During the two sessions in March, President Xi Jinping's words were suddenly introduced. He also picked up the United States and said:
"The U.S.-led West has blocked, surrounded and suppressed China, posing unprecedented and serious challenges to the Chinese economy."
The Wall Street Journal reported that President Xi Jinping gathered Chinese businessmen and said, "The United States is to blame for China's economic difficulties." It's very unusual.
A young foreign minister in his 3s, whose nickname is "Jeonlang," which means "wolf warrior," also raised his anti-US voice at a press conference, saying, "As long as the United States does not step on the brakes, a conflict will be inevitable."
Delegates from all over the country willingly put the word "America" on the chopping block during the two Chinese sessions* in the capital, Beijing, but what did President Xi Jinping and the Chinese Communist Party pursue this strategy? We have summarized the interpretations of the experts who appeared on the SBS Economic Freedom Salon.
*Two Sessions of China: A term used to refer to the National People's Congress (the role of the legislature) and the Chinese People's Political Consultative Conference (political cooperation, a policy advisory body proposed by representatives of 50 areas) held every March at the Great Hall of the People in Beijing. (Related video)
The beginning of this story dates back to the opening day of both sessions last weekend. ▶
Only 5%..."boudoir" instead of "three-term party"?
The first weekend of the two sessions. The market was buzzing when the Chinese government announced its economic growth target of "5%."
There were many speculations that President Xi Jinping, who officially began his third consecutive term through the two sessions, could "revive the economy," but the figures fell short of those expectations. Domestic and foreign investment institutions have projected a target that meets the level of Chinese people accustomed to high growth rates, a target of approximately 3.5~5% growth rate, and a "domestic stimulus package" that can meet it. As you can see from the table below, reflecting that hope, the related stock prices have risen quite a bit.
But President Xi Jinping didn't opt for a hot stimulus package. Why? Park so-hyun, head of the emerging markets team at KB Securities, who appeared at SBS's Economic Freedom Salon, said: ▶ ( Related video)
"The key word hidden under the 6% number is risk management. Risk management, stability That's been used a lot, and it's in line with President Xi Jinping's usual "safety strategy." In the face of a bad global economy, it seems that they have decided that they should clean up the insolvency first (rather than stimulus). At the end of the day, we're going to clean up the property first."
The interpretation is that now is not the time to party with economic stimulus, but to "consolidate the boudoir" to prepare for internal and external economic shocks.
In particular, he has made it clear that he is willing to fix real estate, which is a weakness of the Chinese economy and accounts for 5% of GDP. The "Government Work Report" released this time contains the contents of "preventing and resolving risks of major real estate companies and improving the asset-liability situation."
Effectively prevent and solve the risks of major real estate enterprises, improve the asset-liability situation, prevent disorderly expansion, and promote the stable development of the real estate industry.
"有效防范化解优质头部房企风险,改善资产负债状况,防止无序扩张,促进房地产业平稳发展"
- in the original text of the Chinese government's work report
In short, President Xi Jinping has focused on consolidating his efforts to take into account "economic shocks that are not easy to predict, such as the escalation of the US-China conflict," and as a result, a "conservative number" of 5% has emerged. This is the interpretation of Professor Jeon Garim of Hoseo University, who appeared on SBS's Economic Freedom Salon.
"At the end of the day, 5 percent is the Maginot Line. When it comes to reorganization, there is a tendency to be very conservative in its goals. We're going to show that we've exceeded our good performances."
In fact, Jeon believes that the Chinese government inwardly expects higher economic growth. The basis for this is the number of new hires. "Normally, 1 percent economic growth employs 220.5 million people, so 1 percent is the target for 100 million, but this time we're aiming for 1 million. What's going on? "(The goal) is over 200%."
Now, let's take a look at the "China's Economic Policy Through the Two Sessions" by two China experts who appeared at SBS's Economic Freedom Salon.
The Chinese government has 5) a modest expectation of economic growth of more than 1% in an uncertain economic environment, 5) it has decided that it should focus on "consolidating the economy" in light of the US-China conflict rather than the glamorous party of "stimulus after a third consecutive term," and 2) it has chosen a "conservative approach" that hastily overhauls the real estate issue, which is cited as the epicenter of the crisis. And, of course, the word "America" influenced these decisions.
Marwin is gone... Xi Jinping's choice is 'semiconductor'
5% The next most eye-catching news item was the "increase in defense spending." Of course, this is not a new trend. The Chinese government has continued to increase its defense spending in recent years.
Therefore, experts who appeared at the SBS Economic Freedom Salon analyze that what should be read from the increase in defense spending is the Chinese government's commitment to the overall "national security costs," including the increase in defense spending. ▶ ( Related video)
In fact, President Xi Jinping likes to use the word "security," which can be interpreted as "security." Safety is not safety but security, and President Xi Jinping repeated the word dozens of times in his speech at the 20th Party Congress last year.
Both sessions emphasized safety, but this time it was often read or interpreted as "safety from the United States." Appearing at SBS's Economic Freedom Salon, Professor Hoseo Jeon explained:
"Again, the word safety came up a lot. Who is that safety threatened by? It's from the United States, so everything has to be judged in a counter-U.S. framework. For example, finance has received the most attention in this reorganization. The United States is the strongest, and China is the most vulnerable. In the past, it was dualized into the Financial Insurance Regulatory Commission and the Securities Regulatory Commission, which brings them back together. For what? They decided it was better to put them together to counter the United States."
