Has China's Economy Entered the 'Garbage Time' of History?
It is hard to recall a more striking disconnect between the Chinese people and their modern leaders. When President Xi Jinping marks the 75th anniversary of the founding of the People’s Republic of China on Oct. 1, he will hail a thriving nation destined to become a prosperous superpower by its centennial in 2049.
Ordinary Chinese, on the other hand, see their country entering quite a different period, captured in a recently coined phrase — “the garbage time of history.”
In sports, “garbage time” refers to that point in a game in which one team trails so badly that defeat is no longer in doubt. The remainder of the contest is filled with pointless, low-quality play.
Many in China are convinced their country is trapped in a similarly futile dead end, its prospects unlikely to brighten as long as its direction remains unchanged.
On the surface, such pessimism is driven by economic woes. The collapse of the real estate sector has shrunk the net worth of the middle-class. The resulting negative wealth effect has curbed consumption, exacerbating the slump and threatening deflation.
The malaise, however, has deeper political roots. The country has gone through much worse economic times before without despairing. Tens of thousands of state-owned enterprises were liquidated and more than 30 million workers laid off at the end of the 1990s. Still, ordinary Chinese remained optimistic about the future.
The difference is that those citizens believed in the competence of the reformist then-premier Zhu Rongji. They accepted that the government needed to take decisive action to shore up China’s technically insolvent banking system, restructure its unprofitable state-owned enterprises, and make the economy more competitive in the wake of the 1997-98 Asian financial crisis. And they could look forward to China joining the World Trade Organization.
Such faith in the country’s leadership was redeemed again when the 2008-09 financial crisis plunged Western economies into recession. The government pumped bank credit equal to 25% of GDP into the economy within a year and made China one of the few bright spots globally.
Now, Chinese are not only dissatisfied with government decisions. More importantly, they see no possibility of improvement because the leadership of the Chinese Communist Party has repeatedly signaled that it intends to maintain the same domestic and foreign policies that have led to economic stagnation at home and geopolitical tensions abroad.
In the past, collective leadership and competition for power among rival factions created some space for policy flexibility and reversals. No single leader was powerful enough to force the regime to stick to demonstrably counterproductive policies.
Under Xi, the party is ruled by a highly centralized, if not personalized, leadership. Changing or reversing policies is extremely hard, if not impossible, as evidenced by the absence of major shifts since China’s recent economic struggles began in mid-2023.
Moreover, geopolitical tensions with the West have diminished the country’s prospects, and most Chinese people simply do not see when and how relations with their most important trading partners will return to normal.
The phrase “garbage time of history” thus is a thinly veiled dig at Xi’s open-ended rule, implying that this sorry state of affairs will not change as long as he stays in power. (In sports, “garbage time” ends only when the clock runs out.)
Not surprisingly, official media and propagandists have strongly denounced the phrase. Restoring a sense of optimism will require something more than censorship, however.
Lowering tensions with China’s neighbors and the US is a minimum first step. Implementing real economic reforms — for example, diverting resources from high-end manufacturing to stimulating consumption — would boost sentiment. If Xi relinquished some of his positions in top decision-making bodies (he currently chairs at least five central commissions and three “leading groups”), he would signal a willingness to share power.
As unlikely as those options may seem, the alternative path will not be pretty. At 75 years old, the PRC has already beaten the longevity record of the Soviet Union by one year. In retrospect, the fall of the Soviet regime was no accident. It entered its own “garbage time of history” in the mid-1970s when Soviet leaders refused to adopt much-needed economic and political reforms.
The CCP surely doesn’t want to meet the same fate. To avoid it, Xi and the party will have to rethink their game plan.
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