As outlined in today's National Bureau of Statistics report, China's property market continues to descend. The newly built house price index declined 0.3% month-on-month in February, while the more relevant second-hand house price index, which is less regulated, dropped sharply by 0.6%. Year-on-year, the latter index has seen a significant decline of 5.3%, marking the most considerable drop for this series, with the absolute price level now at its nadir since August 2018.     

Thus far, the plummeting house prices have seemingly not ruffled the feathers of Beijing's leadership despite the bulk of Chinese household wealth being anchored in the property market. The Chinese President has long harboured the notion that deleveraging is imperative, and Xi Jinping has consistently demonstrated a willingness to employ the "cold turkey" method in addressing different problems. 
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‌Nevertheless, there are a few signs that some of Xi Jinping's advisers have cautioned the "all-knowing leader" about the potential for significant downturns in the housing market to foment social unrest, potentially jeopardising the Communist Party's grip on power. This apprehension is subtly reflected in the omission of the mantra "houses are for living, not speculation" in official discourse, alongside the central bank's reduction of mortgage rates and other easing measures concerning property buying and financing [read today's article, China's Hangzhou Ends Checks on Buyers of Pre-Owned Homes to Fuel Sales].

However, the measures enacted by the authorities remain tepid, indicative of Beijing's top leadership - particularly Xi Jinping's - reluctance to revert to the previous "capitalist economy". The fact remains that no significant action is taken without the sanction of the "all-knowing leader". What Beijing truly does not want – from Insightview's perspective – is for the "individual's needs and desires for life" to become predominant over the collective – that is, the Communist Party, which "knows how life should be lived". 
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‌The Communist Party is increasingly interfering in the daily lives of the Chinese – including in matters such as what children should and should not learn. Under Xi Jinping's leadership, Beijing is rolling back many individual freedoms and reforms to recreate or amplify the Communist Party's power. This, coupled with a weak economy, has led to growing dissatisfaction among more and more Chinese, who seem to be more pessimistic about the future than foreign companies in China. Admittedly, the latter group must remain optimistic to avoid offending the authorities, as they are located in a country where the environment could change rather quickly due to geopolitical tensions.‌
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The increasing concentration of power in Xi Jinping's hands is regrettable because China faces significant future challenges that can only be resolved through the use of "multiple brains", which are likely to think better than just one. This applies to managing the pandemic and how Beijing could have leveraged Russia's invasion of Ukraine to China's advantage. In doing so, Beijing clumsily pushed the EU away. Furthermore, Beijing's "neutrality with Chinese characteristics" led most countries in Asia to start or intensify a massive military buildup – even in Japan. Xi Jinping has yet to demonstrate that he possesses the qualities needed to make the right decisions for China - and not only for the Communist Party.

China needs all hands on deck to address its biggest problems, namely an unprecedented demographic headwind that will lead to a dramatic labour shortage in the future. Admittedly, the topic seems out of place at the moment, as China is experiencing deflation and rising unemployment. However, to no small extent, the current crisis is the result of Beijing's many missteps. Nonetheless, this does not change the fact that China's demographic problem is fully comparable to Japan's issues, which began in the mid-1990s. This means that Japan today should be compared to where China will find itself in 2050 [see the charts below].

As usual, there is only one solution in Xi Jinping's eyes: "new quality productive forces" – a phrase that the Chinese will now be forced to hear over the next five years on social media repeatedly and large posters on the entryways to major cities [read the CGTN article, What's 'new' about new quality productive forces?]. The all-knowing Communist Party knows exactly which direction China should take. The latter cannot, of course, be excluded. However, there is no emergency brake if Xi Jinping, "against all expectations", turns out to be wrong [read the FT article, Martin Wolf, The future of ‘communist capitalism’ in China]. 
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‌The problem is that Xi Jinping, to no small extent, removed initiatives from the private sector, even though the private sector is often an important ally in solving long-term problems. Xi Jinping seemingly does not understand that China's technological achievements over the last decade are not due to "Xinomics" but primarily due to the freedom of innovation and the free market economy that existed before Xi Jinping came to power. It took decades to achieve that, but Xi Jinping could destroy it within a few years. 
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‌Unfortunately, there is nothing to suggest that President Xi Jinping plans to revert to the time before he took power. This means even more confrontation with the West because the United States and EU increasingly adopt the same strategy as China [reciprocity]. In this context, the TikTok discussion in the USA is just the beginning, as many politicians in the West – including many Trump supporters – are moving away from what they themselves describe as naivety. 
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‌Instead, today, the same politicians ask: Why is it that, for example, Facebook, Google, and X are banned in China – but not TikTok in the West? [read the Bloomberg article, China’s TikTok Bill Anger ‘Supremely Ironic,’ US Envoy Says]. The West's problem is that many questions are asked a "little late" [read the FT article, 'Naive' Europe must spend more to deter Russia, says Danish PM]. Conversely, other questions need to be asked by politicians because a possible sale of TikTok to a group of investors led by Trump's former Treasury Secretary Mnuchin will not make the power of TikTok less complicated in the West [read the article, Former Treasury Secretary Mnuchin is putting together an investor group to buy TikTok].
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‌14. March 2024 - A short note on demographics, monetary policy, immigration and productivity
‌12. March 2024 - US CPI inflation progress will be slow without a significant increase in unemployment. NFIB indicates this is in the pipeline - maybe
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