It was all about the Party. As China’s Fourth Plenum of the Central Committee was winding up, the CCP was still picking over the bones of Mike Pompeo’s blistering broadside.
The US Secretary of State just fell short of branding the world’s second-largest economy an evil empire in the first of a series of speeches on the fraught relationship between the United States and China.
Speaking at the Hudson Institute in New York earlier this week, Pompeo warned that Beijing’s dream was “international domination.”
“I’ll talk about the competing ideologies and values and the impact that has on America and the world,” he said in his speech to the conservative think tank. “The Chinese Communist Party is a Marxist-Leninist Party focused on the struggle and international domination. We need only listen to the words of their leaders.”
Naturally, his remarks brought a barrage of condemnation from China.
Responding to Pompeo’s address, Foreign Ministry spokesman Geng Shuang accused Washington of “maliciously attacking” the country.
“It fully exposes the deep-seated political prejudice and dark anti-communist mindset of a handful of American politicians. Such remarks are by no means an embodiment of confidence and power, but rather reveal fear and arrogance,” he told a media briefing on Thursday.
“The past and reality has proven that China and the US stand to gain from cooperation and lose from confrontation,” Geng added.
A day later, the political elite reaffirmed their commitment to the ruling Chinese Communist Party under the leadership of General-Secretary and President Xi Jinping in a 5,000-plus-character communique.
Released by the official newspaper of the CCP, the People’s Daily, it hammered home the core mission statements of “political stability” through the “path of socialism.”
“All these notable strengths are the fundamental basis for fostering stronger confidence in the path, theory, system and culture of socialism with Chinese characteristics,” the communique added.
On the economic front, there was an oblique reference to the ongoing trade war with the US, which has stymied growth and cast a giant shadow on the global economy.
As the merry-go-round of talks continued between Beijing and Washington, economic “risks and challenges abroad” dominated the conversation.
Those “risks” have filtered through to the real economy and exposed frailties in the corporate sector with GDP growth in the third quarter dipping to a nearly three-decade low of 6%.
But then, the fallout from the downturn has descended on a broad range of sectors, from retail sales to industrial output. Big-ticket items such as new car sales have stalled while residential property prices have also suffered as consumer debt increased.
As for industrial profits, they plunged 5.3% in September to 575.6 billion yuan (US$81.48 billion) compared to the same period last year. To put that into perspective, the August numbers declined by 2%, data from the National Bureau of Statistics illustrated.
At least, a private survey showed that factory activity in October increased at its quickest pace since February 2017.
The Caixin/Markit manufacturing Purchasing Managers’ Index, or PMI, came in at 51.7 for the month with a “renewed increase in export business.” That was above the 50-point mark which separates expansion from contraction.
Yet Friday’s PMI on small- and medium-sized companies contrasted significantly from the official manufacturing data released by the National Bureau of Statistics 24 hours earlier. The numbers showed factory activity in China contracted for the sixth month in a row.
“Historically, the Caixin index has been the more reliable guide to cyclical fluctuations in China’s economy … On balance, it, therefore, seems likely that growth continued to pick up last month,” Julian Evans-Pritchard, a senior China economist at Capital Economics, said, despite expressing skepticism about the figures.
“[Still], we doubt that activity will be as strong as the Caixin index implies. One reason to be skeptical is that industrial metal prices have only seen very modest gains recently,” he wrote in a note.
For the CCP, it might be premature to throw an economic party just yet.