From the newsrooms of the Sydney Morning Herald and The Age. This is the morning edition. I'm Samantha Cylinder Morris. It's Thursday, March 28th. For decades, a downturn in the Chinese economy has meant a boon for investors in the West. But then came an unwelcome announcement earlier this month from the Chinese government. Today, international and political editor Peter Karcher on why this announcement isn't just bad for our economy, but as a reminder of China's dramatically revamped and dangerous geopolitical goals. So, Peter, we've been hearing about China's struggling economy for many months now, specifically its real estate crisis. But before we get into that, can you briefly walk me through how historically, it's actually been a positive thing for foreign investors, for the Chinese economy to be experiencing a downturn? Because this would seem counterintuitive.

From the newsrooms of the Sydney Morning Herald and The Age. This is the morning edition. I'm Samantha Cylinder Morris. It's Thursday, March 28th. For decades, a downturn in the Chinese economy has meant a boon for investors in the West. But then came an unwelcome announcement earlier this month from the Chinese government. Today, international and political editor Peter Karcher on why this announcement isn't just bad for our economy, but as a reminder of China's dramatically revamped and dangerous geopolitical goals. So, Peter, we've been hearing about China's struggling economy for many months now, specifically its real estate crisis. But before we get into that, can you briefly walk me through how historically, it's actually been a positive thing for foreign investors, for the Chinese economy to be experiencing a downturn? Because this would seem counterintuitive.

Well, I've described it as a Pavlovian form of conditioning, because in the past, the Chinese authorities response has been very predictable. And that is when the economy starts to slow, the authorities ramp up stimulus, so they boost economic growth back to where it was to where they want it. And that happened routinely over the past nearly 40 years, since China began its reform and opening movement under Deng Xiaoping, which began in 1978. So this was, you know, the old autocratic communist Marxist economy of Mao was discarded by Deng, and Deng brought in this new era. And so the government in Beijing would set an annual growth target and whenever and it was pretty ambitious. The average over that roughly 40 years average annual growth of China's economy was 9%. And part of the secret was whenever the growth dipped, the government would ladle out these massive quantities of government central spending, which would then flow into every sector of the economy to boost growth. And that meant that exporters to China would make more money that investors in the Chinese markets, once they opened their markets to foreign investors, would make money and everybody would be happy.

Well, I've described it as a Pavlovian form of conditioning, because in the past, the Chinese authorities response has been very predictable. And that is when the economy starts to slow, the authorities ramp up stimulus, so they boost economic growth back to where it was to where they want it. And that happened routinely over the past nearly 40 years, since China began its reform and opening movement under Deng Xiaoping, which began in 1978. So this was, you know, the old autocratic communist Marxist economy of Mao was discarded by Deng, and Deng brought in this new era. And so the government in Beijing would set an annual growth target and whenever and it was pretty ambitious. The average over that roughly 40 years average annual growth of China's economy was 9%. And part of the secret was whenever the growth dipped, the government would ladle out these massive quantities of government central spending, which would then flow into every sector of the economy to boost growth. And that meant that exporters to China would make more money that investors in the Chinese markets, once they opened their markets to foreign investors, would make money and everybody would be happy.

Okay, so just take me through then. How bad is China's economy right now?

Okay, so just take me through then. How bad is China's economy right now?

Well, it's by historical terms, it's slowed dramatically starting about three years ago. Well Covid really, but everybody assumed that after Covid, China would stage a massive bounce back, fueled by an inordinate amount of central government spending. But where where the country has departed from its historical norm is that instead of XI Jinping, the president, reverting to the norm and grabbing the accelerator lever and pulling hard, he said no, this is a good point to purge our economy of excesses. And as you've touched on, the biggest, most glaring and most dangerous of those excesses was the real estate market. And, okay, there was too much debt, there's too much speculation in the sector. And one of XI Jinping's cash cries in recent years was homes are for living, not for speculation. So that's how he justified crushing the speculative fever that gripped the market. And interestingly.

Well, it's by historical terms, it's slowed dramatically starting about three years ago. Well Covid really, but everybody assumed that after Covid, China would stage a massive bounce back, fueled by an inordinate amount of central government spending. But where where the country has departed from its historical norm is that instead of XI Jinping, the president, reverting to the norm and grabbing the accelerator lever and pulling hard, he said no, this is a good point to purge our economy of excesses. And as you've touched on, the biggest, most glaring and most dangerous of those excesses was the real estate market. And, okay, there was too much debt, there's too much speculation in the sector. And one of XI Jinping's cash cries in recent years was homes are for living, not for speculation. So that's how he justified crushing the speculative fever that gripped the market. And interestingly.

