China spins as economy wobbles

Beijing’s propaganda machine has lauded Xi Jinping’s ‘profound revolution’, as new data shows Delta has knocked China’s economy off course.

Chinese President Xi Jinping. Picture: AFP

Beijing’s propaganda machine has lauded Xi Jinping’s “profound ­revolution” as new data shows a recent Delta outbreak has knocked China’s economy off course.

Official data released on Tuesday revealed sentiment in China’s economy in August slumped to the second-lowest level since the global financial crisis.

Willy Wo-Lap Lam, an expert on Chinese politics at the Chinese University of Hong Kong, said the slowing economy was a rising concern for Beijing.

“The government is afraid that if the economy doesn’t pick up quickly enough then those unemployed people and people who can’t afford to pay their mortgages, or have seen their standard of living going down, might pose ­political problems,” Dr Lam told The Australian.

“They don’t have ballot box legitimacy so economic improvement – real improvement in the livelihoods of the people – is a key pillar of legitimacy.”

Beijing’s National Bureau of Statistics on Tuesday said China’s services sector activity had contracted in August to the second-lowest level on record.

The official non-manufacturing purchasing managers’ index (PMI) – which measures morale in the services and construction sectors – fell to 47.5, from 53.3 in July. A reading above 50 indicates growth in sector activity, while a reading below the mark represents contraction.

Many businesses were closed, or had restricted trading conditions, during that period, following an outbreak of the Delta variant of coronavirus.

The poor indicator for the world’s second-biggest economy was released during a widening crackdown by Mr Xi’s administration that began with China’s tech giants, before spreading to the private tutoring sector and now the entertainment industry.

Overseas investors have been particularly concerned by a new campaign for “common prosperity”. The phrase dates from the early Maoist era, but has ramped up in China’s Communist Party-controlled media in recent weeks.

ANZ’s chief economist for China, Raymond Yeung, said the new “common prosperity” campaign showed Beijing’s concern that less wealthy members of ­society were lagging the wealthy.

“In more recent years, smaller businesses have borne the brunt of the fallout from the US-China trade war and Covid-19 pandemic,” he wrote in a new report on “Xiconomics”. He said policy makers in Beijing were now searching for a “solution to maintain the pace of improvement of the people’s quality of life”.

An officially endorsed commentary piece by Li Guangman, a former editor of a state-controlled newspaper, said the new economic policy was a “profound revolution” that was returning the Communist Party to “the essence of socialism”.

“We need to control all cultural chaos and build a lively, healthy, masculine, tough and people-oriented culture,” Mr Li wrote.

“Each of us can feel that a profound social change has begun … It is necessary not only to destroy the decadent forces but also to scrape the bones and heal the wounds.”

The piece was republished by China’s official newsagency Xinhua and the party’s official newspaper the People’s Daily, the two leading media outlets in China’s propaganda system.

It also praised the attack on the “capital circle”, citing the suspension of the stockmarket listing of billionaire Jack Ma’s Ant Group and an investigation in ride-hailing giant Didi.

The rolling campaign of crackdowns – which last week spread to China’s celebrities and their fans – was cast as part of a struggle against President Joe Biden’s America.

“The profound changes that are currently taking place in China are precisely to deal with the current severe and complex international situation, and precisely to deal with the savage and ferocious attacks that the United States has begun to launch against China,” Mr Li wrote.

Those changes have also come to China’s children, who return for the new school year on Wed­nesday. Their revised syllabus will now include lessons in “Xi Jinping Thought”, starting from primary school. “The government wants to control every aspect of society,” said Chen Yongmiao, a constitutional legal academic in China.

Dr Lam said the Maoist-inspired ideological campaign would continue to intensify ahead of the 20th party congress, a key political meeting to be held late next year. “Both Mao and Xi are control freaks – they believe that with the right kind of policies they can change the mentality, the way of thinking of people,” he said.