China’s leadership glosses over growing popular discontent

Jayadeva Ranade

President, Centre for China Analysis and Strategy

CHINA’S major political events of the year — the plenary sessions of the Chinese People’s Political Consultative Conference, its top political advisory body, and the National People’s Congress (NPC), China’s version of a parliament — started in Beijing on March 4 and 5, respectively. Premier Li Qiang presented the Government Work Report, which is the government’s appraisal of the economy and performance during 2023 and the proposals for this year. The Premier’s report was cautious and avoided raising expectations. It laid strong emphasis on security, which was mentioned 28 times, and retained last year’s forecast for GDP growth at around 5 per cent and inflation at 3 per cent.

It was striking that in the report, Premier Li singled out Chinese President Xi Jinping for praise, asserting that “we owe our achievements in 2023 to General Secretary Xi Jinping, who is at the helm charting the course”. He, of course, acknowledged “the strong leadership of the Party Central Committee with Comrade Xi Jinping at its core, and the concerted efforts of the whole Party, the armed forces, and Chinese people of all ethnic groups”. As anticipated, the 40-page report glossed over the economic problems, though the projected GDP growth rate and estimation of inflation reveal economic difficulties. He admitted that 2023 was challenging for China as its “economy grew in a wave-like fashion amid twists and turns” and the “achievements did not come easily”. He attributed this to the sluggish global economic recovery, geopolitical conflicts becoming more acute, the rise of protectionism and unilateralism, the Covid-19 pandemic and the external environment adversely impacting China’s development.

There are various indicators of China’s difficult economic situation and growing popular discontent, including within the Chinese Communist Party (CCP). These have the potential to negatively affect Xi and the CCP’s leading role. The leadership’s sensitivity to the rising discontent was evident in its recent decision to prohibit official Chinese organisations from reporting the number of protests and strikes taking place. Nikkei Asia disclosed in November that 50-70 demonstrations occurred monthly. Freedom House's China Dissent Monitor project tallied 1,777 demonstrations linked to the property sector between June 2022 and October 2023. The Human Rights in China (HRIC) reported that a protest by students on December 27 and 28, 2023, had burgeoned into demonstrations involving over 10,000 people, becoming the largest Chinese protest last year. The Hong Kong-based China Labour Bureau reported in January that during the past six months, there were 1,104 strikes in China and 976 protests by workers striking for wage arrears, etc. with the latest incident occurring in Guangdong province. Reports revealed that Beijing bus companies were hiring security guards to ‘prevent emergencies’.

China’s economic situation is more stressed than it has been for decades. In efforts to curb spending, the wages of government employees are quietly being slashed across China. The National Financial Work Conference, held in Beijing on December 21-22, 2023, emphasised the need to vigorously promote financial management reform in 2024. Highlighting the economic stress, reports from China’s provinces last December revealed that the policy of reducing salaries of civil servants had spread to the more prosperous areas and regions, including Beijing, Hubei, the Yangtze River Delta, and the Pearl River Delta. Salaries of provincial government employees have been reduced by 15-20 per cent, with many provinces establishing salary reduction offices. Year-end performance bonuses have been withheld. A notice on “strengthening budget management and adhering to the concept of living within tight financial constraints”, issued by the Xiamen Municipal Government in Fujian province, has been widely circulated online. It strictly prohibits the unauthorised construction of buildings and facilities and forbids projects solely for political achievements or image-building. Meanwhile, the state-backed Zhengzhou Public Transport Group is encouraging employees to start their own businesses.

Even public security personnel have been affected. Radio Free Asia reported on November 16 that wages of public security and national security personnel had been reduced by about 20 per cent. Public security bureaus in Beijing and Chengdu have cut wages by about 20 per cent. Radio France International reported that there were numerous posts by citizens on Sina Weibo complaining about delayed payment of wages and non-payment of wages for up to eight months. In an apparent attempt to offset any consequent laxity in enforcement or discipline on the part of security personnel, the authorities have introduced a ‘whistleblower’ programme to help maintain social stability. This rewards citizens who provide ‘hints of instability’.

There are a number of other indications of China’s slowing economy. Graduate unemployment has been officially declared to be at a high of 21.8 per cent. The youth are not getting married pointing to a drop in birth rates and lowered productivity. Additionally, there is a high outflow of funds from China, indicating that Chinese businessmen are uncertain about the country’s economy and its policies. China’s State Administration of Foreign Exchange recently revealed that there had been an outflow of $53.9 billion in September 2023 — the largest amount since January 2016. In a bid to stop Chinese emigrating, China’s use of ‘exit bans’ rose from less than 5,000 in 2016 to 39,000 in 2020.

The growing dissatisfaction, which exists within the CCP too, has compelled Xi to enlarge the number and scope of security-related organisations. The report presented at the NPC is also not optimistic. Unless the economy begins to grow and people’s lives improve, Xi will face increasing popular discontent.

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