Vantage | Why China's economy is forcing Xi to do what he's never done

Xi Jinping’s recent actions and decisions have raised many questions as he avoided the limelight. Skipping the G20 Summit and sacking ministers without explanation, he left the world wondering about his intentions. However, he has now broken his silence and chosen to address China’s economic challenges.

Xi Jinping’s unprecedented move: A visit to China’s central bank In a significant departure from his usual pattern, Xi Jinping visited China’s central bank marking a pivotal moment in his presidency. Accompanied by his top team, this visit is being called a first, shedding light on the Chinese president’s focus on the economy. China’s economic woes: A growing crisis China’s economy is grappling with a range of issues including a job crisis, high unemployment, nervous businesses and debt-ridden local governments. Despite Beijing’s efforts to address these challenges, the economy remains on shaky ground leaving investors hoping for intervention. Xi Jinping’s message: Zero tolerance for economic slowdown During his visit to the central bank, Xi Jinping sent a clear message that he will not tolerate an economic slowdown. He also made a significant announcement about changes to the government budget involving the issuance of new bonds worth a substantial amount. A rare budget adjustment: China’s historical context China rarely revises its budget even during crises such as the pandemic. The last time a similar budget adjustment occurred was in 2008 following the devastating Sichuan earthquake. Now, 15 years later, China’s economic challenges are being compared to an earthquake prompting President Xi to revise the budget. Debt as a solution: A controversial approach China’s local governments are weighed down by over $7 trillion in debt and Xi’s offer of $137 billion is seen as inadequate to alleviate their financial struggles. While it provides some relief, it is unlikely to solve their problems raising concerns about the sustainability of China’s debt-driven approach. Sound policy interventions needed Local governments are under tremendous stress and relying on more debt is not a sustainable solution. China needs sound policy interventions to revive the economy and ensure stability rather than continuing to borrow its way out of the crisis. Leadership shake-up: Xi’s sudden decision In a surprising move, Xi removed his finance minister, Liu Kun, and appointed technocrat Lan Foan to handle the local government debt crisis. Lan Foan, now chief for finance, faces the challenge of creating a plan to address this pressing issue amid a climate of uncertainty regarding ministerial appointments. As China grapples with economic turbulence, President Xi’s visit to the central bank and the government’s budget adjustments reflect a new approach to addressing the country’s economic challenges. The effectiveness of these measures and their ability to sustain economic stability will be closely watched as China navigates its path forward in a complex global economy. Views expressed in the above piece are personal and solely that of the author. They do not necessarily reflect Firstpost’s views. Read all the Latest News , Trending News , Cricket News , Bollywood News , India News and Entertainment News here. Follow us on Facebook, Twitter and Instagram.