You point out and you've just sort of alluded to it a little bit there, that this economic downturn is actually by design, that actually Chinese President XI Jinping wants it this way. So how has he actually created this economic downturn?

You point out and you've just sort of alluded to it a little bit there, that this economic downturn is actually by design, that actually Chinese President XI Jinping wants it this way. So how has he actually created this economic downturn?

Yeah, it's an alien thought to us. You know, Western Democratic countries where leaders are horrified by the idea of a major economic slowdown and do everything possible to avoid it. They have independent central banks because it turned out politicians couldn't be trusted with the responsibility of slowing their economy sufficiently to defeat inflation. And inflation always kept winning. So from the 70s on, governments around the world started creating more independent central banks. But because the politicians themselves just are wedded to growth, because growth makes them more popular, gets them re-elected. XI Jinping doesn't share that either. That incentive having installed himself for rule or for life, not facing real elections, but also decided to confront the problems in the system. Just to point out the scale of the real estate sector in China, it's disproportionately big because it's had China has had this enormous wave of its population moving from the towns and the countryside and the rural villages into the big cities over the last 30 years. It it went from something like 20% now to 55% of the population now lives in the big cities. And they needed somewhere to live. And that gave rise to those vast forests of apartment buildings that you've seen. It was taking up about a third the real estate sector and everything connected to it, including its suppliers, a third of the total Chinese economy, which is an enormous chunk and much bigger than it is in any developed country. So and the debts and it was kind of a Ponzi scheme where the the developers were always short of cash and were depended on pre-selling buildings they hadn't yet built. So people were buying off the plan and they needed to collect that cash from buyers to finish the projects. But XI Jinping called a halt to all that. And what he did was in 2020, he created a policy called the three Red lines, and the three red lines applied a financial constraints on the big property to. In companies. And the simplest of them is that, for example, a developer could only borrow as much debt from its bankers as it had in equity, so you couldn't borrow more than you were worth. Those sort of rules. Now they worked. They tanked the real estate sector. In fact, they worked maybe two effectively. And last year the Chinese government started to ease off on those restrictions.

Yeah, it's an alien thought to us. You know, Western Democratic countries where leaders are horrified by the idea of a major economic slowdown and do everything possible to avoid it. They have independent central banks because it turned out politicians couldn't be trusted with the responsibility of slowing their economy sufficiently to defeat inflation. And inflation always kept winning. So from the 70s on, governments around the world started creating more independent central banks. But because the politicians themselves just are wedded to growth, because growth makes them more popular, gets them re-elected. XI Jinping doesn't share that either. That incentive having installed himself for rule or for life, not facing real elections, but also decided to confront the problems in the system. Just to point out the scale of the real estate sector in China, it's disproportionately big because it's had China has had this enormous wave of its population moving from the towns and the countryside and the rural villages into the big cities over the last 30 years. It it went from something like 20% now to 55% of the population now lives in the big cities. And they needed somewhere to live. And that gave rise to those vast forests of apartment buildings that you've seen. It was taking up about a third the real estate sector and everything connected to it, including its suppliers, a third of the total Chinese economy, which is an enormous chunk and much bigger than it is in any developed country. So and the debts and it was kind of a Ponzi scheme where the the developers were always short of cash and were depended on pre-selling buildings they hadn't yet built. So people were buying off the plan and they needed to collect that cash from buyers to finish the projects. But XI Jinping called a halt to all that. And what he did was in 2020, he created a policy called the three Red lines, and the three red lines applied a financial constraints on the big property to. In companies. And the simplest of them is that, for example, a developer could only borrow as much debt from its bankers as it had in equity, so you couldn't borrow more than you were worth. Those sort of rules. Now they worked. They tanked the real estate sector. In fact, they worked maybe two effectively. And last year the Chinese government started to ease off on those restrictions.

The Chinese economy seems to be stumbling, prices have fallen, exports and imports have plummeted, unemployment has risen and the real estate crisis has deepened.

The Chinese economy seems to be stumbling, prices have fallen, exports and imports have plummeted, unemployment has risen and the real estate crisis has deepened.

It has ordered the liquidation of China Evergrande for a company that was once the pride of the Chinese real estate sector. It's been a dramatic downfall. So I am joined.

It has ordered the liquidation of China Evergrande for a company that was once the pride of the Chinese real estate sector. It's been a dramatic downfall. So I am joined.

