China’s Economic Rejuvenation under Xi Jinping

China’s exit from its zero-Covid strategy has led to severe consequences, including overwhelmed hospitals and shortages of medical supplies. Unofficial projections estimate a large number of deaths in the current wave of infections. These events not only damage the image of Xi Jinping but also makes it difficult for the government’s propaganda machine to defend policies previously touted as evidence of China’s superior governance. However, Chinese officials and government advisers suggest that Beijing is working on plans to improve diplomatic relations and revive the struggling economy in response to critical economic, social and foreign policy challenges.

The recent policies and plans in China are an extension of the objectives established at the 20th congress of the Chinese Communist party, which was an important event in the Chinese political calendar. Xi Jinping, the leader of CCP, secured a third term and appointed a politburo of loyalists. The main economic goals are to revive China’s slowing economy, improve the lives of rural workers, stabilize the property market, and strengthen the finances of local governments. Diplomatically, China’s main goal is to improve relations with certain countries in the West, particularly Europe, which have been damaged by China’s support for Russia in its war against Ukraine.

Beijing aims to improve its relations with certain countries in the West and avoid being seen as a rival or isolated on the international stage, according to Yu Jie, a China expert at UK think-tank Chatham House. China’s investment in its bilateral ties with Russia has decreased due to Russia’s actions in Ukraine. Despite Xi Jinping and Vladimir Putin’s pledge to deepen ties last month, some Chinese officials have privately expressed to the Financial Times a desire to distance China from Russia’s actions in Ukraine. Some Chinese officials have expressed disapproval of Russia’s actions, with one anonymous official calling Putin “crazy” and stating that China should not simply follow Russia’s lead.

China distances itself from Russia’s actions in Ukraine

Chinese President Xi Jinping is reportedly seeking a diplomatic reset in relations with other countries, starting with a re-evaluation of China’s close relationship with Russia. According to Chinese officials, Beijing now believes that Russia will likely not prevail against Ukraine and will emerge from the conflict as a “minor power,” diminished economically and diplomatically on the world stage. Additionally, despite public professions of friendship, some Chinese officials express private mistrust towards Putin, as five senior Chinese officials have told the Financial Times in the past nine months that Moscow did not inform Beijing of its intention to launch a full invasion of Ukraine before the attack. This contrasts with the impression given by a joint statement issued by China and Russia on February 4, which proclaimed that there were “no limits” to cooperation between the two countries and “no forbidden zones.”

The exact details of the conversation between Chinese President Xi Jinping and Russian President Putin are unclear as no official transcript has been released. However, one official has stated that Putin may have only hinted at the potential for limited military engagement in case of humanitarian disaster in Ukraine, not the full-scale invasion that eventually took place.

This lack of understanding on China’s part has led to the demotion of Le Yucheng, a top Russia expert and former vice-minister of foreign affairs, as well as a shift in strategy for China to rehabilitate its standing in Europe. Chinese officials have privately assured European counterparts that Beijing was unaware of Moscow’s plans for an invasion and that it will use its close relationship with Russia to prevent the use of nuclear weapons. This is part of a larger effort to lessen China’s sense of isolation and prevent Europe from aligning closer with the United States.

China is seeking to improve its relations with European countries by positioning itself as a potential peacemaker and willing participant in post-war rebuilding efforts in Ukraine. Chinese President Xi Jinping has publicly stated his commitment to peace and the role of China in promoting it in Ukraine. Additionally, China has removed one of its most prominent “wolf warrior” diplomats, Zhao Lijian, from his position, indicating a desire to reduce hostility towards the West. As part of its efforts to repair ties with Europe, China is insisting that European countries agree to maintain commercial ties, as opposed to the approach of the US which seeks to limit certain commercial ties with China, particularly in sensitive technologies.

China’s efforts to improve diplomatic relations with the European Union and key European nations, such as Germany, France, Italy, and Spain, as well as with US partners such as Vietnam and America’s Asian allies, such as Japan and South Korea. The EU is China’s largest trade partner, and Beijing runs a significant trade surplus with the bloc. Additionally, several of Europe’s leading companies are among China’s biggest foreign investors. According to the article, China’s efforts to reset its diplomatic relationships with Europe appear to be yielding positive results.

Visits to Beijing by German Chancellor Olaf Scholz and European Council President Charles Michel in November are set to be followed by visits from French President Emmanuel Macron and Italian Prime Minister Giorgia Meloni early this year. The article notes that Macron, like Scholz, is opposed to “decoupling” from China and sees it as an “important economic and commercial partner.” It also suggests that China is using its desire to help restrain Russia from using nuclear weapons as a tool to improve relations with Europe.

China’s efforts to improve diplomatic relations with Europe, there is still considerable skepticism among EU officials and member state governments. This skepticism stems from China’s support for Russia’s war and President Xi’s failure to pressure Russia to end it, as well as the war’s revelation of the EU’s reliance on Russia for energy, which has accelerated a push to reduce the EU’s reliance on China for certain critical raw minerals and technological goods. The EU’s foreign service reportedly urged EU capitals to take a tougher stance towards China in October, with one senior Brussels official describing it as “moving to a logic of all-out competition, economically but also politically”.

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