Welcome to the 14th edition of Between The Lines. This week we look at why China’s image in the United States needs a makeover. Also, we focus on the risk of social unrest and shrinking salaries under Comrade Xi’s ‘common prosperity” program. Let’s get started.
China’s Communist Party has a massive image problem in the United States. Earlier this week, a major survey conducted by research group Ipsos and the Reuters news agency revealed “deep” concerns about Beijing’s “global influence.”
It comes “at a time” when Sino-American “relations” have hit rock bottom. The Party’s coercive economic policy, military chest-thumping in the East and South China Seas, and high-profile spying incidents have fueled a toxic atmosphere.
Tit-for-tat trade sanctions have only added to fears of a new Cold War between the two superpowers. Cue Reuters:
At a time when US-China relations have fallen to their lowest point in decades, bipartisan majorities of Americans favor more tariffs on Chinese goods and believe that the United States needs to step up preparations for military threats from the country.
“The two-day poll, which concluded on Tuesday, revealed deep worries among Americans about China’s global influence. Some 66% of respondents said they were more likely to back a candidate in the 2024 presidential election who ‘supports additional tariffs on Chinese imports’,” Reuters reported.
Finally, another 66% of those surveyed agreed that Washington “needs to do more to prepare for military threats from China.” Beijing has been warned.
Fears grow over another summer of discontent
Is China facing a summer of discontent? The risks are certainly mounting as the world’s second-largest economy resembles a patient being rushed into intensive care.
Consumer spending has dried up to a trickle, unemployment among the young has spiraled out of control and factory activity is weak. Now, a “collapse in the financial and real estate sectors” threatens to plunge the country into a recession.
Axios picked up the story in its China newsletter:
Mismanagement of a real estate debt crisis could cause a sustained period of stagnation like the one Japan experienced in the 1990s. A recession in China could also have vast ramifications for the global economy.
“Right now the government is trying to do as little as it can without provoking social unrest,” Louis Lau, of Brandes Investment Partners, told the Axios news site.
Last year, protests broke out in more than 100 cities across China in response to half-built housing projects that had been paid for. More unrest could be just another unfinished apartment block away.
Pays cuts, redundancies and ‘common prosperity’
A chill wind of pay cuts is sweeping across China’s financial sector. The latest targets are staff at state-owned banks.
It is all part of Chairman of Everything Xi Jinping’s “common prosperity” push. The aim is to boost domestic demand by narrowing the “yawning wealth gap that threatens the country’s economic ascent and the legitimacy of CCP rule.”
But instead of stimulating wage growth among vast sways of China’s population, the Party has set its sights on the perceived rich. Foreign Policy’s China Brief stated:
Chinese state-owned banks are slashing salaries for some bankers by up to 15%. The move follows a push from Beijing as part of the ‘common prosperity’ campaign, a Xi-era slogan pushing to reduce visible wealth inequality, as well as raising pay for junior staff.
“The problem is that Chinese officials, including in state-owned enterprises, are already underpaid,” China Brief said.
In March, staff at financial regulators faced pay “cuts of 50%”, sparking an exodus. At the same time, “millions of industrial workers have been laid off,” according to a report in May by the China Labour Bulletin. Hardly a glowing review for “common prosperity.”