President Xi Jinping has turned new year's resolutions into a conundrum for officials busy carrying out his cleanup campaign. Now worried about economic stability ahead of a key leadership reshuffle in October, he wants to tap the brakes on technology and other crackdowns in 2022. He's also softening his energy-transition stance while pushing for more infrastructure. But with other rules unchanged, that makes for a hard balancing act.
This year has brought new rules from antitrust to data security to property, wreaking havoc on a slew of Chinese internet and other companies. Many are listed in New York: The Nasdaq Golden Dragon China index has fallen nearly 40% so far this year; e-commerce giant Alibaba alone has lost $500 billion in value since a 2020 peak. Earlier this month China Evergrande, the country's most-indebted developer, officially defaulted.
But during the Central Economic Work Conference that concluded on Friday read more , where top leaders set next year's economic agenda, Xi made it clear that it's time to return to focus on growth and loosen overly stringent policies. Notably, that includes coal, the lack of which led to a nationwide energy crisis this year as regional governments produced less to meet carbon-neutral goals. Citing a triple whammy of weak consumer demand, insufficient supply and waning market confidence, Xi used the meeting to lecture officials against "chaotic policymaking" that often misunderstood how to balance his long-term vision and short-term priorities.
But he's not pushing for policy U-turns in areas like property, for example: The meeting reiterated "houses are not for speculation". And he's urging local governments, after a year of slacking, to hurry up issuing bonds to finance the infrastructure projects that Beijing needs as soon as possible. But there's a reason why infrastructure investment grew just 1% year-on-year in the first 10 months of 2021: Beijing has scrutinised local debt piles more closely than ever and public projects with good returns are hard to find beyond highway tolls. The meeting's stress on controlling government debt doesn't make that job easier.
Meanwhile, the war on monopolies and "reckless capital expansion", which has yanked entire industries such as private tutoring this year, needs, argued Xi, to be strengthened, but with "traffic lights" that let well-behaved players pass through. It's all a recipe for confusion, leaving officials walking a tightrope to comply.