China Watch: Passive Resistance To Xi’s Leadership
TDI launched China Watch to help clients better understand the complex geopolitical and business landscapes in China, as well as Chinese activities overseas. We aim to provide context for current events, identify larger trends, and flag new business opportunities or challenges as policies and regulations evolve. China Watch draws on the insights of TDI’s China team and Chinese and English language open-source research. If you have any questions or comments, please email us at info@tdinternational.com.
As we wrote in the last issue, Xi Jinping faces no organized political opposition and is expected to secure a third term at the Party Congress, which starts on 16 October. However, there are signs that Xi’s draconian “zero-COVID” policy and the resulting economic downturn are alienating the urban youth and the middle class. In this issue of China Watch, we focus on forms of passive resistance to Xi and the regime. Although the resistance is inchoate, it can complicate China’s economic recovery and lead to social protests, if the root causes are not addressed.
Popular Criticism of “Zero COVID”
A recent and rare outpouring of online criticism of China’s “zero-COVID” policy reflects the pent-up frustration that many Chinese feel toward the repressive measures that have accompanied the policy. In September, a bus that was transporting people to a centralized quarantine facility at 2am in Guizhou Province crashed, killing 27 and injuring 20. The story quickly went viral online, with many netizens bluntly criticizing “zero COVID” and the government. A senior editor of a well-respected financial publication expressed his “resolute opposition” to the policy and advocated a return to normalcy, as the rest of the world has done. His social media account was promptly deleted.
Disillusioned Youth
High youth unemployment, COVID restrictions, and a renewed emphasis on ideological obedience have led to growing alienation among young Chinese, which is reflected in online memes and discussions. As of the end of July, the unemployment rate for people between the age of 16 and 24 was 19.9%, a record high. Youth unemployment has been inching up since January 2021.
- Since last year, there have been several popular memes indicating a general youth rebellion against the ultra-competitive workplace culture in China and dwindling opportunities. One meme is called “involution,” referring to the idea that China is stagnant, but people are spinning their wheels as competition increases. In response, young people have coined the term “lie flat,” choosing to opt out of what they perceive as a rat race for career achievement and an education system that promotes conformity.
- The “lie flat” meme also has been appropriated to signify an alternative to the “zero-COVID” policy, as netizens debate the need to give up on eliminating the virus and instead co-exist with it.
- Resisting increasing ideological orthodoxy has been an undercurrent of the “lie flat” movement. In August 2021, the Ministry of Education announced that “Xi Jinping Thought” would be incorporated into the curriculum from primary schools to universities to reinforce belief in Marxism in China’s youth.
Xi has publicly rebutted these memes, suggesting that he sees them as a criticism of his leadership. In late June 2022, Xi defended his tough COVID policy by saying that if China had taken a “lie flat” approach, the consequences would have been “unthinkable.” In October 2021, Xi said that his “common prosperity” economic framework is the key to avoiding “involution” and cautioned young people against “lying flat.” Ironically, “common prosperity” is associated with the crackdown on technology companies, which in part contributed to high youth unemployment. They have been major employers of college graduates, but the recent crackdown has led several technology giants to reduce hiring.
Middle-Class Frustration
Another popular meme is “runology,” which sums up the desire of many Chinese professionals and elites to “run” from China. While accurate statistics are not available, anecdotal information from press reports indicates that interest in emigration has sharply increased in the past several months and that many young professionals are willing to leave their promising careers in China. To prevent an exodus, Beijing has implemented restrictions on non-essential travel, and many have trouble getting passports. Authorities have also tightened restrictions on transferring money overseas to prevent capital flight.
Recent mortgage boycotts by owners of unfinished homes represent a rare display of assertiveness by China’s usually pliant middle class. In response, the authorities have allowed homeowners to delay mortgage payments while giving builders subsidies to finish homes that have already been sold, but the problem is far from resolved and may flare up in the future. Close to 90% of China’s new homes are sold before they are finished, but many developers are experiencing liquidity issues because of the economic slowdown and the resulting property slump. Furthermore, if homeowners continue to boycott mortgage payments, small and medium banks could be in trouble because they depend on these payments.
Implications
While the impact of the above-mentioned trends is difficult to quantify, middle class and youth alienation bodes ill for China’s economic recovery and social stability. For at least two decades, China has seen a steady influx of talented entrepreneurs, scientists, and professionals, who have been critical to China’s economic success. Many of them are Chinese nationals who have studied or worked overseas. If current economic and political trends continue, China will be much less attractive, as elites figure out ways to leave China permanently.
As the housing slump continues, we can expect more protests from homeowners. Many have put their life savings into real estate. Passive resistance by China’s youth does not pose a threat to the regime, but prolonged downward mobility and perceptions of injustice can spell trouble for Beijing. For example, perceptions by college students that the system was rigged against them in favor of those with Party connections drove their participation in the 1989 Tiananmen pro-democracy protests.
As Xi prioritizes political control over economic development, he will have less flexibility to address the root causes of economic grievances. He will need to increasingly rely on the surveillance state to maintain stability.
April 8th, 2024