Xi Jinping's U.S. Visit: Can it Salvage China's Economy?

National security forces face a 20% salary cut. Discontent spreads among public security officials in multiple areas. China's economy is beyond saving. Xi Jinping calls for tightening our belts again. Xi Jinping's highly anticipated visit to the US, a matter of urgency with potential for societal unrest. Entry fees for Xi Jinping's Los Angeles dinner, $2,000 general, $40,000 for a closed seat. Another foreign company pulls out of China. Citrix's parent company ceases transactions. It's all covered in today's China Truths. National security forces face a 20% salary cut. Discontent spreads among public security officials in multiple areas. China's economy is in a downward spiral, and the era of across-the-board salary reductions has long since begun. According to reports, in some areas, even the salaries of public security personnel have not been spared, with cuts of up to 20%. This grim reality has also prompted a change in their behavior towards the public. A report from Radio Free Asia, FRA, on the 6th revealed that government employees and workers in state-owned enterprises across China have been expressing their frustrations over delayed salary payments. Human rights activists in Beijing, Sichuan, and Hunan have also noted that in the past six months, local public security personnel have shown a more restrained attitude towards dissenters. A rights activist in Chengdu explained this phenomenon. Currently, it's because even public security officers in Chengdu have experienced salary cuts, ranging from 1 to 2,000 yuan per person. So, it's no surprise that they now communicate more politely. In truth, they've also begun to feel discontent with the government, especially since the salary reductions have affected their own interests. Additionally, many individuals without income are expressing their frustrations in the comments section of Sina Weibo. For example, a traffic police officer in Inner Mongolia shared that their department has not paid salaries for eight months. In Handan, Hebei, a husband of one netizen, who is employed by the traffic bureau in Yongyan District, Handan City, hasn't received a salary for 20 months. Notably, a netizen from Jiangxi explained that their father-in-law, who works as a sanitation vehicle driver, hasn't been paid for 20 months. According to a report by Voice of America, China's economy finds itself trapped in a troubling cycle. Official reports from China indicate that in the first half of this year, per capita income increased by 6.8% compared to the same period last year, reaching 11,300 yuan per month, approximately 1,551 US dollars. However, many people have raised doubts about this. Some analysts suggest that this growth may be due to rural migrant workers returning to factories after the pandemic lockdown was lifted, compensating for the insufficient increase in salaries for white-collar workers. The report highlights a survey conducted by the job recruitment website Xiaopin, which revealed that in the second quarter of this year, the average salary for new job openings in 38 major cities decreased by 0.7% compared to the same period in 2022. In the first quarter, this figure had increased by only 0.9%. The report also points out that household consumption in China contributes less to the country's GDP compared to most other countries around the world. Back in September, The Vision Times reported that China has entered an era of widespread salary cuts. While civil servants are facing reductions in their salaries, reports from various regions indicate that the income of government employees in retirement, including teachers and doctors, has significantly decreased due to reduced government subsidies. In some areas of Guangdong, subsidies for civil servants have been delayed. Beijing and Tianjin have already outlined plans to reduce salaries for civil servants, with Zhejiang even proposing cuts of up to 20% in civil servant salaries. The news of salary reductions for public security personnel in various parts of China has generated extensive discussions among netizens. One netizen said, if government civil servants are now also experiencing wage delays, over time, public security may take to the streets to demand their rights, which is a positive development. The real estate market is collapsing, banks are failing, and wage arrears are leading to protests. The Chinese Yuan is in turmoil. The main act is just beginning. Let's sit back and watch the show, supporting the chief accelerator. We'll see how long their financial resources can last. One netizen even said that let's wait and see if a Li Chuangwang, refers to a rebel leader, emerges. China's economy is beyond saving. Xi Jinping calls for tightening our belts again. On November 7, CCP leader Xi Jinping once again stressed the importance of tightening our belts, raising concerns among experts about the severity of China's economic challenges. In detail, on November 7, Xi Jinping chaired a meeting of the Central Committee for Comprehensively Deepening