China Politics Weekly – March 21, 2016

Dear friends and colleagues,

A week in Wuhan offered a different perspective to the negativity in Beijing. Wuhan looks and feels very much like the go-go China we have known for the past 15 years. It was hard to find many people who were worried about social stability or the economy, despite the recent announcement that Wuhan Iron and Steel is poised to lay off 50,000 workers.

It’s not to say that all was light and sunshine. Everybody is feeling the effects of the slowdown- particularly those in heavy industry. But overall, most companies we talked to are still making money and feel that they can successfully adapt to the new normal.

Politically, we found more liberal-minded contacts to be anxious, but resigned to Xi’s leftist tendencies. On the whole, we found Xi to still be very popular, and were surprised at the positive impressions that many had of their interactions with local government.

It was refreshing to find so much relative optimism (or perhaps relative lack of pessimism) in Wuhan. However, while Beijing may be overly focused on the negative, we think those in Wuhan are probably giving too little heed to the underlying problems that are increasingly evident in China’s political economy. When asked about some of the big questions of the day- debt, unemployment and political tensions- few could articulate how these problems would be ameliorated.

So who is right- the Cassandras in Beijing or the Pollyannas in Wuhan? The answer is…Both! Things are heading in the wrong direction, but we are not near imminent catastrophe.

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