5 Events That Shaped China In 2021

6 min read.

As China continues to rise as a global powerhouse, it has increasingly attracted scrutiny from the international community. This year, COVID-19 compelled the world’s second largest economy to severely restrict movement at its borders, resulting in a recalibration of the country’s strategy towards economic growth, social stability and global positioning. In this article, we delve into 5 key events and changes that shaped China in 2021.

1. Clamping down on big tech

Credit: Financial Times

In 2021, the Chinese government seems to have taken a tougher stance on big tech. Their laissez-faire approach over the years has given rise to the dominance of certain tech companies, who now hold significant market shares and wield an immense amount of power. To put this into perspective, e-commerce giant Alibaba’s total retail e-commerce sales alone stands at 55.9 percent, amounting to more than half of the total retail e-commerce sales in China. Citing the risk of abusing market power to stifle competition, misuse of consumers’ data and violation of consumer rights, the government introduced drastic measures this year to tighten regulations on big tech.

The first to be affected by the crackdown was Alibaba Group. The company was slapped with a record fine of US$2.8 billion in April this year, after the State Administration for Market Regulation (SAMR) reported that Alibaba had “abused its dominant market position in China’s online retail platform service market since 2015 by forcing online merchants to open stores or take part in promotions on its platforms,” which constitutes a breach of the country’s anti-monopoly law. 

In the months following the lawsuit, Chinese regulators ordered 34 of the largest internet companies in the country to conduct a ‘comprehensive self-inspection,’ including Pinduoduo, JD.com, Kuaishou and Bilibili. Meanwhile, 13 firms, including Tencent, Didi Chuxing and ByteDance, were summoned for a regulatory meeting, where they received a stern warning requiring them to adhere to tighter regulations on their financial arms. Amidst the harsh crackdown, the CEOs of Alibaba, Pinduoduo and Bytedance have also resigned from their respective companies.

The onslaught of regulatory measures sent a clear message that Chinese authorities will crack down harshly on any monopolistic behavior of large tech companies which are perceived to be breaching the country’s anti-monopoly laws. Moving forward, tech companies will have to tread carefully to strike a suitable balance between growth and finding a common understanding with Chinese authorities.

2. Attaining social equality through common prosperity

Credit: Lau Ka-kuen via SCMP

The idea of common prosperity was introduced in President Xi’s commemorative speech for the 100th anniversary of the Communist Party of China (CPC) earlier this year. Broadly, this goal involves building a “moderately prosperous society in all respects” by ensuring that China’s development improves the lives of all its people, particularly those below or near the country’s poverty line. In a finance and economic meeting held in August, Xi said that achieving common prosperity will require a “reasonable adjustment of excessive incomes,” urging “high income groups and businesses” to “return more to society.” 

According to Zhang Zhiwei, chief economist at Pinpoint Asset Management, authorities are “trying to address the income inequality issue” this year particularly because they have a rare opportunity to tackle long-term problems without needing to worry much about growth. With the goal of common prosperity, the country will take on a new trajectory that will significantly reshape many aspects of China’s economic and social landscape.

So far, apart from clamping down on unequal growth and monopolistic behaviour among tech companies, Xi’s pledge to curb ‘excessive’ incomes has yet to culminate in concrete policies. However, some of the areas Xi has hinted at include: lifting the livelihoods of the rural folk, improving the salaries of civil servants, strengthening the safety net for migrant workers and the elderly, and helping small and medium-sized businesses grow.

3. Guochao and the boycott of foreign brands

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Guochao has become a crucial buzzword in China ever since the successful debut of domestic sportswear brand, Li-Ning, at New York Fashion Week in 2018. Comprising “guo (国)” and “chao (潮),” which represent “country” and “fashionable (潮流)” respectively, this movement has received overwhelming support from Millennials and Gen Z consumers in particular.

Having grown up in an era where China is quickly catching up with its western counterparts, many Millennials and Gen Z consumers have developed genuine confidence in their national identity and culture. While foreign brands used to have a halo effect surrounding its physical and aesthetic quality when compared to local brands, many Chinese brands have made significant headway in improving the quality of their products, introducing trendy elements and creatively incorporating technology into them. These factors have drawn younger consumers towards local brands, who tend to prioritize seeking novel products, rather than purchasing luxury items like older generations did. 

