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China’s economy: Policy failure or paradigm shift?

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The meetings of the 14th Chinese People’s Political Consultative Conference and the 14th National People’s Congress, known as China’s most important annual political event, have begun. They are known in the West as the ‘Two Meetings’ and in China as the ‘liang hui’ because they begin one day apart. The Chinese People’s Political Consultative Conference, attended by more than 2,000 delegates from eight parties other than the Communist Party of China and various sectors of society, is, as its name suggests, a consultative body. The National People’s Assembly is the highest legislative body, with around 3,000 delegates from the CCP and other parties.

Delegates elected by the People’s Assemblies from the remotest corners of the country, from provinces and cities to counties and townships, are also important for understanding political participation in China. In his article for The Diplomat, Patrick Meyer of Peking University preferred the term ‘capillary democracy’, while the Chinese media’s coverage of the two sessions in 2023 emphasised that the process was a living example of ‘full-scale democracy’. These concepts, highlighted at a time when US President Joe Biden claimed that autocracy and democracy fronts were at the heart of international alignment, were later followed by the Chinese Foreign Ministry’s report entitled ‘The State of Democracy in America’.

What does the data say about China’s economy?

Coinciding with the 75th anniversary of the founding of the People’s Republic of China, the narrative of this year’s meeting of the two leaders is dominated by the economy. While the Western press declared that the ‘Chinese miracle’ was over, US President Joe Biden likened the Chinese economy to a ‘ticking time bomb’.

There are three interrelated reasons for these assessments in Western capitals. The first and most important is the 5.2 per cent growth rate that the Chinese economy is expected to achieve in 2023. Although this rate is above the global average of 3 per cent and satisfactory for many countries, it is the lowest level for China since the 1990s (excluding the pandemic period).

The performance of China, which has become the world’s second-largest economy and the engine of global growth with an average growth rate of 9% for many years, is thought to have been affected by policies geared towards the property market. It should not be forgotten that stagnation in the property sector, which accounts for a quarter of China’s gross domestic product, is a source of employment for millions of people and increases unemployment rates.

The second reason for the pessimistic picture of the Chinese economy is the declining share of exports in economic growth. According to the 2023 data, China’s exports fell by 4.6 per cent to $3.38 trillion. It is clear that geopolitical tensions are behind this contraction rather than the ‘invisible hand’ that regulates markets.

In order to prevent the rise of China and maintain its hegemonic position in the global system, the United States and its allies have for some time been trying to diversify their supply chains in the name of ‘de-risking’. It is not surprising that by 2023 Mexico will overtake China as the largest exporter to the US for the first time in 20 years.

The third reason for believing that China’s growth will eventually cease to be a ‘model’ is the country’s changing demographics. While this change may not set off alarm bells in the short term, Chinese experts recognise that it is a serious challenge.

While China’s National Bureau of Statistics reports a population decline of 850,000 by 2022, models by the United Nations Population Division suggest that China’s population could fall below 800 million by 2100. Beijing is also concerned about its growing elderly population, with the National Health Commission predicting that the number of people over 60 will rise from 280 million in 2022 to 400 million in 2035.

Geopolitical pressures and new productive forces

Western pundits are analysing policy failure, arguing that China’s high growth rates have come to an end and that the success story based on external demand is eroding. Such a judgement (if not wishful thinking) may be premature. Indeed, the economic policies that China has been pursuing for some time point to a paradigm shift rather than failure.

According to the Chinese leadership, which believes that analysing the economy in terms of short-term growth rates is short-sighted, what is needed is to succeed in changing the means of production and the relations of production in a way that captures the spirit of the times, however painfully. This technology-centred concept, known as the High-Quality Development Plan, was introduced by Chinese leader Xi Jinping in 2017, then included in the 14th Development Plan in 2021, and finally elaborated at the 20th Party Congress.

