Xi Jinping Prepares for 2025

In his latest diary entry, China’s leader takes the long view -- as usual.

Dear Diary,

This year turned out much better than 2023. Next year may get bumpy as my old friend Donald Trump returns to power, but I feel good about how we now have our economy back on track. The “China Dream” I like to talk about is coming into view, and not even 60% tariffs are going to stop us.

Sure, I know numbers have been mixed. Even the optimistic picture that my advisors paint for me can’t hide high youth unemployment or factory prices teetering on the edge of deflation. But we will finish 2024 with the 5% growth that we planned -- even if we need to round up a little.

Our real estate headache continues, with investment down another 10% despite measures to ease credit and relax rules for home buying. Clearly, we want families to start spending again, but I don’t need any more lectures from Janet Yellen about “more stimulus” to “rebalance demand.” China won’t lead the world by turning into a country of shoppers.

Over time, we certainly need to provide our people with better health care and pensions so they don’t save crazy (now 43%!) shares of their incomes. But the World Bank still ranks us somewhere between Turkey and Malaysia in GDP per capita. We can’t afford a Swedish social safety net just yet, especially as our population ages and shrinks.

But we are making steady progress toward what I call “the great rejuvenation of the Chinese nation,” which aims to reach developed status by the 100^th anniversary of the founding of the Communist Party in 2049.

Yes, I also know that it’s going to be hard to keep up the current pace of growth. My team has explained that we already have enough airports and railroads and that investing in infrastructure doesn’t deliver the growth it did in the good old days.

And nearly every foreign leader I meet gives me an earful about inexpensive Chinese manufactured exports undercutting their car companies or solar panel makers. But most of them are just whining because their workers just aren’t as good as ours. Some of them are just trying to keep us down the way they have tried through the centuries.

Trump was bubbling on the phone when I called to congratulate him, even if the invitation to his inaugural was pretty weird. But he should be under no illusions that I will tolerate his tariffs without retaliating. He doesn’t seem to understand that we don’t depend as much on U.S. sales as he thinks. All our exports – including the electronics, furniture and toys that make American Christmas so cheap - represent just 3% of our GDP. And we’re more than happy to slap stiff tariffs on American soybeans and cars.

We’ll find plenty of other friendly trading partners in Southeast Asia, Latin America and Africa. They may not love us everywhere we go, but they sure love the highways, ports and soccer stadiums we have financed with our Belt and Road Initiative. Even Europe will come around as a trade partner once there’s a cease-fire in Ukraine, and they stop blaming us for backing Putin.

Besides, long before “decoupling” and “derisking” became favorite words in Washington, we knew we couldn’t rely on America. We can’t avoid holding all those Treasuries for now, but we are building payment systems that will circumvent dollar sanctions. We still need advanced chips from the U.S., but Huawei is making good progress on our own designs.

We also have plenty of ways to keep our economy humming as we weather the short-term disruptions from tariffs. At least that’s what my advisors tell me -- and I don’t think they’re just telling me what I want to hear.

And besides, with America now fully into an isolationist swing, it will become less consequential and problematic with each passing election. Sure, it’s still got the most powerful military in the world, but it seems to be rapidly losing the will to use it.

Yes, all this means we will be much at risk when we need to make a move on Taiwan. No, it won’t come next year, and no, we’re certainly not planning an amphibious assault! (Americans watch too many movies about D-Day!)

First, we will block U.S. arms deliveries, which world opinion views as Washington’s meddling in China’s internal affairs. Then, we’ll apply slow pressure on the Taiwanese government to stop this independence nonsense. We can take our time. The only thing worse than failing to reincorporate Taiwan is attempting reunification by force and failing.

But that’s not for 2025. And for now, I’m just grateful for 2024.