With the US fading as the preferred destination for PRC students, leaving other English-speaking countries to gain favour, our latest brief in the China Executive Briefing series ‘PRC education in the New Era’ shows social and political change at home is emerging as a new driver of overseas study. Meanwhile, student flows to Australia are rebounding.
COVID has taken several turns for the worse in the PRC. Amid a record surge in cases, the National Health Commission surprised everyone on 11 November by lifting some COVID curbs in moves described as ‘sidling out’ of the zero policy.
As a ‘metaverse craze’ infects the market, a first national-level guidance text emerged on 1 Nov 2022. Betting on VR/metaverse dominance, Beijing is as ever intent on self-reliance and heading off global competition, adding quasi-military imperatives to growing key capabilities at home.
Xi was able to show confidence despite domestic travails and economic headwinds. Beijing reads the Bali outcomes as grounds for ‘guarded optimism’. Heated rhetoric with the US has cooled even if it did not rate as a Kumbaya moment.
With demographic crisis and concern about social security funds looming, Beijing is advancing plans for personal pension accounts. A framework was issued earlier in 2022 and announcements on 4 November shed more light on how the accounts will work, and the role of financial institutions in setting them up.
The state is intervening further in agriculture production in 2022. This comes after a minimum grain output of 650 million tonnes was inscribed into the macroeconomic agenda in 2021. This is no mere policy whim. Under threat from weakening capacity in the rural sector, this is now a national security imperative.
The PRC was the world’s second-largest FDI destination over the past four years, despite the global total declining by a third in 2020. Yet investment into the PRC faces new headwinds, not least from 2022’s tightening zero-COVID regime. Resurging infections and lockdowns nationwide keep memories alive of factory closure, supply failure and shuttered production.
Chaos at Apple’s largest PRC iPhone assembly made global headlines last week. Workers fled the Foxconn ‘campus’ in Henan, COVID lockdowns having become insufferable. The Foxconn exodus is mirrored on a wider scale by workers flocking to the service sector, disillusioned with production lines. Beijing frets the trend will stymie its aspired-for new growth model.
China has been a frontrunner in digital trade. Almost 40 percent of its economic activity was transacted online in 2021, making it now the world’s second-largest digital economy. But the PRC has been slow to move into more sophisticated digital trade fields.
The RMB has depreciated steadily since April 2022. A mix of concerns over the domestic economy and the US Federal Reserve interest rate hikes have derailed PBoC moves to support the economy.
Amid the expected infrastructure boom to support GDP growth, the neglected rural sector looks set to benefit. Rural infrastructure spending stepped up in the spring. Backed by eight central departments, a work plan issued in mid-October further drives existing projects and launches new ones in batches touted to achieve ‘solid results’ by year’s end.
Consumer spending along with exports and investment, is in a trough. The Party Congress did little to help it out. Doubling down on COVID, and identifying national security threats in every sector, only added to the current woes flowing from the crippled housing market. Removing veteran economic managers bodes no better in the long term.