When Xi Jinping took office 10 years ago, China had just surpassed Japan to become the second-largest economy in the world.
Since then, it has expanded at an incredible rate. Since 2012, China's GDP has grown at an average annual pace of 6.7%, making it one of the major economies with the fastest continuous expansions in history. According to the World Bank, its GDP reached approximately $18 trillion in 2021, making up 18.4% of the world's economy.
The United States and its allies now face a strategic danger from China as a result of its fast technical development. It is progressively ousting American rivals from long-held leadership positions in industries ranging from artificial intelligence to 5G technology.
Up until recently, several experts believed that China would surpass the United States as the world's largest economy by 2030. The scenario now appears to be much less favorable.
As Xi gets ready for his second decade in office, he must deal with growing economic difficulties, notably an unsatisfied middle class. If he is unable to restart the economy, China will see declining productivity and innovation as well as escalating social unrest.
According to Doug Guthrie, director of China Initiatives at Arizona State University's Thunderbird School of Global Management, "China was on a path for 30 years that gave people enormous optimism," adding that the nation is "in severe difficulty right now."
The slowing economy and sporadic dissent
Despite the fact that Xi is one of the most powerful leaders China and its governing Communist Party have ever known, some observers think he cannot take credit for the nation's incredible development.
Sonja Opper, a professor of Chinese economics at Bocconi University in Italy, asserted that "Xi's leadership is not responsible for China's economic success." She said, "Xi was able to take advantage of a continuing entrepreneurial movement and the quick growth of a private [sector] economy that earlier presidents had unleashed."
Instead, Xi's initiatives in recent years have given China a ton of trouble.
Beijing's extensive crackdown on the nation's private sector, which started in late 2020, and its steadfast adherence to a zero-Covid policy has had a negative impact on the economy and job market.
If anything, Opper claimed, Xi's leadership may have slowed down some of the nation's growth dynamics.
Over the past two years, Alibaba and Tencent, the crown jewels of China's internet economy, have lost more than $1 trillion in market value. Tens of thousands of workers have been laid off and the sector's sales growth has stalled, contributing to record-high young unemployment.
The real estate industry has also taken a beating, hurting some of the biggest house builders in the nation. The fall in real estate, which contributes up to 30% of GDP, has led to widespread and unusual middle-class discontent.
As a result of thousands of irate homeowners refusing to pay their mortgages on delayed projects, authorities were forced to exert pressure on banks and developers to quell the discontent and allay concerns about systemic financial risks. This year, there have been other instances of dissent as well.
A peaceful demonstration by hundreds of depositors seeking their life savings returned from rural banks that had frozen millions of dollars worth of deposits was forcibly put down by Chinese police in July. The banking crisis exposed the failing financial condition of China's smaller banks as well as endangered the livelihoods of hundreds of thousands of clients.
Many middle-class individuals are dissatisfied with Xi's leadership and disappointed with the country's recent economic performance, according to David Dollar, a senior fellow at the Brookings Institution's John L. Thornton China Center.
Analysts claim that the financial system is vulnerable as a result of the nation's unrestrained, debt-fueled development in the preceding ten years and that a new paradigm is required.
According to Neil Thomas, a senior analyst for China and Northeast Asia at Eurasia Group, "China's growth during Xi's decade in power is primarily attributable to the general economic approach adopted by his predecessors, which focused on rapid expansion through investment, manufacturing, and trade."
But he said that the paradigm had "reasonably diminished returns" and was causing more environmental harm, economic inequality, and debt.