As a result of the two current sessions, the concept of ‘new productive forces’ is expected to serve as a guide for China’s journey towards ‘high-quality development’. Based on the fact that traditional intensive labour has been replaced by data and artificial intelligence has transformed production relations, the Beijing administration laid out nine basic tasks at the Central Economic Work Conference in December, with the statement ‘scientific and technological innovation should lead the development of the modern industrial system’ at the top of the list. In short, China will stop devoting most of its resources to the traditional labour-intensive model and talk more about ‘chips’, more ‘bio-manufacturing’, more ‘artificial intelligence’ or ‘humanoid robots’, as we have seen in recent years. In this context, it is worth remembering China’s efforts to close the gap with the US, the leader in this field, by investing $456 billion in R&D by 2023.

It is clear that the changing geopolitical landscape is also affecting China’s focus on the New Development Plan. The trade wars that began under former US President Donald Trump and continued under current President Joe Biden, as well as the rise of global protectionism, have increased the importance of domestic demand for the Beijing government.

By increasing the share of domestic consumption in GDP growth by 43.1% to 82%, China is taking a serious step towards weaning itself off its dependence on external demand, and this share is set to increase as the consumer confidence index rises. It should be added, however, that China has not given up the expectation of exports or foreign investment. In line with the high-quality development model, sales of electric vehicles and solar panels are expected to increase by 30% and 54% respectively by 2022. This model, which relies on the domestic market but does not postpone exports, was announced by the Chinese at the end of 2020 under the name of ‘double circulation’.

In terms of demographic change, which could be a long-term concern for China’s economy, the country aims to increase the number of newborns in the long term while investing in systems such as artificial intelligence, robotics and automation that will help close the employment gap. In China, once known for its one-child policy, the new family planning law makes it easier for a third child to receive state support.

Potential challenges for China

It would be overly optimistic to expect China’s high-level development framework and the notion of new productive forces, which we will discuss more in the future, to be implemented without challenges. For example, China needs to increase the purchasing power of consumers as a prerequisite for its reliance on the domestic market. This requires the expansion of the middle class, currently estimated at 400 million out of a population of 1 billion 400 million.

Aware that China is going through a ‘special period’, Sheng Laiyun, deputy director of the National Bureau of Statistics, said at the announcement of the 2023 data: “The Chinese economy is currently at a critical stage of transforming its development model and optimising its economic structure.”

The extent to which a country as large as China will successfully complete this paradigm shift is one of the most important issues to watch. The success of the process, the speed and the sustainability of the transformation may bring a new version of the debates on the Chinese model, once famous in Turkey, to our agenda.

OPINION

G20 Summit could use a few extra pairs of chopsticks

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Li Yunqi, Journalist
CGTN Radio

“If there’s an extra guest, you have to prepare an extra pair of chopsticks,” – an ancient Chinese wisdom for the upcoming G20 Summit in Rio de Janeiro.

The global economic order is undergoing an obvious shift toward Global South countries, as the International Monetary Fund (IMF) predicts that by 2030, developing economies will account for 60% of global GDP—up from already 50% in 2010. With emerging markets playing an increasingly prominent role at the global “economic table,” the question facing the G20 is clear: Where is the hospitality, and those extra pairs of chopsticks?

Formed in the 1970s, G7, the more “elite” club of G20, was designed to address the economic challenges of its time. At its peak, the G7 nations accounted for 60-70% of global GDP, with the U.S. alone contributing 25%. This dominance made the G7 a natural hub for global economic decision-making.

But as the global economy diversified, so too did the need for governance structures that reflected this reality. By the 1990s, the rapid growth of emerging economies such as China, India, and Brazil reduced the G7’s share of global GDP. Recognizing the limitations of G7 as an exclusive forum, the G20 was established in 1999, incorporating a broader range of voices from across Asia, Africa, and Latin America.

Yet, despite its broader membership, the governance structures of the G20 still tilt heavily toward historically dominant economies, leaving the perspectives of the Global South underrepresented.

In 2023, developing economies attracted about 65% of global foreign direct investment (FDI). Many of these nations boast young populations, in stark contrast to aging demographics in Western countries. For instance, Africa’s median age is 18.8, compared to over 40 in many Western European countries. By 2030, the Asian middle class alone is expected to exceed 3 billion people.

These economic transformations underline the need for more fair and inclusive governance systems. Just as a gracious host ensures there are enough chopsticks for every guest, the G20 must adapt to accommodate the realities of a multipolar economic world.

