As the Chinese economy struggled to recover from the post-COVID blues and anti-monopoly campaigns, the ruling Communist Party in an attempt to bolster sagging business confidence has warned its cadre against ‘inappropriate interference” in microeconomic activities.
The officials of the Communist Party of China (CPC), which is headed by President Xi Jinping, were at the forefront of the anti-monopoly campaign in the last few years to rein the country’s multi-billion businesses like Alibaba and corporate leaders like Jack Ma, who suddenly announced his retirement in 2019 and spent following years mostly abroad.
Ma returned home in March this year following assurances of friendly policies for the private sector to revive the struggling economy, especially by Premier Li Qiang, regarded as a friend of Ma.
Ma’s return followed assurances from Xi, under whose watch the CPC in the few two years carried out a massive anti-monopoly campaign against top business houses including Alibaba which created a panic among private businesses. Besides the crackdown, several top businessmen were whisked away by security agencies creating panic among private businesses. The problem was accentuated by prolonged stringent Covid lockdowns leading to huge losses for businesses.On Wednesday, an article in the Study Times – an education journal of the CPC Central Party School, widely read by officials at all levels to gauge which way the winds are blowing in Beijing warned the cadre not to overstep.
“Curbing the inappropriate interference of authorities in microeconomic activities has always been a key task in the reform of China’s economic system,” Cai Zhibing, an associate professor of the Economics Teaching and Research Department at the Central Party School, said in the article, citing dictates in the Central Anti-Corruption Coordination Group Work Plan (2023-27) released in September.
Such “interference” means those officials are not taking into consideration the requirements of “high-quality development”, as championed by the party’s Central Committee, Cai said, adding that some authorities are not “strict and civilised” when it comes to law enforcement.
And “one-size-fits-all” regulations and measures that have popped up across the country have “greatly” increased economic uncertainties, burdens and risks for businesses, Cai said, without pointing any fingers, the Hong Kong-based South China Morning Post reported on Thursday. Cai blamed the pandemic, changes in global trade trends, and shifts in domestic development focus for what he called an “imbalance” in local government finances, warning that this has subsequently incentivised regional authorities to turn more aggressive in seizing assets and assessing fines, seeking any means to raise revenue.
“As a result, such interference has disturbed the order of operation, harmed the business environment and affected confidence in business operations,” Cai said. “Reducing inappropriate interference in economic activities involves mitigating authorities’ circumvention of market-economy rules … and ensuring fair and full market competition while effectively revitalising market vitality,” he explained. China’s National Bureau of Statistics (NBC) on Wednesday cautioned that China’s external environment was becoming more complex and grave and warned that domestic demand remained insufficient.
The warning came when China’s economy slowed in the third quarter, amid muted global demand, deflationary pressures and an ailing property sector.
The world’s second-largest economy grew 4.9 per cent year-over-year in the July-September quarter, higher than the 4.5 per cent forecast, but slowed down from the 6.3 per cent growth in the previous quarter.
The economy grew by 1.3 per cent in the third quarter, compared to 0.8 per cent growth in the April-to-June quarter.
For the first nine months of the year, China’s economy grew 5.2 per cent compared to the same period last year, signifying that it is on track with Beijing’s target of about five per cent growth for 2023.
