Xi Jinping is considered the most powerful ruler of China since Mao. Nevertheless, the Chinese head of state looks battered than ever. Because the problems are piling up in front of him. He made many himself.
"Down with the CP!" and "Down with Xi Jinping!" shouted the angry crowd on the streets of Shanghai in November. At this point, it has been just a month since Xi Jinping was elected general secretary of the Chinese Communist Party for the third consecutive term. Age limits couldn't stop the 69-year-old, nor a limit on terms of office. It was subsequently said that Xi had cemented his position as China's most powerful ruler since Mao Tse-tung, the founder of the People's Republic.
Nevertheless, the Chinese head of state looks battered than ever. Because he is faced with a huge mountain full of problems, most of which he has created himself. The Chinese economy is weakening, government revenues are falling, unemployment is rising, especially among young people, and the best friend is a warmonger. The most pressing problem is still the Corona situation.
Before the biggest protests since the Tiananmen massacre in 1989, Xi also gave in. At the beginning of December, Beijing announced easing of quarantine, PCR tests and lockdowns. A logical decision if you absolutely want to prevent an escalation, but in the end also simple economics: sealing off blocks of houses, carrying out mass tests and providing food for millions of people costs personnel and money. If factories remain closed and workers are stuck at home at the same time, nothing new comes into the coffers.
The zero-Covid policy was an expensive undertaking and has caused serious damage to the Chinese economy, agrees Jürgen Matthes from the Kiel Institute for the World Economy. The economist said on ntv that it was badly on its knees in November. "The most recent forecast that the economy will grow by 3.3 percent this year has become obsolete. The Communist Party reacted to this: the economic weakness and the protests."
In November, China presented its worst trade data in more than two years. Deliveries abroad fell by 8.7 percent compared to the previous year. These are astounding figures, above all, because the Christmas business begins in November and the foreign trade of the export world champion is actually flourishing.
However, this development does not come as a surprise: Even before Xi severely damaged the economy with strict lockdowns in the financial center Shanghai or in the "iPhone City" Zhengzhou, he led a regulatory campaign against successful tech companies such as Alibaba, Didi and Tencent last year. As a result, their share prices crashed on the stock exchanges worldwide, revenue collapsed and jobs were lost.
The Chinese real estate sector experienced a similar situation just over a year ago. When the bubble burst there, one construction giant after another was unable to repay their loans. Apartments that had already been paid for were not completed, shells were torn down again. Now Beijing has to rescue highly indebted housing companies with "comprehensive aid". This year, China will therefore run its largest budget deficit in decades. According to the financial portal Bloomberg, from January to September it was already 980 billion US dollars.
Construction sites that also have a full impact on the job market. Last May, then-Prime Minister Li Keqiang warned of a "complex and grim" situation affecting young people in particular. About 20 percent of 16 to 24-year-olds are unemployed, says Jörg Wuttke in the ntv podcast "Learned again". And those are the official figures, explains the head of the European Chamber of Commerce in China. It is quite possible that every third young person is without a job.
"Of course, that's devastating in a society that has a one-child policy," says Wuttke. "Four grandparents and two parents look at the offspring, on whom the future of the family rests. Then they have to say: Sorry, I've been tormented for 15, 16 or 17 years, but I'm now unemployed or have a job where I have a carrying a few bottles back and forth. Complete disillusionment."
The financial situation is complicated not only at home. The "Financial Times" had already reported on the first Chinese debt crisis abroad in July. Because the New Silk Road seems to be turning into a boomerang, at least in part. A few years ago there was still a fear that China could make developing countries dependent on its generous loans for new trade routes and infrastructure. Now the opposite seems to be happening: Many partners can no longer repay their loans, mainly because of the Corona crisis - and are costing China so much money.
According to the Financial Times, more than $52 billion worth of loans had to be renegotiated and restructured in 2020 and 2021. Partner countries received longer maturities at lower interest rates in the hope that ports, rail links or other infrastructure projects in Sri Lanka, Zambia or Pakistan could still be completed. In many cases, China even had to add more money because everything had already been spent.
A financial force that is increasingly becoming a problem in countries like Pakistan: Chinese workers are increasingly becoming the target of terrorist attacks and kidnappings. Because they promise high ransoms or symbolize corruption and Chinese influence in the partner countries. Francesca Ghiretti from the Mercator Institute for Chinese Studies (MERICS) in Berlin says China must plan for the risk of terrorism when financing these projects.
Now the easing of the zero-Covid policy should give the sluggish Chinese economy some momentum again: without lockdowns, factories can work at full speed again and fill the coffers - at least that's what they hope in Beijing. But if the Omicron variant rushes through China, it could backfire, warn observers like Jürgen Matthes from the Institute for the World Economy. Continued easing would be positive for China and the global economy, he says on ntv. "But there is a great danger that the number of infections will increase so much that the hospitals will be overwhelmed. Then there could possibly be an even tougher lockdown."
Overall, China has a high vaccination rate. However, it is precisely the older people who are particularly at risk who have often foregone the spades: Officially, 86.4 percent of those over 60 were vaccinated at least twice in November. About two thirds also received a booster. Many others are skeptical because they do not trust the vaccines - this is also a problem for which Xi Jinping is partly responsible: last year he had the mRNA funds from Biontech and Moderna glorified by the state media as lethal injections.
After the end of zero Covid, an omicron wave will now roll through China. Chinese health authorities expect that around 80 to 90 percent of the huge population of 1.4 billion people will eventually become infected. Many come into contact with the corona virus for the first time after almost three years of strict protective measures and are therefore susceptible to a severe course that could end up in the hospital. When it comes to intensive care beds, however, China lags far behind other Asian countries such as Taiwan or Thailand. Compared to Germany, there are only about half as many hospital beds per 10,000 inhabitants. China's most powerful man since Mao faces a new problem.