This is not merely a symbolic gesture. Global South nations have legitimate demands for reforms in international institutions like the United Nations Security Council, the IMF, and the World Bank, all of which remain skewed toward the interests of Western nations. The inclusion of perspectives from emerging economies isn’t just about fairness—it’s about crafting more effective and sustainable solutions to global challenges.

The rise of the BRICS is a case in point. Originally formed as a loose group of emerging economies, BRICS has evolved into a platform for addressing global imbalances, recently expanding to include nations like Argentina, Egypt, and Saudi Arabia. This expansion signals a broader desire among Global South countries for alternative frameworks to the traditional Western-led institutions.

The 2024 G20 Summit in Brazil offers a rare chance to recalibrate global governance. With a host nation that is itself a leader in the Global South, the summit is well-positioned to champion a more balanced approach to decision-making for global affairs.

This does not mean sidelining the priorities of developed nations; rather, it calls for recognizing that the inclusion of diverse perspectives leads to more innovative and equitable solutions. For Western countries, this shift will require letting go of long-held assumptions about leadership and embracing the legitimacy of different economic models and governance approaches.

The Global South’s rise is not about dismantling the established order but about evolving it to reflect the realities of today’s interconnected world. By preparing those extra pairs of chopsticks, the G20 can ensure a more inclusive future—one that respects the voices of all its members, regardless of their economic status.

Not having to share the table may seem convenient, but if we zoom out, we see that many in the world still struggle to secure even the basics, let alone a seat at the global table. Preparing a few extra pairs of chopsticks isn’t just a metaphor, but a call for a more balanced, diverse, and inclusive global order.

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Türkiye’s “soft severance of diplomatic relations” with Israel has limited impact on the Middle East

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On November 13th, Turkish President Erdoğan announced that Türkiye has cut off trade and diplomatic relations with Israel. Anadolu Agency reported his statement during his return trip from visits to Saudi Arabia and Azerbaijan. Erdoğan declared, “We currently have no relations with that country,” emphasizing that Türkiye has responded in the strongest terms to “Israel’s atrocities” by taking concrete measures, including halting all trade exchanges. He also stated that the ruling “People’s Alliance” firmly supports this stance.

Observers believe that Erdoğan’s remarks, coming just after the conclusion of the Arab-Islamic Riyadh Summit, aim to enhance Türkiye’s discourse power, express additional sympathy for the suffering of the Palestinian people, maintain sustained anger towards Israel’s belligerence, and exert pressure on Trump, who is about to return to the White House and is highly pro-Israel. This move may also serve to soothe strong anti-Israel public opinion domestically. However, it is conceivable that this posture will not affect the development of the current war situation in the Middle East, let alone change the geopolitical landscape; on the contrary, it may bring pressure on Türkiye from the United States and the European Union.

Erdoğan’s statements further highlight Türkiye’s tough stance and sanctions against Israel over the past year, attempting to demonstrate Türkiye’s political responsibility, humanitarian concern, and religious obligations as a major country in the Middle East, especially an Islamic power. Objectively, this will make the six Arab countries that still maintain policy relations with Israel feel embarrassed and will also enhance Türkiye’s discourse power in Middle East disputes, particularly in promoting the de-escalation process of this round of conflict.

Türkiye is not only a major country in the Middle East and the Islamic world but also a NATO member and EU candidate country, as well as the initiator and leader of the Turkic States Alliance. From the outbreak of the “Arab Spring” in 2011 to the Russia-Ukraine war in 2022, Türkiye has been a very active geopolitical actor and has played an important role in shaping the regional landscape. However, in the grand chessboard of Israel’s “eight-front warfare” triggered by the current Israeli-Palestinian conflict, the space for Türkiye to maneuver is very limited.

Erdoğan’s publicized severance of relations with Israel seems to be a kind of “salami-slicing,” or even a painless “soft severance,” and therefore will not cause significant shockwaves. Tükiye had already recalled its ambassador to Israel in November last year and announced in May this year the suspension of all imports and exports with Israel to punish the latter for exacerbating the humanitarian tragedy of the Palestinian people. In August, Türkiye formally submitted an application to the International Court of Justice to join the lawsuit initiated by South Africa against Israel’s alleged “genocide,” becoming one of the few Third World countries to use international legal means to challenge Israel.

