China is trying to win over Western countries and private firms

Mr. Liu, who is one of China’s four vice premiers and a trusted advisor to Chinese leader Xi Jinping, was polite. It was he, not the others in his entourage, who stole the show. His speech made a welcome note among the assembled business magnates on January 17, given the fragile state of the world economy. “If we work hard enough,” he said, “2023 will see a significant recovery in the Chinese economy.” He promised “greater attention” to supporting private business – which has been irked by Mr Xi’s campaign over the past two years to tighten controls on technology firms and his increased use of Marxist-sounding language. For those worried about China’s many barriers to foreign firms, Mr. Liu had soothing words: “China’s national reality dictates that opening up to the world is a necessity, not an expediency. should and should do a better job.”

There was nothing surprisingly new in Mr. Liu’s comments at Davos. But his softer tone fueled speculation among foreign observers that, along with ditching a “zero-Covid” policy, Mr Xi has decided to tone down some of the rhetoric, sparking a backlash among businessmen at home and abroad. Panic has set in, the pressure on private entrepreneurs has eased. And prevent further deterioration of your country’s badly strained relations with the West. China’s state-controlled media has encouraged this view. After attending the forum, Mr. Liu had his first face-to-face meeting with the US Treasury Secretary, Janet Yellen, in Zurich. facing since assuming his post two years ago. A Chinese news outlet called it “another sign of breaking the ice between the world’s two largest economies”.

It may well be that China sees a need to adjust its strategy in both economic and diplomatic matters. Last year’s annual GDP growth of 3% was the second slowest since Mao Zedong’s death in 1976. US efforts to stem the flow of cutting edge technology to China are frustrating Mr Xi’s ambitions for technological supremacy. As geopolitical tensions rise, and Covid exposes the vulnerability of supply chains linked to China, Western companies have become increasingly nervous about relying on the country as the source of every widget. China’s cozy relationship with Russia, and its refusal to condemn its invasion of Ukraine, has poisoned China’s relations with Europe, a region it has long sought to conquer in an effort to undermine US alliances. was trying to

China likes to use Davos as a place to butter up foreigners. In 2017, nearly five years after taking power and triggering a wave of unease across the West, Mr. Xi himself came to the fore. He was the first Supreme Leader of China to attend the Forum. The audience heard a portrayal of China as a champion of globalization and a leader of efforts to combat climate change. US President-elect Donald Trump appeared determined to go in the opposite direction. This made it even easier for Mr. Xi to score points.

But recently there have been significant changes. Mr. Xi’s decision to meet his US counterpart Joe Biden on the sidelines of the G20 summit in Bali on November 1 follows. Since August, China has been at odds with the US due to a visit to Taiwan by Nancy Pelosi, then Speaker of the US House of Representatives (China claims the island and abhors official contact with it by foreigners). . US Secretary of State Antony Blinken is expected to visit Beijing in February, the State Department says. This will be the first such visit by America’s most senior diplomat since 2018. Also next month, films from Hollywood company Marvel Studios will be shown in Chinese cinemas, ending China’s vague four-year ban.

China is also signaling to other western countries. While in Bali, Mr. Xi also met with Prime Minister of Australia Anthony Albanese. It was the first head-to-head encounter between the two countries at that level since 2016—with Australia angering China on several fronts, including calling for an independent investigation into the origins of Covid. Since the beginning of this year, China has eased a two-year ban on Australian coal imports. And Mr. Xi has increased the pace of diplomacy with Europe. In November he hosted a visit from German Chancellor Olaf Scholz. French President Emmanuel Macron is expected to visit early this year.

relief to private sector

The tone on the economy is also changing. The official account of the Communist Party’s annual closed-door gathering in December to discuss economic policy, the Central Economic Working Conference, had little ideological language from Mr Xi and no railing against the “disorderly expansion of capital”, which had previously Fintech firms had. accused of committing a crime. It said China should “vigorously develop” the digital economy. The Asia Society Policy Institute, a think-tank in New York, said the words were arguably “the most positive and authoritative statement on the political and ideological legitimacy of the private sector” since Mr Xi came to power.

In recent weeks, the government has also backed down from its two-year-long effort to prevent a property-market catastrophe by imposing stricter limits on borrowing by developers. sector still badly in need of repair, But the return of a more cautious approach has brought relief to businessmen. The campaign was affecting sales.

But it would be wrong to conclude that Mr. Xi himself has changed, or that he is politically weak. China’s chaotic exit from zero-COVID—a policy with which it was closely associated—may have damaged its credibility among some members of the public and China’s elite. But the country’s political machinery continues to function, as evidenced by the creation of a party congress in October, in which Mr. Xi won an unprecedented third five-year term as general secretary, and a reshuffle of the politburo that surrounded him with loyalists. .

Across the country, officials still make chilling speeches in reference to Mr. Xi and his leadership. China is still showing its strength around Taiwan. Even as they try to mend fences with Western countries, China’s envoys continue to use the harsh language about the West that has become a hallmark of diplomacy under Mr. Xi. In Davos, Mr. Liu probably said what his audience wanted to hear about China’s economy. But his call for an end to “Cold-War” thinking was an indirect jibe at America. In China’s view, the US is its main carrier. He twice referred to Mr Xi’s idea of ​​a “community with a shared future for mankind”. It means, in effect, a new world order in which criticism of China is taboo.

Mr. Xi will try to use two big political events this year to boost public and business confidence in the economy and their support for non-state firms. The first is the annual session of the country’s parliament, which is scheduled to take place in March. Outgoing Premier Li Keqiang will deliver the keynote report. It is likely to echo the language of December’s working conference. The party’s 376-member Central Committee will meet in autumn. Traditionally, at this stage of China’s political cycle, it should focus on the economy. Expect a discussion of improvement.

But cynicism will also abound. A year after taking power, Mr. Xi presided over a similar meeting of the Central Committee. Its vaguely worded communiques were filled with talk of reform that soon turned out to be empty as they focused on increasing the party’s control over business, and especially strengthening state-owned firms.

Four years later, it was Mr Xi’s turn as the Davos Man. But the later years of his rule saw an ever more harsh crackdown at home – not least in Xinjiang and Hong Kong – a deterioration in relations with the West and a growing frustration among private entrepreneurs and foreign investors alike. “There is a certain amount of wishful thinking on some of this,” says Andrew Small of the German Marshall Fund of the United States, a research center. And I think, on the Chinese side, they know that wishful thinking is something they can take advantage of.”

© 2023, The Economist Newspaper Limited. All rights reserved. From The Economist, published under license. Original content can be found at www.economist.com