And the residents here are very worried about all this negative news potentially impacting the prices of their properties. Even in the big city.

And the residents here are very worried about all this negative news potentially impacting the prices of their properties. Even in the big city.

This has been a huge blow to the Chinese population, because the middle class in China invested all its future hopes in real estate prices going up, which they've done relentlessly for 40 years, and suddenly they've stopped the pathway to wealth. The aspirational pathway has been closed. It's caused a lot of pain and a lot of bitterness in Chinese society.

This has been a huge blow to the Chinese population, because the middle class in China invested all its future hopes in real estate prices going up, which they've done relentlessly for 40 years, and suddenly they've stopped the pathway to wealth. The aspirational pathway has been closed. It's caused a lot of pain and a lot of bitterness in Chinese society.

And XI Jinping hasn't just cracked down on the real estate market, has he? He's also introduced other policy changes and restrictive measures that have just really tanked the economy. Is that right? Yeah.

And XI Jinping hasn't just cracked down on the real estate market, has he? He's also introduced other policy changes and restrictive measures that have just really tanked the economy. Is that right? Yeah.

So the bigger picture here, Samantha, is, as his years in power have advanced, he's becoming more and more controlling in every area of government policy, including the economy. So he has curbed the real estate sector and the growth and the speculation. He has also curbed the private sector. He made an example of Jack Ma, the biggest entrepreneur in the country, multi-billionaire, one of the richest people in the world, uh, was crushed, taken in for questioning, left the country for many months, uh, scaled back all his financial plans, had to cancel the float of what would have been the world's biggest sharemarket float. An insurance company that he was floating. XI Jinping has crushed a series of the biggest and most successful entrepreneurs in the country. Some of them have ended up in jail, purportedly for corruption. Corruption is enforced selectively. It's usually the pretext for other motives. In this case, it was to send a message. I am in charge. The state is in control. And the party, the Communist Party, is in control of the state. The private sector knuckle down and do what you're told. You're getting too cheeky, you're getting too ambitious and you're getting too much freedom moving too much capital around. You've got these global empires. They were forced to start selling their international holdings, a repatriated capital. We saw that out of Australia. Lots of big office blocks and multibillion dollar developments were sold in the last few years by Chinese developers. So he curbed the real estate sector at home. He's curbed the big entrepreneurs and the tech sector in China to bring everything under his control. Um, and he's, uh, also, uh, tightened up on foreign investors and foreign companies and what they're allowed to do. And there have been more tax inspections going on, more, uh, other regulatory inspections, you know, fire inspections and auditing going on and arrests, fairly arbitrary arrests of foreign executives. Foreign businesses have got the hints many have left. Others have scaled back their plans, um, for investment in China. So this is the bigger picture. And why is he doing all this stuff? Partly it's because of the impulse for control that that he has that is inherent in all autocrats. But he is particularly prone to that, but also because he is anticipating a war or major security crisis in the near future. He talks about this pretty openly. But, you know, when he visits military bases, his routine, one of his routine lines is to the troops prepare to fight and win wars. He he tells them to put all your efforts into preparation for war. So don't worry about all the business enterprises you guys have been enjoying and running for the little corruption scams you've had going, this is about war. This has got serious. He talks in public speeches. He talks about extreme circumstances that are heading China's way. He talks in um, uh, prophetic terms about a clash with the global hegemon, meaning of course, the US, um, he has talked about extreme storms that China is going to have to confront. The thinking is that if we have economic problems, if there are vulnerabilities in the system, I want to I want to address them now in a controlled way so that when we have the crisis, we have the war, then we won't have uncontrolled crises that distract, create problems and open vulnerabilities. So that's all happened. But it's what XI Jinping wanted. Western investors look at that and go, oh, it's terrible. You know, they can't put up with that. That means there's going to be massive investment and new stimulus coming, and they're going to bounce back to their old 9% growth rates instead of the current projection of five. And even five is ambitious on the current policy settings. But no, there has been no massive stimulus. There's no plan for massive stimulus because XI Jinping wants it tidy, he wants it controlled, and he wants it batten down for a crisis that he is expecting and who knows, may even help precipitate.