However, Türkiye has not announced the closure of its diplomatic missions in Israel, nor has it punished Israel as severely or even rudely as it did in May 2018. Six years ago, when Trump announced the relocation of the U.S. Embassy in Israel from Tel Aviv to Jerusalem, thereby recognizing the latter as Israel’s capital, the Erdoğan government not only immediately recalled its ambassadors to the United States and Israel but also expelled the Israeli ambassador to Türkiye on the spot. The ambassador was subjected to a full set of humiliating security checks at the airport, including body searches and shoe removal, causing bilateral relations to plunge to a historic low, only beginning to recover slowly two years ago.

Israel has not made any response to Türkiye’s latest declaration of “severing diplomatic relations” and may continue to maintain a low profile or restraint. Perhaps Israel has adapted to Türkiye’s nearly two-decade-long “angry diplomacy,” or perhaps it currently lacks the energy and willingness to provoke Ankara and thereby create new enemies for itself. It is already overwhelmed dealing with the Iran-led “Axis of Resistance” and the United Nations, not to mention the internal frictions and power struggles among its top officials.

Türkiye’s tough stance against Israel is actually facing very similar historical scenarios, making it seem powerless or even counterproductive when playing the Palestinian card. This is because the Arab world does not welcome the successor of the former Ottoman Empire changing the long-standing Western-oriented “Kemalism” to an “eastward and southward” approach. They especially strongly resist Türkiye’s deep involvement in Arab affairs, much like their strong aversion to Iran constructing a “Shia Crescent” in the Arab world. From this perspective, Middle Eastern countries, particularly the Arab world, exhibit an “Arab Monroe Doctrine,” opposing any external interference, even though they are incapable of fairly resolving the Palestinian issue.

Since the Justice and Development Party led by Erdoğan won the general election in 2002, based on the disappointment and dissatisfaction arising from repeated setbacks in pursuing EU membership, as well as a dual return to Neo-Ottomanism and Islamism, Türkiye has significantly elevated the strategic position of the East, especially the Middle East—its traditional sphere of influence—within its foreign policy framework. Ankara began by actively attempting to mediate the Iranian nuclear crisis, suddenly paying high-profile attention to the Palestinian issue, and in 2008, a public dispute erupted between then-Prime Minister Erdoğan and Israeli President Peres at the Davos World Economic Forum.

In May 2010, disregarding Israel’s warnings, Türkiye dispatched the humanitarian aid ship “Mavi Marmara,” attempting to forcibly cross Israel’s naval blockade to dock in the Gaza Strip. This led to Israeli special forces air-dropping onto the ship, resulting in a bloody conflict. Türkiye announced the severance of diplomatic relations with Israel, and it was not until Israel later apologized that bilateral relations were restored. However, due to the indifferent or even critical stance of Egypt, Saudi Arabia, Jordan, and even the PLO towards the Palestinian Islamic Resistance Movement (Hamas), which was fighting Israel alone, Türkiye’s proactive “foreign aid” actions did not receive enthusiastic responses.

After the outbreak of the “Arab Spring” in early 2011, the development model of the Arab world was widely questioned and even lost its future direction. The “Turkish model” received widespread international attention and was even considered a reference or option for Arab countries. Facing an Arab world mired in failure and chaos, the Erdoğan government was highly proactive, even being described as “attempting to act as the leader of the Islamic world.” Driven by such wishful thinking and strategic impulses, Türkiye not only supported Egypt’s “Square Revolution” in a high-profile manner, strongly backed the Muslim Brotherhood entangled in power struggles, sent troops to Syria and Libya, intervened in the Eastern Mediterranean oil and gas disputes, and openly supported Qatar in its rivalry with Saudi Arabia. Ultimately, Türkiye’s relations with Arab countries deteriorated from the idealized “zero problems diplomacy” to a nightmarish “all problems diplomacy.”

