China’s top leader Xi Jinping may have amassed unlimited political power but there is a disconnect because he seems unable to use the political might to solve the major economic problems the Asian giant faces, experts in Washington said Tuesday.
“It is very hard after coming through this congress and not feel that you can’t avoid the overwhelming dominant shadow of Xi Jinping everywhere,” said Jude Blanchette, who holds the Freeman Chair in China Studies at CSIS.
“Xi has all of this power. He can defenestrate factions. But he clearly isn’t powerful enough to drive through a property tax,” he added.
Experts say that tax reform in China would be major step in resolving the country’s property bubble.
Xi had tried to deal with fiscal problems as far back as 2013 but no new plan were announced over the weekend.
“Without tax policy, it is all just aspirations and wish list,” said Dan Rosen, a partner of Rhodium Group and a non-resident senior fellow at the CSIS.
“There is really nothing other than ‘the triumph of the will’ is going to produce a fiscal reform strategy that resolves the obstacles of the past,” Rosen said.
Any sense that the government will ride to the rescue of the Chinese domestic economy is just as distant as it was months ago, Rosen added.
At the same time, foreign firms doing business in China, should expect a “a darker period,” and this will impact China’s growth engine, he added.
“Nobody is feeling better coming out of the congress on the outlook for growth…in 2022, 2023 or 2024 either,” Rosen said.
Blanchette said the key document from the congress contains “very little recognition of any hard choices China will need to make.”
“You almost get a sense from the report that they are going to address inequality just by demanding that employers pay higher wages,” he said.
Scott Kennedy, senior adviser and trustee chair in Chinese business and economics at CSIS, noted that Xi might be President Joe Biden in mid-November in Indonesia.
“What will come out of that conversation? Are there any places to compromise or cooperate?” Kennedy asked.
Prior statements that China would seek to “cooperate” with the United States were replaced a less ambitious term of “positive interaction,” said Bonny Lin a senior fellow for Asian security at CSIS.
Chinese stocks have been weak on concerns of Xi receiving an unprecedented five-year term as leader of China. The currency has also weakened.