China’s ruling communist regime has started announcing plans to stimulate the domestic economy after the week-long Chinese Lunar New Year celebration. However, experts aren’t optimistic about China’s economic prospects and anticipate another wave of company exits.
Authorities in many provinces and cities across the country have held high-profile meetings since the Lunar New Year holiday to hammer out the key economic tasks for 2023, according to mainland Chinese media. Provincial officials have signaled plans to “fight for the economy with full strength” during the meetings.
Recently, many top officials at the provincial, city, and county levels also have hosted entrepreneur forums, Mr. Liu, an entrepreneur in Guangdong, the largest Chinese province by gross domestic product, told The Epoch Times. But he feels those gatherings have been “useless, because the credibility of the governments has gradually declined in recent years, and many entrepreneurs attended just for show.”
“In fact, many policies have not been implemented, and enterprises that can receive subsidies or assistance are limited to the few top ones in the industry,” he said.
Liu said the fundamentals of the overall Chinese economy are still dominated by manufacturing and exports. In the consumer electronics industry that he’s in, factory orders shrank last year by at least 40 percent, without any sign of improvement.
In recent years, Chinese shoemaking, home appliances, and electronic technology companies have invested in manufacturing in Vietnam.
For example, China’s leading panel maker, BOE, plans to invest $400 million this year to build two factories in Vietnam to supply TV screens for Samsung and LG Electronics, according to Reuters.
Exodus to Southeast Asia
U.S.-based current affairs commentator Wang He told The Epoch Times that the three-year-long COVID-19 epidemic will significantly affect the Chinese economy.
A typical example occurred when a large number of workers at Foxconn, Apple’s supplier factory for iPhones, fled Zhengzhou city when COVID-19 started spreading at company facilities. The workers couldn’t bear the regime’s restrictive “zero-COVID” policy, such as indefinite lockdowns and the fear of group infection because of the regime’s lack of transparency on COVID-19 information.
Then, the Chinese regime suddenly abandoned all COVID-19 controls in December 2022, amid increasing infection rates. The virus then spread even more rapidly, with many places reporting 80 percent infection rates within 20 days, which had a massive effect on factory and business operations.
Due to uncertainty created by the U.S.–China technology war and the sudden change of the COVID-19 policies by Chinese authorities, Apple accelerated the relocation of its supply chain to India and Vietnam at the end of 2022. The MacBook Pro/Air series products will be produced in Vietnam by Foxconn’s Hon Hai factory starting in May, while plans call for iPhone production to be moved to India.
“After COVID restrictions were lifted, many domestic private enterprises who have overseas customers are not sure about their future in China, and they may move their factories to Southeast Asia one after another—mostly to Vietnam,” Liu said.
Wang predicted that 2023 will be a very difficult year for China’s economy, with sluggish domestic demand, bottomed-out investment, and a weak import–export market.
At this time, if small- and medium-sized enterprises want to survive, they must quickly relocate their production bases overseas, especially considering the trend of “selective decoupling” from China by the United States and other Western countries, according to Wang.
“In addition, the real number of people infected with COVID-19 and the death toll in China in the past three years, which has been concealed by the CCP authorities, has become another major variable affecting the Chinese economy,” Wang said.
Lin Cenxin, Luo Ya, and Reuters contributed to the report.