U.S., UK and European investment in China, long a major source of technology transfer and capital influx, declined steeply since Xi Jinping enforced his zero-Covid policy and crackdowns on the private sector. It makes no medical sense for Xi to insist on zero-Covid or economic sense to crack down on private enterprise. These two self-inflicted injuries only make political sense through the lens of a power grab and consolidation by Xi.
Be that as it may, Xi’s actions seriously harmed the Chinese economy, triggering crisis after crisis: property crisis, banking crisis, declining consumerism, increasing unemployment, regular city-wide lockdowns, mass Covid testing involving millions of residents, stringent border control, and strict quarantine, among others. As a result, economic activities have slowed drastically and negatively affected the lives and livelihoods of millions of Chinese citizens.
Given all these damaging actions, the writing is on the wall that Xi is taking China backwards to the era of Maoism, with uses of extreme nationalism to turn people against capitalism and foreign forces. He has built a Maoist-like personality cult, reversed market reforms, subjected the private sector under the direct control of the Communist Party of China, and after 10 years in power, is still systematically eliminating his political opponents.
In short, Xi is using Maoism to unite China against any challenges to his reign, which he hopes to extend for a third term during the 20th National Congress in October.
It is no wonder then, that foreign investment is disappearing as foreign companies lose interest in China and are looking to invest in Southeast Asia, India and other business-friendly parts of the world, according to three new reports released in September by the European Chamber of Commerce in China, Swedish Chamber of Commerce in China and Rhodium, a New York research company.
It is ironic the single most damaging liability to the Chinese economy is Xi himself. In the face of Putin-triggered global inflation, energy and food insecurity, and confronting rising geopolitical tensions with the free world, Xi, who turns China into a totalitarian regime during his reign, is adding to domestic economic woes by his imposition of ideology over the economy.
Xi’s politicization of business has dimmed China’s prospect as an investment destination and led to an unprecedented disruption of the economy. Now, global CEOs and investors increasingly viewed China as a country with more political, economic and reputational risks. This is not good because in any business environment, transparency, stability and certainty are values appreciated by profit-seeking CEOs and investors wanting a fair return on investment.
A totalitarian regime is not good for investment
Indeed, on a superficial level, Xi cracks down on both the Covid-19 virus and private sector but in fact, on a deeper level, his real crack down is on freedom and the truth. By taking away freedom from the Chinese citizens, he is taking away the opportunity to improve their lives and to lead a dignified life.
With his crack down on the truth, professional opinion, science, research, academia, and think tanks do not matter anymore. His refusal to listen to experts, whether in regards to Covid-19 or the economy, has cheapen and demean knowledge gained from rigorous academic training.
Importantly, Xi has single-handedly destroyed the reputation of China’s esteemed medical schools and research institutions because subject matter experts are silenced and nobody dares to speak the truth. And those who did were punished by the Communist Party of China. Medical experts parroted party lines, including falsehood, lies, propaganda and conspiracy theories about Covid-19 origins and the western-made mRNA vaccines.
Dr Zhang Wenhong, China’s top infectious diseases expert and head of the Center for Infectious Disease at Huashan Hospital under Fudan University, in August 2021, pushed forward the view of a Covid-19 endemic and coexistence with the virus, which was at odds with Xi’s zero-Covid policy. He paid a price for speaking the truth.
A torrent of online attacks came fast and furious. An army of trolls and ultranationalists called him a traitor who blindly worshipped western ideas, alleged he colluded with foreign forces to sabotage China’s Covid strategy, undermined his academic credentials, and accused him of plagiarism in his doctoral thesis published twenty years ago.
The fury and attacks were reminiscent of Mao’s Cultural Revolution, during which scientists, intellectuals and artists were subjected to public humiliation and physical harm by the Red Guards for their perceived lack of loyalty.
Another of Xi’s signature policy, straight from Mao’s playbook, was the introduction of the Xi Jinping Thought into academic curriculum, from primary school up to university. By the end of 2017, dozens of universities had set up research institutes for Xi Jinping Thought. Besides schools, newspapers, television, the internet, billboards and banners all glorified the ideas of Xi.
In an attempt to forcibly replace truth and science with propaganda, Xi expects Chinese citizens to apply his ideology into all aspects of daily life. But tragically, history has shown Maoism did not bode well for China as millions of Chinese died and the economy was left in tatters. Therefore, Xi is now taking hostage the economy and along with it, 1.4 billion Chinese, for a ride that will not end well.
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