Xi Jinping has plenty of problems, but ever-slower economic growth is not yet one of them.
China's gross domestic product growth estimate for the third quarter, which came in at a slightly lower than forecast at 6 per cent, was widely and reflexively bemoaned as the lowest such figure in 30 years — as was second-quarter growth and as fourth-quarter growth will almost certainly be as well.
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But China's president and his economic advisers could not care less about such headlines. They only care that the world's second-largest economy remains on track to meet the government's full-year growth target of at least 6 per cent, which it is set to do, and urban job creation — Beijing aims to create 11m new jobs this year.
Hitting the economic growth target, which in turn helps the Chinese government achieve its urban job creation aims, is easily done given Beijing's grip on the banking system and state-owned enterprises.
If growth is trending lower than Chinese officials are comfortable with, they can tap the economic accelerator — a little more credit here, a few more project approvals there. If trending above target, and therefore threatening to undermine Beijing's three-year campaign against excessive debt and financial risks, the leadership taps the brakes.
"China needs slower growth" to avoid wasting money on uneconomic projects, Trey McArver at Beijing consultancy Trivium said in a research note on Friday. "Policymakers' reluctance to stimulate the economy might disappoint investors in the short term, but it's a huge long-term positive."
The real risks that Xi's administration needs to worry about are "blindside" ones that catch it by surprise. And there have been plenty of these this year, ranging from the continuing protest movement in Hong Kong to a nationwide African swine fever epidemic.
These crises have something in common. They arose in large part because the authoritarian system that Xi inherited seven years ago — and has made far more rigid during his time in office — may be great at building infrastructure, repressing dissent and censoring the internet, but it is often hopeless when it comes to passing bad news up the chain.
One senior US official, who has spent almost 30 years dealing with Chinese Communist party cadres across the country, said he was shocked during a recent visit to Beijing at how badly briefed even politburo-level officials appeared to be.
"They appeared to have been given very bad information," the US official said. "They kept saying things that were flat-out false."
Even in private settings, Chinese officials cling to their official narrative that American and British "black hands" sparked the unrest in Hong Kong. It is a narrative that conveniently absolves everyone, from Beijing's representative office in the semi-autonomous territory to Xi himself, of the failure to appreciate the potentially destabilising consequences of Hong Kong's unrepresentative political system, the chronic incompetence of its coddled civil servants-turned-politicians and its soaring economic inequality.
In the case of African swine fever, rural officials' reflexive reluctance to report bad news up the chain of command to provincial governments and Beijing has been reinforced by the financial consequences of doing so.
Knowing that cash-strapped local governments were either unable or unwilling to compensate them as mandated by Beijing, affected farmers rushed to cull herds or sold infected pigs across county or provincial lines, reducing pork supplies and hastening the spread of the disease.
As of the end of September, China's pig herd had collapsed by 40 per cent and pork prices were up 70 per cent year on year. The central government is now trying to force state banks to step into the breach by issuing more credit to pig farmers, but they are reluctant to do so.
As powerful as he is, even Xi cannot compel local governments to give away money they do not have or force the local branches of state banks to issue loans to pig farmers that they know will not be repaid.
If the party's grip on power is seriously tested over the next few years, it will be as a result of systemic weaknesses such as these rather than a slowly decelerating economy.
Written by: Tom Mitchell
© Financial Times