Cecilia Machado: China’s economic challenges in the next five years

On October 16, the 20th National Congress of the Chinese Communist Party begins, an event that takes place every five years and culminates in the definition of the 25 members of the Politburo and the members of the Standing Committee, including the post of secretary. -general, currently held by Xi Jinping.

The Politburo is the body with the greatest deliberative power within the party, but the Standing Committee has a select group with greater leadership, which guides policy discussions and makes decisions when the Politburo is not in session.

With just over three weeks to go before Xi’s second term ends, there is little doubt he will remain in office, but a third term marks a transition unprecedented in China’s recent history. In 2018, an amendment to the 1982 Constitution removed the two-term limit for the presidency of China, a government post that has been held by the party’s secretary general (concurrently) since 1993.

The last two leaders before Xi, Jiang Zemin (1993-2003) and Hu Jintao (2002-2013), retired immediately after the end of their second term, both from their governmental and party roles.

If, on the one hand, Xi’s continuity as the party’s general secretary seems very likely, on the other hand, some uncertainty about the members of the Politburo Standing Committee, the political circle that will be closest to Xi in the next term, still hangs in the air. .

At least two members, who turned 68 during the last term, are expected to retire, leaving two positions on the Standing Committee open. And current premier Li Keqiang, 67 and eligible for one more term as a member of the Standing Committee, must either occupy another position within the Standing Committee or else retire, as there is a two-term limit on the prime minister’s role. .

The new configuration of the Standing Committee will be crucial for the execution of the development goals set out in the 14th Five-Year Plan, with ambitious goals for the energy transition and for the innovation and technology policy, in a context in which the economy shows strong signs of slowing down, and in which the growth model based on the resumption of domestic consumption is put in check with the uncertainties associated with the Covid zero policy and with the unfolding crisis in the real estate sector.

Although the number of new daily cases of Covid-19 remains below a thousand, the geographic dispersion in transmissions has made regional lockdowns commonplace, especially in smaller cities, which poses enormous challenges to the control and testing policy and undermines the confidence of what restrictions on mobility will be overcome, in the near future, in these places.

In addition, there are structural reasons behind the slowdown in the real estate sector. Population growth and urbanization, which were largely responsible for the sector’s growth in recent decades, have become limiting factors.

It is possible that China reached its population peak this last year, due to the low fertility rates revealed in the most recent Census. The data also showed that the country has become much more urbanized than expected, reaching a rate of 65%, with tens of millions of people migrating from the north to the south of the country. From now on, the sector’s performance should depend on the growth of the economy and the population’s income, through the demand for larger units and the renovation of spaces already built.

Elected since 2012 as the party’s general secretary and in 2013 as president, Xi has seen a real economic and social transformation in China in recent years. The country, which grew at rates close to double digits in past decades, is expected to grow well less than 5.5% in 2022, the target for the year.

Although extreme poverty has been eradicated, social challenges have become others, such as the high unemployment rate among young people, close to 20%.Considering the importance of the external sector for the recent performance of the economy, the slowdown in global activity adds complexity for the next few years. Challenges that certainly match the stature conquered by China, today the second largest economy in the world.