China is currently in the grips of a multifaceted crisis that is undoubtedly the most complex since the Mao era, such is its intricacy.
On the political front, the 20th National Congress of the Chinese Communist Party (CCP) paved the way for an autocratic concentration of power. The nation’s keys are now in the hands of a single man, Xi Jinping, who is surrounded exclusively by a band of ultra-loyalists. The public humiliation of former General Secretary Hu Jintao being manhandled out of the Congress was a clear symbol of this. Concentrating power may work, as long as Xi Jinping remains in good shape. But if he goes, the whole edifice could crumble.
Then there is real estate. Initially hit by a crisis among real estate developers, the sector is seeing house prices fall month in and month out. Accounting for nearly a quarter of GDP and 70% of household wealth in China, the backbone of the Chinese economy is gradually eroding.
On the healthcare front, the country is facing a COVID-19 wave of an unprecedented scale – the number of daily cases is now higher than in the January 2020 and spring 2022 waves. Although the government has recently loosened its zero-COVID policy, the logic remains unchanged. Drastic measures are imposed as soon as new cases emerge, regardless of economic or social cost.
On the geopolitical front, the desire to annex Taiwan is likely to further cool already glacial relations with the US. This risks isolating the country, which would be all the more costly given that the Chinese economy is still largely reliant on exports.
Social discontent seems higher than ever in China. Of course, in a country stifled by the grip of the CCP, this may look moderate in comparison with the movements that occasionally rock western democracies. Images of demonstrations linked to the real estate crisis or against COVID-19 restrictions are nonetheless proliferating. In a country where youth employment is running at close to 20%, this is a major challenge for the authorities.