Stock Market Crash Signals 'Red Light' for China's Economy... Media and SNS Scramble to Gauge Xi Jinping's Reaction

Xi Jinping's Third Term Confirmed at Party Congress Ending on 22nd
"Xi Jinping's Corporate Regulations and Zero-COVID Policy Strangle the Economy"

Chinese President Xi Jinping is giving a greeting speech at the press conference for the newly appointed Standing Committee members held at the Great Hall of the People in Beijing after concluding the 1st Plenary Session of the 20th Central Committee of the Communist Party, which elected the General Secretary and members of the Politburo Standing Committee on the 23rd. Photo by Yonhap News

[Asia Economy Reporter Park Hyun-joo] As Chinese President Xi Jinping secured a third term through the 20th National Congress of the Communist Party of China (Party Congress), concerns about the Chinese economy have emerged. Xi's policies, which have tightened regulations on private enterprises and strengthened quarantine measures through the zero-COVID policy, are being evaluated as having slowed economic growth.

According to Bloomberg on the 24th (local time), Scott Kennedy, senior adviser at the U.S. think tank Center for Strategic and International Studies (CSIS), predicted that China's economic recovery would be slow due to the zero-COVID policy. He pointed out that Chinese authorities have not sent any signals externally regarding an exit strategy from zero-COVID. He added, "Even if signals of strategy modification are sent, consumers and investors have already suffered from zero-COVID for a long time," and predicted, "Economic recovery will be very slow and gradual."

Regarding Xi securing a third term at this Party Congress, he said, "China seems to continue following the leadership that has lasted for the past decade," but added, "However, going forward, it will be in a more thorough and overt manner."

After visiting China for the first time in three years, Senior Adviser Kennedy also compared Beijing to Pyongyang. He said, "In 2019, Beijing was becoming an international city like London," but "when I visited Beijing again last September, it felt like Pyongyang, to put it half-jokingly." He explained that the visa issuance process to enter Beijing from Washington was not smooth, the airfare was exorbitantly expensive, and flights were continuously canceled, forcing him to enter Beijing via Taiwan.

Even after entering, he had to continue experiencing inconveniences due to the zero-COVID policy. Kennedy said that whenever he moved within China, he had to obtain green (normal) certification via a mobile phone application (app), stating, "Without a green code, you physically cannot go anywhere. There is no transparency or anonymity in China." He added, "There are no foreigners in China. There are almost no multinational company employees, no foreign tourists, and fewer students than before."

Medical staff wearing protective equipment in Beijing, China, are moving test kits collected from shopping mall workers who tested positive for COVID-19 on the 17th. Photo by Yonhap News

Meanwhile, the Chinese economy is showing red warning signs, such as a sharp drop in the stock market. According to Bloomberg's tally on the same day, the stock price of Chinese e-commerce company Pinduoduo fell 24.6% in the U.S. stock market, reducing the wealth of its founder Huang Zheng by about $5.1 billion (approximately 7.31 trillion KRW). Following that, Tencent founder Ma Huateng and Nongfu Spring founder Zhong Shanshan experienced net asset decreases of about $2.5 billion (approximately 3.6 trillion KRW) and about $2.1 billion (approximately 3.02 trillion KRW), respectively. Ding Lei, founder of internet and gaming company NetEase, also lost about $1.8 billion (approximately 2.58 trillion KRW).

Bloomberg viewed the Chinese stock market as a high-risk investment destination lacking transparency, controlled by the will of President Xi alone. Benny Lam, head of research at CEB International Investment, said, "The market is concerned that as the Politburo Standing Committee is filled with Xi Jinping's close associates, Xi's ability to implement market-unfriendly policies is strengthened."

On the same day, CNBC also diagnosed that the Chinese Communist Party has tightened regulations on the technology sector and squeezed the private economy through the zero-COVID policy. Professor Xin Xun explained to CNBC, "The policies of Xi Jinping, which have focused on prioritizing the public sector at the expense of the private sector over the past few years, are unlikely to change or be revised," adding, "This has led to an extremely bleak economic outlook."

However, domestic media in China remain silent about the stock market crash. According to Bloomberg on the 25th, China Securities Journal, a leading Chinese economic media outlet, did not cover this market turmoil. Shanghai Securities News briefly mentioned the mainland stock market decline but did not refer to the fall of Chinese stocks and the yuan. According to Bloomberg, it is also difficult to find related content on Chinese social networking services (SNS) such as Weibo or WeChat.

This content was produced with the assistance of AI translation services.