Xi Jinping plays down China's economic 'growing pains'

Xi Jinping has acknowledged that China’s leaders are concerned about the economy, but described the problems as “growing pains”, as he prepared to leave for his first state visit to the UK, bringing with him billions of pounds of planned investment.

In the wake of stock market jitters that rocked China and the wider region recently, and with imminent growth figures likely to confirm the slowest growth rate since 2009, the Chinese president said China was looking to external deal-making with countries such as Britain as a way of diversifying its economic base.

“We do have concerns about the Chinese economy, and we are working hard to address them,” Xi said in written answers to questions put by Reuters on Saturday. “We also worry about the sluggish world economy, which affects all countries, especially developing ones.”

The solution, he said, was to open up the Chinese economy to more foreign investment and encouraging the country’s firms to invest overseas. The four-day visit to Britain, which officially starts on Tuesday, is aimed at facilitating both. About 150 deals are expected to be sealed this week in areas such as healthcare, aircraft manufacturing and energy.

China has been basking in its role as the motor of global growth and a generator of wealth and jobs envied by the other big powers. But beneath the headlines lurk persistent questions about the sustainability of Chinese economic power: the stock market volatility that rattled the authorities this summer, a mounting regional debt bubble fuelled by years of cheap money, faltering exports, and weak consumer confidence.

We have warned for years that China was at risk of a hard landing,” said experts at Fathom, a London economics consultancy. “Since June, when China’s stock market first started to falter, sentiment surrounding China and its prospects for growth have deteriorated markedly. Many now widely dismiss China’s official GDP statistics as little more than propaganda.”

Prof Michel Hockx, the director of the SOAS China Institute, said Xi was coming to Britain with clear economic objectives. “The Chinese economy is slowing down and it is changing its nature from an investment-driven growth economy to an economy that has to look to invest in other places,” he said. “Chinese businesses are very eager to invest in other countries, and some of the best export products that China has to offer are to do with infrastructure, high-speed trains, energy, things like that, and these are exactly the things that the UK needs.”

The trip, Xi’s first to Britain as president, has been hailed by British and Chinese officials as the start of a golden era of relations that the Treasury hopes will make China Britain’s second-biggest trade partner within 10 years. But the growing proximity between the Conservative and Communist parties has attracted fierce criticism from those who believe Britain has abandoned its commitment to human rights by cosying up to Beijing.

Xi praised Britain’s decision to prioritise trade and investment over awkward things like Tibet and human rights as a “visionary and strategic choice”. But Fraser Howie, the co-author of Red Capitalism: The Fragile Financial Foundation of China’s Extraordinary Rise, accused Downing Street of turning its back on Hong Kong’s struggle for democracy and ignoring an unprecedented crackdown on dissent that is under way in China.

“It is so obsequious, it is just nauseating,” said Howie. “Clearly, China under Xi Jinping has become highly repressive towards those who do not agree with the rules ... [but] we haven’t heard anything of substance from the UK government about what is happening. [Beijing] must be loving how America’s best ally is fawning and falling over itself to curry favour with China.”