The Economist Magazine Cover FOr 04/06/2024

The Economist Read in browser APRIL 6TH 2024 How we chose this week’s image SUBSCRIBER ONLY Cover Story How we chose this week’s image The Economist Zanny Minton Beddoes Editor-in-chief This week we had one worldwide cover. China’s famously industrious workforce is shrinking, its property boom has ended and the system of free trade that helped it grow rich is disintegrating. However, Xi Jinping, China’s president, has a master plan. Branded “new productive forces”, this sets out to boost advanced manufacturing, in order to create high-productivity jobs, make China self-sufficient and put it beyond reach of American sanctions. There’s just one problem. It won’t work. Here we illustrate two sides to Mr Xi’s cunning plan. At its best it’s a high-tech vision of the future, full of robots, AI and advanced materials. That’s why we have a pair of android hands creating a viewfinder, as if they belonged to a fancy film director. Less charitably, China’s president is pulling a rabbit out of a hat—and here the hats are being stacked to make a millinery pagoda. In reality, Mr Xi’s thinking is both visionary and magical, so we combined them in a single image Mr Xi’s plan is hardly short of ambition. Annual investment in new productive forces is $1.6trn—double what it was five years ago and equivalent to 43% of all business investment in America in 2023. Factory capacity in some industries could rise by more than 75% by 2030. Some of this will be made by world-class firms keen to create value, but much will be prompted by subsidies and state direction. Many of us liked this design, but others worried about the cover’s unresolved contradiction. Are new productive forces a reality or a conjuring trick? Anyway, our timing was out. We would be featuring a bunny in the week after Easter. We tried another tack. A problem with the master plan is that much new Chinese production will have to be exported. However, China already accounts for 31% of global manufacturing. How much higher can that figure go? America will surely block advanced imports from China, or those made by Chinese firms elsewhere. Europe is already in a panic about fleets of Chinese vehicles wiping out its carmakers. Emerging countries will not want their own industrial development to be stymied by a new “China shock”. The world has moved on from the free-trading 2000s—partly because of China’s own mercantilism. Those thoughts led us to containers and the ships that carry them. The Great Wall of containers summons up the idea that this strategy is not just about economic growth, but also about China’s security. Relations with America are steadier than they were a year ago, but they remain fragile. Chinese officials are convinced that America will restrict more Chinese imports and penalise more Chinese firms, whoever wins the White House in November. The ship, loaded up with gambling chips, takes us back to the riskiness of Mr Xi’s strategy. (Fortuitously, our drawing of the ship also conveys Mr Xi’s wishful thinking: physics says that its bow should be dipping into the waves.) Again, here is a version that combines these two sketches. The container ships have become an armada; seen from above, they look like a fleet of ballistic missiles. The aggression is apt. China’s lopsided growth model could wreck international trade, ratcheting geopolitical tensions even higher. If it failed, China could stagnate. That thought may comfort America and its allies, who fear an onrush of Chinese goods. It should not: discontented, China may be even more bellicose than if it were thriving. Many of us liked this cover, but some felt that containers are an old-tech way of representing a high-tech revolution. What’s more, this design fails to get across how the new productive forces are Mr Xi’s creation. Those thoughts led us to a third set of ideas. Mr Xi’s master plan rejects the conventional cure for a slowdown—a big consumer stimulus to reflate the economy. Instead he is going for a 21st-century industrial revolution. Not only will China escape dependence on Western technology, but it will control much of the key intellectual property in new industries and charge rents accordingly. Multinationals will come to China to learn, not teach. Accordingly, we have him pressing the reset-button—as if he were voting in the National People’s Congress. We also have him parading in front of a Communist Party logo adapted to look like a computer’s on-switch. And once again, we combined these two ideas, this time into what was to be our final cover design. We wanted the focus on Mr Xi because the new productive forces are ideological as well as economic. In recent decades China’s technocrats have had a mandate to study global best practice. Today, by contrast, they have been marginalised. Feedback has turned into flattery. Instead, China has come under Mr Xi’s centralising rule. China’s president rejects the idea of bailing out speculative property firms or giving handouts to citizens as the kind of ruse the decadent West resorts to. Young people should be less pampered and willing to “eat bitterness”, he said last year. Equally, national security now takes precedence over prosperity. China must be prepared for the struggle ahead with America, even if there is a price to pay. The ill effects will be felt in China and around the world. Cover image • View large image (“China’s risky reboot”) Backing stories → Xi Jinping’s misguided plan to escape economic stagnation (Leader) → How Xi Jinping plans to overtake America (Finance and economics) → The mind-bending new rules for doing business in China (Business)