Reforms, once again stressing the importance of consistently adhering to the ideology of tightening our belts and putting an end to extravagance and waste. Since the onset of the pandemic in 2020, the CCP has consistently advocated for tightening our belts. Even during the two sessions, official media outlets like the Economic Daily published articles highlighting China's prolonged financial strain, advocating for the normalization of belt-tightening measures. Throughout this year, reports of salary reductions for Chinese civil servants have been widespread, leading analysts to believe this reflects the precarious state of China's economy with significant financial vulnerabilities. Chinese Ministry of Finance data reveals that from January to September, the national general public budget income amounted to 16.6 trillion yuan, expenditure reached 19.7 trillion yuan, resulting in a deficit of 3.1 trillion yuan. Additionally, data indicates that as of the end of September 2023, the national-local debt balance surged to a staggering 38.8 trillion yuan, approximately 5.3 trillion U.S. dollars. According to columnist Wang Yi, the CCP relies on the national economy and on civil servants to maintain control. The impact of cutting civil servants' salaries is significant. If civil servants refuse to work, how can the governance of this country function? The current economic and financial situation is very tense. Otherwise, it wouldn't have reached this point. American economist David Huang expressed, considering the ongoing challenges in real estate and local debt, the current situation is incredibly grim and pessimistic. Without more profound reforms or transformative plans, China is in a dangerous and concerning state, and reversing it poses significant challenges. Another person named Huang Wei, using a pseudonym, added, reversing this situation is impossible. Relying on land sales and the real estate economy is inherently unsustainable. The external environment is becoming politically tense globally, with foreign capital withdrawing, real estate collapsing, banks facing numerous crises, policies taking extreme turns, and the increasing burden on ordinary people. When you factor in all these elements, not only is economic recovery improbable, but there's also a swiftly emerging potential political crisis. Xi Jinping's highly anticipated visit to the U.S., a matter of urgency with potential for societal unrest. The Asia-Pacific Economic Cooperation APEC Leaders' Summit is scheduled to take place in San Francisco, USA, next week, and based on current indications, it's highly probable that Xi Jinping will attend the summit and meet with U.S. President Biden. According to reports from U.S. media, Xi Jinping has been eagerly anticipating this trip to the United States, aiming to address the pressing issues at hand and salvage China's teetering economy. The primary challenge facing the CCP is local debt, a significant issue involving the entire financial and real estate sectors. Mishandling this matter could lead to social unrest, impacting regime stability. In addressing the problem of local debt, the CCP has shifted from its previous stance of each family dealing with its own children. At the Central Financial Work Conference held at the end of last month, the CCP expressed the need to establish a long-term mechanism to prevent and resolve the risks of local government debt. The central government is willing to take on more funding responsibility to resolve local debt, implying that it has no choice but to bear the burden of local government children means debt. China's economic challenges are becoming more apparent, with data from WIND revealing alarming levels of provincial debt. As of the end of 2022, 21 out of China's 31 provinces have debt ratios exceeding 120 percent, and eight provinces surpass 200 percent, with Heilongjiang reaching nearly 500 percent. When considering interest-bearing debt from urban investment, only Shanghai has a local government debt ratio below 100 percent, while 23 provinces exceed 200 percent, with Tianjin having the highest debt ratio at 685 percent. The pace of China's economic decline remains unchecked. The General Administration of Customs of the CCP reported on November 7 that China's October export volume dropped to $275 billion, a 6.4 percent year-on-year decrease, surpassing September's 6.2 percent decline. The Wall Street Journal notes that this marks the sixth consecutive month of declining Chinese exports, intensifying pressure on the CCP government to boost domestic spending. Simultaneously, the Chinese real estate industry grapples with a massive debt crisis, impacting major companies and deterring investors. In response, on November 8, Reuters reported that the CCP authorities directed Pingan Insurance Group to acquire equity in Country Garden Holdings. The Guangdong provincial government, where both companies are located, has been instructed to assist in orchestrating Pingan's rescue plan for Country Garden. The report suggests that this rescue plan would be a significant