In particular, President Xi Jinping attaches great importance to industries that conform to this "safety concept." KB Securities recently released a report related to the "focus of investment in four industries." ▶ ( Related video)
The KB Securities report described the "four strategic security industries" as "the market is expected to focus its preference on four industries, including the data economy, highlighted in the government work report: data, energy, military, and agriculture." Park so-hyun, who wrote this report, gave this explanation in an appearance at the SBS Economic Freedom Salon.
"President Xi Jinping is very focused on his security strategy right now as he is in power for a long time. And technological independence is key to security. There's data security, there's energy security, and that's connected to national security. In both meetings, the heads of big tech companies were absent and representatives of companies such as semiconductors and electric vehicles came."
This is why the passage "Ma Yun disappeared, Lei Jun appeared" is so symbolic.
In the past, Tencent Chairman Ma Huateng and Alibaba founder Ma Win held one seat each. These are the so-called Big Tech personalities.
Let's take a look at a photo of the material. Alibaba Chairman Ma Win and Tencent Group Chairman Ma Huateng take a commemorative photo after receiving the Merit Award at the 40th Anniversary Celebration of China's Reform and Opening-up in 2018. This time, however, they were not invited.
Instead, Xiaomi Chairman Lei Jun, Huahong Semiconductor Chairman Jiang Xuxin, Xiaofeng Motor Co.'s Chairman He Xiaofeng, and Goretech Chairman Zhang Bin were appointed as CEOs. Photos of their attendance have not yet been released.
Ultimately, "the Chinese government now pushes industries related to national security. Businesses like semiconductors, energy, and electric vehicles."
Another basis for the interpretation that China's economic policy began to be guided by conflict with the United States in mind is the way China's central bank, the People's Bank of China, operates foreign exchange.
Park so-hyun, head of KB Securities, said, "The composition of China's foreign exchange reserves is changing rapidly. U.S. Treasuries are shrinking, and gold continues to grow. When Russia (invaded Ukraine) saw that all their money was tied up, they decided that U.S. Treasuries were no longer a safe-haven asset for China, which was on the verge of conflict with the United States."
After witnessing Russian sanctions through the war in Ukraine, we learned the lesson that "the United States must kick a pocket that cannot be touched." Recently, there were reports that the Chinese government had ordered Chinese companies to "reduce their wealth overseas." The interpretation is that it is prepared for a freeze in U.S. assets.
Let's take a look at President Xi Jinping's "safe economy" revealed through the two sessions. "We need to secure technology that can withstand U.S. and Western sanctions, foreign exchange reserves that can remain unshakable under U.S. sanctions, and foreign assets. So, we focus on saving the security economy rather than just saving the economy."
A warm word from a wolf warrior to Europe... Avoiding loners?
The third episode is the story of the wolf warrior.
First, let's talk about the trendy "group formation." Recently, there has been a surge in meetings that might be put to the test of common sense. Let's sort it out.
"There is the United States, there is no China."
From economics to military, it's a sentence that can run through these completely different gatherings together. And in the media commenting on the gathering, the phrase "to contain China" is not missing.
How does China feel about this? Could it be Putin's face? Were you worried about being a loner in the international community?
That's why Chinese Foreign Minister Qin Kang, who has been described as "wolf warrior diplomacy" and is well known for his harsh rhetoric to the United States, made an unusually gentle statement toward Europe, saying, "No matter how the situation develops, China regards the EU as an all-round strategic partner." Interpreted to mean "I will try to get along well even if there is a fight with the United States," the media titled it "Splitting the West." This is the explanation of the KB Securities team of Park so-hyun, who appeared at SBS Economic Freedom Salon.
"If Taiwan is what China cares about the most, Europe is what the U.S. cares about the most. It's part of that strategy. I would also have taken into account that it is difficult for Europe to completely exclude China when it comes to its economy. I think it's a strategic choice."
It is analyzed that this is the background that President Xi Jinping spoke harshly about the United States at the two meetings, but did not specifically speak bitterly about other countries, including Europe.
Appearing on SBS's Economic Freedom Salon, Professor Jeon Garim of Hoseo University said, "China is very uncomfortable with the situation in which the United States is uniting with other countries."
"On the issue of unity, China is very uncomfortable. That's one of the things I felt watching this war in Ukraine. I don't know that so many countries would come together in solidarity to help Ukraine. No matter how many people China gathers, it can't gather as much as the United States. That's the biggest problem facing China."
There cannot be two tigers on one mountain
Now let's go back to the beginning.
President Xi Jinping made a statement during the two sessions to the effect that "the Chinese economy has suffered because of the US blockade and repression." The reason this accusation has become a hot topic is that it was unusually aimed at "the United States" and it was made public.
According to the opinions of the experts who appeared at the SBS Economic Salon, 1) the economic policy direction of "consolidating the economy from the bottom line," 2) the semiconductor and energy sectors that guarantee national security, and 3) the foreign policy that separates the United States from other countries, China has begun to prepare for an open and full-scale "US-China conflict."