People News - Amid growing tensions between China and the U.S. and the increasing risk of conflict in the Taiwan Strait, Xi Jinping's visit to Fujian has drawn attention. On one hand, Xi is strengthening military deterrence against Taiwan, while on the other, he is calling for boosting the domestic economy. However, the contradiction between military pressure and economic recovery has made markets wary of China’s economic outlook, with investors increasingly concerned about the future uncertainties.

According to a report by Radio Free Asia, Xi Jinping's visit to Fujian comes at a time when tensions in the Taiwan Strait and the South China Sea are escalating. Simultaneously, China's domestic economy is facing significant challenges.

In the past two years, as China’s economic growth has continued to stagnate, the CCP government has finally ramped up efforts to stimulate the economy. Caixin reports that over the next three years, China may raise 6 trillion yuan by issuing special government bonds to increase fiscal stimulus. Reuters also mentioned that 2 trillion yuan in special sovereign bonds are expected to be issued this year to support economic recovery. Despite these large-scale monetary easing policies, the market remains skeptical about China’s economic prospects.

Significant Downward Pressure on the Economy

A Reuters poll indicates that China’s economic growth rate may only reach 4.8% in 2024, falling short of the government’s target, with further slowdown to 4.5% expected in 2025. This puts additional pressure on CCP policymakers, likely forcing them to introduce more stimulus measures. The Chinese government has historically been adept at achieving its growth targets, but in 2022, following the pandemic, external evaluations showed growth at only 3%, far short of the 5.5% target. This has raised doubts about the effectiveness of future policies.

The latest Reuters survey presents a more pessimistic outlook compared to forecasts in July, with 57% of the 75 economists surveyed lowering their growth expectations.

Even with recent monetary easing measures, the survey results indicate no change in GDP growth forecasts for the next two years, reflecting the continuing pessimism fueled by the prolonged real estate crisis. Analysts expect the Chinese government to announce more concrete stimulus plans during the National People's Congress meeting later this month.

At the same time, according to a statement from the Chinese Embassy in the U.S., China's Ambassador to the U.S., Xie Feng, attended the U.S.-China Business Council's (USCBC) 2024 Annual Gala on Tuesday and conveyed Xi Jinping’s congratulatory message to the USCBC on behalf of the Chinese leader.

In the message, Xi emphasized that China will "further promote institutional openness" and continue building a world-class international business environment, leveraging its large market and domestic demand to create more opportunities for U.S.-China cooperation. Observers believe this message is intended to boost investor confidence in China’s economy.

Military Strategy Adds Instability

While Xi Jinping sends signals of economic openness, the Chinese military is taking an increasingly hardline stance on Taiwan. According to Xinhua News, on Tuesday, October 15, Xi visited Dongshan County in Fujian Province, a historic battlefield where the Communist Party defeated the Nationalist forces during the mid-20th-century civil war.

Bloomberg reported that the timing of Xi's visit to Fujian has sparked speculation about his determination to use force to achieve unification with Taiwan. Many believe this visit signals a tough stance toward Taiwan.

More symbolically, Xi's visit coincided with the "Joint Sword-2024B" military drills conducted by the People’s Liberation Army (PLA). These exercises took place only 160 kilometers from Taiwan and were intended as a warning to "Taiwan independence" forces. A record number of Chinese warplanes crossed the sensitive median line of the Taiwan Strait, drawing criticism from both Taiwan and the United States.

This was the second large-scale military exercise around Taiwan since Lai Ching-te assumed office as Taiwan’s vice president in May. Similar drills were held multiple times during the end of former President Tsai Ing-wen's term, seemingly simulating a blockade of Taiwan’s main island. The frequency of these drills increased following Tsai's meetings with senior U.S. officials, which had infuriated Beijing. Tsai is expected to visit the U.S. in the coming weeks, and according to Politico, this could further provoke Beijing. After the latest exercises, the PLA stated it would respond to any "provocations."

The Wall Street Journal noted that the recent escalation of tensions in the Taiwan Strait could undermine China’s efforts to rebuild economic confidence. Although China is committed to attracting foreign investment through measures of openness, the rising risk of conflict in the Taiwan Strait may cause multinational companies and global investors to be more cautious. Since Lai Ching-te took office, the PLA has frequently conducted large-scale military exercises around Taiwan, raising concerns that this military deterrence is increasing the likelihood of conflict, potentially affecting China's economic recovery and long-term stability.

Scholars: Contradictions Deepen the Crisis

Qiu Jiajun, a former political science professor at Tongji University in Shanghai, pointed out that the CCP’s concept of "national security" is really about "regime security." He believes that any economic intervention by the CCP’s leadership aimed at maintaining "regime security" will only exacerbate China’s political and economic situation, trapping it in a vicious cycle.

"China’s economy has reached this point because Xi Jinping and his ruling team fundamentally don’t understand economics and are using political power to interfere with economic development. In such a situation, economic development is bound to worsen," he said. He argued that the lack of real economic recovery will further destabilize the regime. Therefore, Qiu believes the CCP is unable to resolve the contradiction between economic growth and political stability.

Craig Singleton, a senior China fellow at the nonpartisan think tank Foundation for Defense of Democracies, told Radio Free Asia that the tension between China’s supposed "economic openness" and what the Communist Party defines as national interests is increasingly apparent. Although Beijing outwardly promotes openness to attract foreign investment, behind the scenes, the CCP enforces strict state control, using economic engagement to gain strategic advantage. Ultimately, the Party prioritizes national security and political stability over genuine economic openness, creating a system that subordinates market principles to state goals.

Singleton further noted that sacrificing economic growth in exchange for national security has become a primary strategy for the CCP government. "Under Xi Jinping’s leadership, the CCP has shifted toward placing national security above economic growth, most notably through its civil-military fusion policy and crackdown on the tech industry. While this may strengthen internal control and security in the short term, in the long run, it could lead to economic stagnation, technological isolation, and diminished global competitiveness. The CCP’s aggressive stance may also erode foreign investor confidence, leading to a decoupling from major Western markets."

Timothy Heath, a China expert at the Washington-based RAND Corporation, pointed out: "For the CCP, national security has become more important than economic growth. This reflects a change in the nature of the CCP’s politics and international relations. Xi Jinping is more concerned about potential domestic and international threats to the CCP’s rule, while U.S.-China relations remain tense and fraught with distrust."

Although the CCP government is striving to project an image of economic openness to the world, its military actions concerning Taiwan undoubtedly add uncertainty to the situation. This contradiction between boosting the economy and safeguarding national security makes China’s development prospects even more complex.