move by the CCP authorities to support the real estate industry. The real estate sector contributes around a quarter of China's economy, raising concerns in the market about a broader financial crisis. Insiders mention that authorities hope to prevent Country Garden's liquidity risk from spreading to a more extensive economic domain. However, Pingan Insurance has denied Reuters' report. Pingan and China Life are the top two insurance groups in China by market value, and Pingan's founder and chairman, Ma Mingzhi, declined to be interviewed. Sources reveal that Chinese regulatory authorities aim to use this proposed rescue plan as a viable template for debt restructuring and other financially troubled real estate enterprises. An article on the U.S. website Foreign Policy on November 7 expresses that Xi Jinping, the president of the CCP, has been eagerly anticipating this trip to the United States, and the urgent priority is to find ways to rescue China's teetering economy through the meeting with Biden. On November 7, the International Monetary Fund, IMF, pointed out that China's weakened productivity and aging population would be unfavorable factors for the country's medium-term economic development. Gita Gopinath, the first deputy managing director of the IMF, recently visited China with her team. In a press release, she stated that China's economic growth, relying on credit-driven expansion in recent years, has led to increasing imbalances and vulnerabilities. High household savings are used for diminishing returns in infrastructure and housing investment, resulting in excessive debt levels. The rapid expansion of the real estate industry has led to an oversupply of housing, and rising prices bring affordability pressures. Gopinath highlighted that China faces high financial stability risks due to reduced capital buffers in financial institutions and escalating risks in the quality of assets, and these risks are still on the rise. Rumor – Entry Fees for Xi Jinping's Los Angeles Dinner – $2,000 General – $40,000 for a Close Seat In connection with the U.S. President Biden and Chinese President Xi Jinping meeting at the APEC summit in San Francisco on November 15, a senior U.S. official disclosed that she will also have dinner with senior executives from American companies. Attendance at the dinner requires a $2,000 ticket, but sitting at Xi Jinping's table costs $40,000. According to Newsweek, it anticipates the attendance of hundreds of business leaders, including top U.S. CEOs, at the reception. Online registration forms are encouraging interested individuals to join the waiting list. In preparation for Xi Jinping's U.S. visit, the Chinese consulate is mobilizing a welcome team. A screenshot shared by an activist on the social media platform X revealed that the Chinese consulate general in Los Angeles has begun organizing activities to support Xi Jinping's platform. The screenshot indicates the consulate has asked students from USC and CSSA to go to San Francisco for airport pickup and meeting participation. Buses will be provided for transportation, covering all travel and accommodation expenses. Participants, once registered, cannot withdraw and need to request leave in advance. The source stressed not disseminating this information further. Another foreign company pulls out of China, Citrix's parent company ceases transactions. Recently, an email has been circulating, revealing that Cloud Software Group, the parent company of Citrix Systems, has announced its withdrawal from the Chinese market. The decision is attributed to increasing business costs and is set to take effect on December 3. A spokesperson from Cloud Software Group confirmed the authenticity of the email to Wall Street Journal, emphasizing that this resolution will have repercussions across all its subsidiaries. The withdrawal involves discontinuing all new business transactions in mainland China, Hong Kong, and Macau, whether conducted directly with customers or through channel partners. However, maintenance and support services will persist for existing contract customers. A spokesperson from Cloud Software Group confirmed the authenticity of email to Wall Street Journal, emphasizing that this resolution will have repercussions across all its subsidiaries. Reports on November 9 highlight that Cloud Software Group's move positions it as the latest U.S. technology company to exit the Chinese market. Based in Florida, Cloud Software Group is the proprietor of enterprise software providers like Citrix and Tibco Software v.v. Citrix, formerly listed on Nasdaq, merged into Cloud Software Group. The company's website indicates the existence of sales offices in Beijing, Shanghai, Guangzhou, and Hong Kong. Citrix has catered to prominent Chinese companies such as JD.com and the state-owned automotive manufacturer Shanghai Automotive Industry Corporation Don't forget to leave a comment in the section below to share your opinions on today's topic with us. Make sure to like and subscribe to see more interesting topics from China Truths.