As the 20th Chinese Communist Party (CCP) Congress came to an end on Sunday October 23, Xi Jinping, the Party’s general secretary, not only won his third term as expected, but installed his cronies and supporters in the Standing Committee of the Politburo, the CCP’s highest authority. The result has worried many executives of the foreign companies that operate in China.
In an interview with the Voice of America, Joerg Wuttke, president of the European Union Chamber of Commerce in China, was pessimistic about the future of the Chinese economy. Wuttke is considered to be one of the most knowledgeable Westerners about China. He went to China in 1982 and has lived there on and off for 33 years.
He stated, “It’s definitely a surprise. I had a completely different line-up in mind (of the new leadership). I had of course the Prime Minister Li Keqiang as the head of parliament. I thought about two candidates for Prime Minister. I know both candidates quite well. It was a surprise to see that basically all of them were rooted out. Also, of course, the visual realization that president Hu Jintao was sent out of the room has already painted a picture that an era is gone. We have a greater clarity now that it is obviously Xi Jinping who is calling the shots to an extent which we did not see before. He has aligned a group of people that are totally loyal to him. We have basically left this sphere of achievements and meritocracy. It’s all about loyalty. We have to see where this group of people are leading China.”
“My struggle is I am trying to be realistic in order to give it a taste of which direction this might go. Obviously, Monday (October 24) was a very pessimistic market reaction, and reflects what many of my colleagues are thinking. But again, we have not entered the space in which we know where we are heading.”
“I am a child of the 90’s. I have been here about 30 years. I grew up in the opening up mode of Deng Xiaoping. My first party Congress I witnessed personally was in 1982, where Deng Xiaoping was trying clearly to integrate China and open up. Maybe at the tail of my career in China, I have to witness China actually closing up again to some extent. So, in a way it’s a full circle, which is, of course, disappointing. But at the same time, its their country; it’s their choice.”
“So many of them (the business leaders) put their operation on auto pilot. We have not seen companies moving away, and I don’t expect this. But we have noticed this – that new investment and new additional activities from those companies that normally would come up in China has been rerouted to other regions. So we see more interest in Thailand, Southeast Asia, India, but even close to home in Turkey and eastern Europe, for the simple fact that executives can fly there in and out easily.”
“They have also realized that the world bank has predicted China will grow this year at 2.8 percent, and rest of Asia 5.3 percent. These leaders follow the money. Hence there will not be an exodus of European business out of China, but we will definitely see an underachiever given the potential of this economy.
Source: Voice of America, October 28, 2022