It can be said that the decade or so during which the “Arab Spring” evolved into the “Arab Winter” was a period when Türkiye’s realist offensive diplomacy and “eastward and southward” strategy suffered major defeats. Türkiye not only lost its traditional ally Israel and offended more than half of the Arab world, but its relationships with Russia and the United States also faced unprecedented challenges.

The Middle East today has once again plunged into war and turmoil, but the causes, nature, conflicts, and opponents are vastly different from those of the “Arab Spring” or the Arab-Israeli conflicts during the Cold War. Several non-state actors from Arab countries are involved in what some are calling the “Sixth Middle East War.” However, countries that have normalized relations with Israel—such as Egypt, Jordan, the United Arab Emirates, Bahrain, Sudan, Morocco, and even the Palestine Liberation Organization—have no intention of re-entering the historical stream of the Arab-Israeli conflict. On the contrary, Iran and its leadership of the “Shia Crescent” have become the main forces opposing Israel in this new Middle East war. Some non-state actors in Arab countries have formed a new “Axis of Resistance” in alliance with the Shia Crescent. This shift in geopolitical relationships makes the attitudes of Arab nations more nuanced. Yet, in balancing “interests and righteousness,” they still value the hard-won Arab-Israeli peace and the crucial Arab-American relations. Although Arab countries are deeply frustrated by Israel’s refusal to cease fire and feel powerless to change the situation, they are absolutely unwilling to accept Iran and Türkiye taking the lead in Arab affairs.

Therefore, Türkiye’s new round of Middle East diplomacy is bound to fall into an awkward position similar to that after the “Arab Spring.” It is unlikely to receive widespread and positive responses in the Arab world or have any substantive impact on the current “eight-front warfare.” Nonetheless, Ankara’s diplomatic efforts to support the rights of the Palestinian people are commendable, reasonable, and even resonate with mainstream international public opinion.

With the openly pro-Israel Trump team controlling the White House, the State Department, and the Pentagon, and the Republican Party—which has always been more favorable toward Israel—fully controlling the U.S. legislative, executive, and judicial branches, Washington’s Middle East policy will further tilt toward Israel. Even if the new U.S. government does not encourage Israel to escalate and expand the existing conflicts and wars, it will mobilize all resources and employ all means to exert maximum pressure on Israel’s opponents to force them to compromise. At that time, Türkiye’s relations with the United States will experience new friction and uncertainties due to its tough stance against Israel.

Not only will the new U.S. government’s Middle East policy fail to reward Türkiye’s hardline approach toward Israel, but major European powers—which generally support Israel’s security and hold unfavorable views toward Iran and its led “Axis of Resistance”—will also be dissatisfied with Türkiye’s intensified pressure on Israel. This could further affect the smooth development of Türkiye-Europe relations.

Therefore, although Türkiye’s stance toward Israel is tough, the pressure it can exert is nearly exhausted, and Israel has considerable capacity to withstand such pressure, especially from Türkiye’s “soft severance of relations.” Given that Arab countries do not welcome deep Turkish intervention and that the U.S. and Europe oppose Türkiye joining the anti-Israel camp, Türkiye’s role and space for maneuvering in the Middle East are very limited and unlikely to see significant breakthroughs.

Prof. Ma is the Dean of the Institute of Mediterranean Studies (ISMR) at Zhejiang International Studies University in Hangzhou. He specializes in international politics, particularly Islam and Middle Eastern affairs. He previously worked as a senior Xinhua correspondent in Kuwait, Palestine, and Iraq.

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OPINION

Palestinian messages to the Arab-Islamic Summit

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Our people have endured decades of oppression, during which their rights were virtually destroyed and forgotten. In the post-Oslo period, when the Palestinian leadership opted for negotiations, settlement expansion accelerated while the foundations of national independence eroded under partition, isolation and prolonged blockades. Today, the occupation seeks to complete the historic Nakba by exploiting the Palestinian uprising that began on 7 October in response to escalating Zionist extremism, attempts at Judaisation and efforts to marginalise and eradicate the Palestinian entity. This existential challenge, backed by a broad coalition with regional and international dimensions that do not serve the interests of our people, obliges us to unite our efforts around common principles. Despite these barbaric attacks, limited resources and the imbalance of power with the enemy, we stand in solidarity with the resistance and determination of the Palestinian people. If these efforts are coordinated, we can put counter-pressure on the occupation, deepen its political and legal isolation and worsen its economic crisis. This will be an opportunity to force the occupation and its allies to stop the aggression and strengthen the ongoing struggle of our people.

