A conversation with Victor Shih on what we saw this week – and who we didn’t see.
The People’s Republic of China recently celebrated the 75th anniversary of its founding back in 1949. For a closer look at what the festivities tell us about Chinese politics, Good Authority editor Jeremy Wallace spoke with Victor Shih, a political science professor at the University of California, San Diego and director of the 21st Century China Center. Victor studies China’s elite politics, as well as Chinese banking and fiscal policies.
Jeremy Wallace: October 1, National Day in China, typically kicks off a week-long celebration. How did the country and the country’s leaders commemorate the occasion on the 75th anniversary?
Victor Shih: The political elite had a day-long celebration with a flag-raising ceremony in Tiananmen Square, a massive reception in the Great Hall of the People, a banquet, and a music gala. According to CCTV official state television coverage, General Secretary Xi Jinping was in attendance at these events and seemed to enjoy them. Because this was a half-decade celebration, there was no military parade, which only takes place once a decade.
In a political system like China’s where politics and policymaking often happen behind closed doors, major events can sometimes serve as an illuminating window into these processes. Were there any big surprises in the events and speeches last week that seemed particularly significant to you? How so?
As part of the televised National Day celebration, former senior officials of the Chinese Communist Party, the so-called elderly comrades (lao tongzhi) also attend. This provides one of the few rare instances when observers can detect the health status and even political fortunes of these formerly powerful figures. Of note, neither former party secretary general Hu Jintao nor former premier Zhu Rongji attended any of the National Day events. To be sure, they are not young, especially in the case of Zhu, but even older figures such as Li Ruihuan (age 90) and Li Lanqing (age 86) were in attendance.
Of course, Hu Jintao embarrassed Xi in 2022 by showing visible displeasure of the announced slate of Politburo members at the 20th Party Congress, which led to an even more astonishing turn of events as he was escorted out of the final and most important session of the party congress. So the absence of these two former leaders may have some political reason. On the other hand, former premier Wen Jiabao, whose family is known to have enriched themselves in various ways, sat proudly on Xi’s left-hand side during the state banquet. Clearly, this indicates that Wen’s political status is secure for now.
In the run-up to the anniversary, we saw the government finally initiating a more significant set of policies to stimulate the economy – and that sparked a major rally in the Chinese stock market. A Deutsche Bank analysis reportedly notes this could be China’s largest stimulus ever: “7.5 trillion yuan (US$1.07 trillion), or equivalent to 6 percent of the country’s GDP in 2024.” How do you think we should interpret the timing and shape of these policy moves?
The domestic business community, as well as foreign investors, have become increasingly vocal about the poor state of China’s economy and the ineffectiveness of previous government policies. A slate of mainly monetary policies [including cutting the loan prime rate, seven-day reverse repurchase rates, reserve requirement ratio, and mortgage rates] were announced, which finally moved the stock market. Those policies alone, without much more substantial fiscal policies, will not fundamentally reverse slowing growth in China.
Reuters also reported on a potential 2 trillion RMB [$284 billion] special stimulus. To meaningfully jump start domestic demand, the government would need to do much more as China’s economy will surpass 130 trillion RMB this year. I am not sure the Chinese leadership has this in mind at the moment, although economists both in China and outside are certainly calling for a stimulus of significant magnitude [perhaps up to 10% of GDP].
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