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Global perspectives: China should fine-tune Japan policy as its economy slows down

Chinese President Xi Jinping waves during the inauguration ceremony in Macao, Friday, Dec. 20, 2019 to mark the 20th anniversary of the former Portuguese colony's handover to Chinese rule. (AP Photo)

As we enter December and head toward the year's end, gingko leaves are finally turning yellow. It seems that climate change is steadily expanding. In Japan, in recent years, we have more rains triggering floods and landslides on overwhelmed rivers and mountains.

At the United Nations Climate Change Summit in September, 16-year-old Greta Thunberg urged a rapid implementation of countermeasures to stem global warming. Is it possible at all, however, to make a turnaround that will put the environment, not the economy, first? Following the UN Climate Change Conference, COP 25, what counts is not words written on paper but real action. Can humanity look beyond its short-term interests and pursue the long-term benefits of posterity instead?

My answer to this question is not optimistic, considering the worldwide economic downturn. The slowdown of the Chinese economy, which requires close attention, and other factors seem to be shaking the country's social and political stability.

According to the official announcement of the Chinese government, the country's economy grew by 6.9% in 2017 and 6.6% in 2018. But people who know China well generally think that actual figures were not that high. And this year, China's economic slowdown is obvious even from official figures -- growth of 6.4% in the first quarter, 6.2% in the second and 6.0% in the third. The number of new cars sold in the period from January to September plummeted by 10.3% from the previous year.

Chinese government leaders in charge of the economy have a tough view of the current situation. Vice Premier Liu He, who handles trade talks with the United States, touched on the fact that the economy was facing downward pressure and called on the urgent need to arouse one's patriotic sentiments and turn the problem into opportunity for the country during a conference in September.

Steering clear of rough waters, nevertheless, is no easy task. The top priority is the maintenance of financial order, and the country must advance deleverage, or debt reduction. At the same time, there's a need to shore up the economy through an active fiscal and monetary policy. In particular, it is an ongoing challenge to make financial institutions expand lending to small- and medium-sized private corporations.

Vice Premier Liu also issued directives to local governments, indicating that they are primarily responsible for the reduction of risk and maintenance of stability. They must crack down on illegal financial activities and prevent an outburst of problems in large numbers. That implied he already envisioned some problems would occur.

One incident that grabbed popular attention in this context is the failure of seven professional soccer teams in China in the third-tier league to pay salaries to their players due to bad business conducted by their corporate sponsors. Some of the players are seeking help by demonstrating in front of relevant local governments, but many municipalities have trouble paying their own employees. To make matters worse, the spread of African swine flu has been pushing up the price of pork, which is very popular in China. Many restaurants in Beijing and Shanghai are said to be closing down due to poor business.

The economic order will remain in place as long as the central state coffers have money to spare. People think that the central government will eventually take care of growing corporate and household debts. But attention must be paid to the growth of the fiscal deficit. The state fiscal revenue for January through September this year was around 15 trillion yuan, up 3.3 percentage points from the same period in 2018, while the state fiscal spending was slightly less than 18 trillion yuan, jumping by 9.4 percentage points from a year earlier.

Indeed, such a deterioration of the socio-economic situation is affecting politics in the country. One expression of this impact is stronger control inside the Communist Party of China and society as a whole. Every day, party members must continue their political studies on the "Xuexi Qiangguo" (Study to Make the State Stronger) application on their smartphones. The name involves a pun meaning the app is for learning President Xi's thoughts. Now, more than ever, it appears that people are scrutinized for any political expression on popular social networking services such as WeChat.

Meanwhile, criticism against the Chinese leadership is spreading quietly. The economic slowdown, concentration of power, propaganda campaigns to fan up personality worshipping, and stronger control of freedom of expression are providing fodder to burning dissatisfaction inside the party and society at large.

Last year, President Xi revised the constitution to scrap the term limit for his position and pave the way for indefinite rule. In mid-September this year, Qiushi, a political theory periodical published by the Communist Party's Central Committee, reprinted a speech the president made five years ago, in which Xi stated this: "To evaluate a country's political system as democratic or effective, one only has to see... if that country's leaders step down from power in an orderly manner according to the law... After long-term effort... we abolished lifelong terms that effectively existed for leading cadres and universally introduced term caps, realizing orderly succession of top leaders and officials at state organizations."

It is clear that this quote was intended as sarcasm, but Xinhua, the official news agency, carried this speech on its website anyway.

The strengthening of control is affecting China's external relations. In September, a professor of Hokkaido University in Japan specializing in China's modern history was detained in Beijing. Meanwhile, the number of China Coast Guard ships entering the 24 nautical mile zone around the Senkaku Islands in the East China Sea -- a group of islands controlled by Japan but also claimed by China and Taiwan -- surpassed 1,000 since the beginning of the year. China has set its aim at improving ties with Japan as its relationship with the United States deteriorates, but causing issues like these will not help improve its image among the Japanese people at all.

Meanwhile, economic cooperation between Japan and China is indeed making progress. As the total number of new cars sold is declining, Japanese carmakers Honda and Toyota succeeded to record increases of 16.4% and 8.4%, respectively, during the January-September period this year. Panasonic decided to build a new home appliance factory in Zhejiang Province for the first time in 16 years. As if moving ahead of the stalled trade talks with the U.S., the State Council, China's top administrative body, has introduced new ordinances and implementation rules for the Foreign Investment Law in an effort to establish written guidelines for the protection of intellectual property and the prohibition of forced technology transfers, etc.

From a Japanese perspective, China is taking both hardline and softer approaches, but the Chinese authorities are not a single slate at all. I hope President Xi, who is scheduled to visit Japan next spring, will carefully study the manual for Japan policy and pay attention to the details of it. For the long-term stability of the bilateral relationship, consideration of the hearts and minds of the people on the other side is essential.

(By Akio Takahara, Dean, Graduate School of Public Policy, The University of Tokyo)

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