Today, the Palestinian people are facing one of the heaviest Zionist attacks on the Gaza Strip, which reaches the dimensions of genocide and ethnic cleansing. According to unofficial statistics, the number of Palestinian martyrs since the beginning of the war has exceeded 186,000, and the environmental and health destruction caused by the attacks has directly contributed to this number. This scenario could, God forbid, be repeated in the West Bank, with radical settlers attacking Palestinian towns and villages through the occupation army or with the official support of the occupation government.

Historically, the Palestinians have paid the heaviest price for the Western approach to the Eastern question. The consequences of this approach have been disastrous for us: It not only led to the seizure of our land by the Zionist movement, but also paved the way for the establishment of a settler state. In this war, the Arab and Islamic countries acted with great responsibility, rejecting the international categorisation of the resistance as terrorism and insisting on presenting it as a national liberation movement.

Arab and Islamic countries have played a strong role in supporting our cause in international forums, with a growing regional awareness of a common destiny and the need for common security against a common enemy. This solidarity is a very important step in supporting our cause through the work of the Ministerial Committee of the Arab-Islamic Summit convened in Riyadh, which is expected to be an international framework for shaping a solution to the Palestinian issue in accordance with the legitimate rights and aspirations of the Palestinian people.

Internationally, unlike in previous crises, we have seen clear international positions condemning the genocide and crimes against humanity committed against our people, reflected in firm positions at the United Nations. We appreciate these positions of the nations and peoples of the world and see the path to the establishment of a Palestinian state based on international legitimacy as the result of more than a century of Palestinian struggle and the revival of their rights, which have historical and political roots. Since 1922, the foundations of a Palestinian state have been laid, and despite British and Zionist conspiracies, Palestine retains its political primacy on the world map.

Today, more than 150 countries recognise the State of Palestine on the basis of international resolutions such as the General Assembly Settlement Plan (Resolution 181), the Algiers Declaration declaring the State of Palestine in 1988, and Security Council resolutions on the illegality of settlements outside the 1967 borders. The most recent resolution demands that Israel end its ‘illegal presence in the Occupied Palestinian Territory’ within 12 months of the General Assembly’s request to the International Court of Justice for an advisory opinion on the legal consequences of Israel’s policies and practices in Palestine. The resolution was adopted with overwhelming support – 24 votes in favour, 14 against and 43 abstentions – demonstrating the gains made by the Palestinian cause and highlighting the growing political isolation of the occupying state.

Despite the obstacles to sovereignty posed by the occupation, the Palestinian state remains a legal reality. We see current international efforts to revive these historic and entrenched rights, against the post-World War II trend of international powers favouring the establishment of a Zionist political entity at our expense.

These forward-looking initiatives, called the ‘International Alliance for the Realisation of the Two-State Solution’, include direct steps to organise the establishment of a Palestinian state, rather than merely negotiating its right to exist. This is an important step for regional security and international peace, a necessary way to stabilise the global system and prevent the spread of geopolitical conflicts, sometimes with a religious or cultural dimension.

Diplomatic and political efforts to achieve Palestinian statehood must be compatible with efforts to end the war, protect civilians, facilitate humanitarian aid and address the consequences of the aggression through compensation and reconstruction. At the same time, Palestinian efforts to meet the conditions for a sovereign state consistent with the principles of regional security and global peace should be intensified.

In the midst of these efforts, it is clear that the Palestinian forces will respond sincerely to these initiatives and are willing to overcome differences over governance, elections and the so-called ‘day after’ issues. Palestinian behaviour shows that these disputes are now a thing of the past and that focusing on the future enhances the ability to build and govern the Palestinian state on the basis of national spirit and solidarity.

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