Welcome to Foreign Policy’s China Brief.
Chinese stock markets start 2024 on bad footing, former U.S. President Donald Trump suggests the United States should not come to Taiwan’s aid in a crisis, and Houthi attacks in the Red Sea create a dilemma for Beijing.
Chinese stock markets are in sharp decline this year, driven by the fallout of the COVID-19 pandemic, government mismanagement, and a decades-long inflation of the property bubble. In January so far, mainland China’s CSI 300 Index has dropped by 6 percent, the Shanghai Composite Index has dropped by 7 percent, and Hong Kong’s Hang Seng Index has fallen by more than 12 percent, reaching its lowest level in two decades. The slide has dampened Beijing’s recent efforts to paint a rosy picture of economic recovery.
GDP grew by 5.2 percent in 2023, a low figure compared with its decades of high growth but a respectable one. But analysts outside China aren’t so sure, with skeptics estimating last year’s GDP growth at as low as 1.5 percent.
Stock markets are not as significant to the Chinese economy as in the West; only a fraction of household wealth is invested in stocks, and the most critical barometer for China’s economy—the property market—is doing just as badly.
None of this means that the Chinese economy overall is on the brink of collapse. But the psychological shock of the downturn is hitting harder than it might in another country because the Chinese government and public have become used to high GDP growth in the last three decades.
For the first time in decades, the growth gap is opening up to the United States’ advantage—something that prominent Chinese international relations expert Yan Xuetong has predicted will continue in the next decade.
Trump’s years in the White House gave pause to many China hawks. Hugo Awards, which recognize literary science fiction, are caught up in a scandal following the ceremony in Chengdu, China. The U.S. campaign against Houthi piracy in the Red Sea has put China in somewhat of a dilemma.
Xi is a well-known soccer fan, but China remains one of the most underperforming nations in the sport by size. According to the Chinese leadership, the culprit is rampant corruption among both teams and organizers. The most recent soccer crackdown began last March, when the disciplinary officials put in charge during an earlier crackdown were arrested for corruption.