi is “pulling on every lever” to get the rate back up: Beijing announced this week that access to abortions for non-medical reasons will be reduced. But how far will he go? “In place of forced sterilisation, could we see the state pursue a policy of forced fertilisation?” We may one day see Beijing “bring back its two-child policy – only this time as a minimum”.