Beijing unleashes confidence campaign to reassure markets

(Edited and refined by Josephine Hong, with the assistance of AI translation.)

For three consecutive days since 22 August (NB: and one more since the time of writing), the People’s Daily, the Chinese Communist Party’s official newspaper, published articles under the byline “Zhong Caiwen”. This follows the release of July economic data showing weak domestic demand, falling investment, and slowing growth momentum.

The articles stressed the resilience of China’s economy, its contribution to the global economy and the “quality” behind 4.7% growth. Interviewed academics said the articles are intended to stabilise economic expectations, bolster market confidence, and rebut external doubts about China’s economy.

Story of growth, resilience and transition

“Zhong Caiwen” is the pen name for the Central Financial and Economic Affairs Commission, and is mainly used for publishing official commentaries on the economy. For eight consecutive days from 30 September to 7 October last year, the People’s Daily also carried a series of articles under the Zhong Caiwen byline titled “Special Commentary on China’s Economy under the Guidance of Xi Jinping Economic Thought”.

Interviewed academics said that the authorities had five considerations in publishing the articles in succession: managing expectations, strengthening confidence, aligning domestic thinking, responding to pessimistic views from abroad, and creating a more favourable economic and public opinion environment ahead of the China-US leaders’ meeting and the fifth plenum of the Chinese Communist Party (CCP) Central Committee.

The three articles form an official economic narrative, moving from why China’s economy is resilient, to how it contributes to the world economy, and why 4.7% economic growth remains worthy of recognition.

The first article, “The Resilience and Vitality of China’s Economy”, published on 22 August, said China was in a period of transition between old and new growth drivers. It argued that rather than looking at short-term GDP growth, greater attention should be paid to the quality of economic performance, the strength of technological innovation and industrial capability. The article said that technological innovation was being translated more rapidly into industrial competitiveness. In the first half of the year, value added in equipment manufacturing and high-tech manufacturing industry rose 9.3% and 13.3% respectively, while risks in areas such as the property market and local government debt were being resolved and brought under control in an orderly manner.

The second article, “China Is a Positive Contributor to Global Economic Growth and a Powerful Anchor of Stability”, shifted the focus to the world economy. It described China as a key engine of the world economy and a stabilising anchor for global industrial and supply chains, while rebutting claims of a “China Shock 2.0” and a “China squeeze”. It added that China’s strengths in new energy had reduced its crude oil imports and eased pressure from rising international oil prices. In the first half of this year, eight out of every ten humanoid and quadrupedal intelligent robots sold globally were made in China. The article also stressed that Chinese manufacturing and the Chinese market offered development opportunities to the world.

Aligning domestic views ahead of high-stakes meetings

Gu Qingyang, an associate professor at the Lee Kuan Yew School of Public Policy (LKYSPP) at the National University of Singapore (NUS), told Lianhe Zaobao that China’s economy was undergoing structural divergence. New growth drivers, including new quality productive forces and technological innovation, had performed strongly, but traditional industries were still struggling. Coupled with pessimistic market expectations for third-quarter economic performance, this prompted authorities to manage expectations through a series of articles.

Gu said that while the articles were intended to align domestic thinking and show the public that China’s economy remained resilient, they also responded to pessimistic views from abroad by stressing that China’s economy was performing relatively well compared with the global economy, thereby improving overseas expectations of China’s economy.

He said the three articles were linked to the fifth plenum of the CCP Central Committee slated for October, and an expected China-US leaders’ meeting at the end of September. Stronger economic performance and market expectations ahead of the plenary session would help create a favourable atmosphere. In China’s contest with the US, economic performance was an important factor in strengthening China’s negotiating position. He said, “This year marks the start of the 15th Five-Year Plan. China attaches great importance to getting off to a good start, considering it as half the battle won. It will certainly strive to do well this year.”

Pivoting policies at critical mid-year juncture

Zhao Xijun, associate dean of the School of Finance at Renmin University of China, said that August was an important juncture for policy adjustments and reconfiguration in China’s economic work, as well as a key window between the first and second half of the year. The authorities’ successive articles at this point were mainly intended to convey more clearly China’s economic conditions, enabling markets, the public and the international community to see its resilience in responding to risks and challenges, while understanding how China’s macroeconomic policies were being implemented and their future direction.

Measures to stabilise growth implemented by China in August include the optimisation of policies coordinating fiscal and financial measures from 1 August to boost domestic demand, with the scope of interest subsidies further expanded. Work has also begun on 800 billion RMB (US$119 billion) in a new policy-based financing tool, with implementation plans already issued to local authorities.

This article was first published in Lianhe Zaobao as “中共党媒连发三文解释中国经济 学者点出五大原因”.

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