Among other things, the renewed confidence in domestic brands has resulted in record-breaking sales during the Singles’ Day shopping spree on November 11th this year. The turnover of Anta Sports, China’s largest sportswear company, for example, exceeded US$727 million at the end of the day across various e-commerce platforms. According to the company, this figure is 61 percent higher than that in the previous year. 

Similarly, a report jointly published by Baidu and People.cn revealed that Chinese consumers’ interest in domestic products soared by 528 percent, compared with 10 years ago. This shift in preferences has paved the way for a resurgence of Chinese cultural elements and traditional style, which are increasingly deemed to be cool and trendy, especially among Millennials and Gen Z. Additionally, trade tensions between the U.S. and China have further ignited a strong sense of national pride and identity among young Chinese consumers, which have steered them away from international brands and towards local substitutes. 

4. Carbon neutrality by 2060

Credit: China Dialogue

China is the world’s largest emitter of carbon dioxide, the most abundant greenhouse gas in the atmosphere. According to the Climate Action Tracker, an independent scientific analysis that tracks climate action of countries around the world, China’s Nationally Determined Contribution (NDC) was rated to be “highly insufficient” and “not at all consistent with holding warming to below 2°C,” the goal laid out in the 2015 Paris Agreement. As pressure mounted on the Chinese government to take greater action in curbing carbon emissions ahead of the COP26 summit, the government released a document outlining several policies and actions the country will take to tackle climate change in October this year. 

In the document, China reiterated its roadmap of peaking in carbon dioxide emissions by 2030, then achieving carbon neutrality before 2060. To do so, China will increase its wind and solar power capacity to over 1.2 billion kW by 2030, raise its forest stock volume by 6 billion cubic meters by 2030 (from 2005 levels), and work towards deriving 80 percent of its total energy mix from non-fossil fuel sources by 2060. Achieving this goal would come under the purview of a newly established working group, which is headed by the Premier of the State Council and comprises officials from 30 ministries and commissions.

Apart from these overarching goals, China’s 14th Five-Year Plan for 2021-2025 set a binding target of slashing carbon intensity by 18 percent from 2020 to 2025. Authorities have also announced plans to decouple economic growth from coal and strengthen its renewable energy infrastructure. According to Climate Action Tracker, 2021 saw some of the most ambitious climate policies that China has ever implemented in history, although critics lament that China is still not doing enough.

From a political perspective, China’s pledge towards carbon neutrality signifies its commitment in being a prominent global leader in renewable energy and forest conservation. Through its strategic plans, the government hopes to demonstrate how responsive they are to public concerns regarding environmental issues like air pollution and flooding, which have been exacerbated as a result of climate change in recent years.

5. A new era cemented by Xi’s historical resolution

Credit: Nikkei

On November 11th this year, the Chinese Communist Party’s (CCP’s) Central Committee passed its third historical resolution to cement President Xi’s ambition to stay in power for a third five-year term and beyond. The document, a summary of the party’s 100-year history, addresses its key achievements and future directions.

Among other things, the historical resolution pronounced Xi as the “core, helmsman and principal founder” of the Xi Jinping thought on socialism with Chinese characteristics for a new era, which it describes as “the Marxism of contemporary China and of the 21st century.” As such, Xi’s leadership and thought is said to illuminate the CCP’s long-term goal of becoming a “great modern socialist country by 2049.” Being the third historical resolution since CCP’s founding in 1921, the document effectively cements Xi’s hold on power and puts Xi on the same pedestal as Mao Zedong and Deng Xiaoping, the two previous leaders documented in resolutions published in 1945 and 1981 respectively.  

According to BBC, some observers view the resolution as President Xi’s attempt to reverse decades of decentralisation which began under Deng and continued through Chinese leaders after him. So far, this has been evident through the government’s harsher rhetoric on censorship and tougher regulations on industries such as cryptocurrency and private tuition this year.