On February 17, Chinese President Xi Jinping met a group of private-sector business leaders in Beijing. While key messages released to the public from the meeting remain similar to past public remarks from the Chinese leader, some of the meeting invitees caught public attention. Jack Ma, the founder of Alibaba whose business suffered from government regulatory crackdowns in recent years, appeared in this meeting with top Chinese Communist Party officials, as did several other key businessmen from the Chinese technology sector. China’s political leaders apparently intend to refocus on developing a strong private sector, and Ma’s reappearance in key political meetings is a signal to that end.
After years of contradictory economic policies and attempts to increase the role of state-owned enterprises in the Chinese economy, Xi now hopes to reverse the trends. To boost the Chinese economy after seeing lower-than-expected results in 2023 and 2024, the Chinese leader seems ready to rely on the country’s private sectors, notably the country’s leading entrepreneurs, to prepare for a tumultuous period ahead. Since 2019, China has encountered increasing geopolitical pressure and economic sanctions over its actions in Xinjiang and Hong Kong, and its stance on the ongoing Russia-Ukraine War. China’s economy also faced pressure and punitive measures from the United States, both from the previous Biden administration and the Trump administration, through economic sanctions and tariffs.
In essence, the Chinese political leaders want consumers and potential investors to turn the page on the government’s recent economic blunders. In the past five years, a series of mistakes in China’s economic policy have led to mediocre growth.
In 2020, China became the first country to fight against the COVID-19 global pandemic. In response, China’s government imposed massive lockdowns across regions and strictly tracked the movements of individuals within the country. The approach, known as the zero-COVID strategy, aimed to prevent the virus from spreading and eliminate infections. While the approach may have had some initial success in the first months of the outbreak, Chinese officials failed to change their strategies and prioritize geopolitical battles with other countries on vaccines, border restrictions, and international trade.
In 2022, China imposed strict lockdown measures in major cities such as Shanghai and Urumqi. Chinese officials argued that those measures remained effective in containing the pandemic. However, the side effects of zero-COVID policies erupted during those lockdowns and ultimately led to a nationwide protest. Fearing further political implications and regime stabilities, the Chinese leadership team quickly abandoned its three-year-long strategy and lifted lockdown measures without effective vaccinations or other public health measures. The massive surge in COVID-19 infections following the lockdowns halted significant efforts toward economic recovery and led to further economic slowdowns in the following years.
Along with mistakes in its COVID-19 strategies, the Chinese government further blundered in handling key industries such as private tutoring and real estate. The Chinese government imposed a harsh crackdown on private tutoring businesses, with new restrictions on tutoring and after-school examination preparation services. The policies were supposed to relieve the burden on Chinese parents, but led to significant unemployment for the highly educated workforce and failed to ease the pressure on students. Entrance to top-level universities in China remains hard. Furthermore, job prospects and outlooks started to decline for new graduates as China experienced an economic slowdown with stagnant wages and a high cost of living. The government attempted to reverse course in 2024, but the measures came too late. The education industry has yet to recover from the damages.
China’s real estate sector followed a similar trajectory. In December 2016, Xi first started calls to stop house-flipping practices. “Properties are for people to live in, rather than people to profit from,” Xi said, and his government began to enact policies restricting local governments from selling land to developers and limiting developers from taking additional loans. Those measures resulted in declines in housing prices, but with unintended consequences that yielded worse economic and population growth outlooks. The bankruptcy of Chinese real estate hegemon Evergrande exacerbated the real estate struggles, leaving China with a weak housing market that remains unaffordable for wage-earning laborers, but now has even lower consumer and investor confidence.
As the Chinese central government limited local governments from benefiting from land approvals and land sales to slow down the price increase of real estate properties, local governments in China had to find other sources to meet their financial obligations and government expenses. With limited tax revenues, local governments have directed police agencies to go after businesses outside of their provincial jurisdictions to arrest and harass business owners to collect fines through regulatory penalties. Chinese media calls the practice, which has surged since 2023, “offshore fishing”: the police agencies abuse their power to arrest business owners and blackmail businesses outside of their ordinary jurisdiction to collect non-tax government revenues. While China hopes to present a positive image for foreign investors and entrepreneurs to do business in China, politically driven policies and ambiguous rules with local governments continue to be hurdles and barriers.
Facing ongoing economic struggles, China’s top leaders continue to proceed on an ineffective path that overly subsidizes selected products, instead of paying attention to its ordinary citizens’ welfare. With a huge emphasis on building electric vehicles (EVs) and artificial intelligence (AI) products, Chinese firms have established significant achievements in creating low-price EVs and the latest AI chatbots such as DeepSeek. Mobile applications such as TikTok, RedNote, and Temu are making a presence in developed world markets. At the same time, China has few effective measures to address the long-term economic pains and looming crises detrimental to the country’s future. China’s leaders have offered few solutions for the aging population, low birth rate, and the lack of consumer and investor confidence.
Furthermore, China is unwilling to reform its political structures or diplomatic strategies to cope with the changing priorities and needs. Despite facing economic challenges, the country’s top leaders only see private sector businesses as a means to sustain their authoritarian political system or a weapon that could help address issues or obtain diplomatic gains. With little mention of efforts to respect the market economy, China’s political leaders insist on ideologies that resist democracy and personal freedom. With no concrete changes in its political institutions, China will find it difficult to divert risks from the increasingly intensive geopolitical tensions in global politics.
China hopes to reestablish its previous economic success with significant GDP growth in the past decade. Strong economic numbers offer China the resources to improve its military and technological capacities and maintain the legitimacy of its authoritarian governance. Yet with no concrete reforms of its political structure, China will struggle to boost investor and consumer confidence through the same scheduled meetings or repetitive public messages.