So the bigger picture here, Samantha, is, as his years in power have advanced, he's becoming more and more controlling in every area of government policy, including the economy. So he has curbed the real estate sector and the growth and the speculation. He has also curbed the private sector. He made an example of Jack Ma, the biggest entrepreneur in the country, multi-billionaire, one of the richest people in the world, uh, was crushed, taken in for questioning, left the country for many months, uh, scaled back all his financial plans, had to cancel the float of what would have been the world's biggest sharemarket float. An insurance company that he was floating. XI Jinping has crushed a series of the biggest and most successful entrepreneurs in the country. Some of them have ended up in jail, purportedly for corruption. Corruption is enforced selectively. It's usually the pretext for other motives. In this case, it was to send a message. I am in charge. The state is in control. And the party, the Communist Party, is in control of the state. The private sector knuckle down and do what you're told. You're getting too cheeky, you're getting too ambitious and you're getting too much freedom moving too much capital around. You've got these global empires. They were forced to start selling their international holdings, a repatriated capital. We saw that out of Australia. Lots of big office blocks and multibillion dollar developments were sold in the last few years by Chinese developers. So he curbed the real estate sector at home. He's curbed the big entrepreneurs and the tech sector in China to bring everything under his control. Um, and he's, uh, also, uh, tightened up on foreign investors and foreign companies and what they're allowed to do. And there have been more tax inspections going on, more, uh, other regulatory inspections, you know, fire inspections and auditing going on and arrests, fairly arbitrary arrests of foreign executives. Foreign businesses have got the hints many have left. Others have scaled back their plans, um, for investment in China. So this is the bigger picture. And why is he doing all this stuff? Partly it's because of the impulse for control that that he has that is inherent in all autocrats. But he is particularly prone to that, but also because he is anticipating a war or major security crisis in the near future. He talks about this pretty openly. But, you know, when he visits military bases, his routine, one of his routine lines is to the troops prepare to fight and win wars. He he tells them to put all your efforts into preparation for war. So don't worry about all the business enterprises you guys have been enjoying and running for the little corruption scams you've had going, this is about war. This has got serious. He talks in public speeches. He talks about extreme circumstances that are heading China's way. He talks in um, uh, prophetic terms about a clash with the global hegemon, meaning of course, the US, um, he has talked about extreme storms that China is going to have to confront. The thinking is that if we have economic problems, if there are vulnerabilities in the system, I want to I want to address them now in a controlled way so that when we have the crisis, we have the war, then we won't have uncontrolled crises that distract, create problems and open vulnerabilities. So that's all happened. But it's what XI Jinping wanted. Western investors look at that and go, oh, it's terrible. You know, they can't put up with that. That means there's going to be massive investment and new stimulus coming, and they're going to bounce back to their old 9% growth rates instead of the current projection of five. And even five is ambitious on the current policy settings. But no, there has been no massive stimulus. There's no plan for massive stimulus because XI Jinping wants it tidy, he wants it controlled, and he wants it batten down for a crisis that he is expecting and who knows, may even help precipitate.

We'll be right back.

We'll be right back.

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So really you're talking about a seismic shift in economic policy there in China, that XI Jinping is consciously sacrificing economic growth in favor of national security priorities. So what sort of changes is he making in that regard? What sort of growth industries, I guess, is he focusing on? And instead of helping the real estate market and so forth?

So really you're talking about a seismic shift in economic policy there in China, that XI Jinping is consciously sacrificing economic growth in favor of national security priorities. So what sort of changes is he making in that regard? What sort of growth industries, I guess, is he focusing on? And instead of helping the real estate market and so forth?

Yeah. Okay. Great question. So two things. One very striking emblem of this switch of focus from a reform and opening to control, especially with a security minded mentality. One is that the central bank, the people's Bank of China, which was pro-reform and pro-market for decades, has been degraded. It had a new commission put over the top of it, Communist Party commission put over the top of it. So it's been crushed in the power hierarchy. The Ministry of State Security has been elevated, and it has its own Twitter account and various other Weibo accounts. Starting last year, it's given and been given a new voice and authority in the system. So that's a good, uh, you know, institutional, um, rearrangement that helps us envisage in a material way, how XI Jinping's priorities have changed your question of, okay, well, what are the alternative industries? The government published a new list at the NPC National People's Congress. And what they've done is XI Jinping has adopted a new catch cry called, with emphasis on what he calls, quote, new productive forces, which obviously is a contrast to real estate, which is not considered productive, especially residential. And he's nominated a series of new priority industries, and all of them have a specific role in, uh, boosting China's capability for the war to come. And they range from some fairly straightforward things that you'd expect about, um, lithium batteries, aerospace, especially what he calls the low altitude economy. That means flying manned and unmanned aeroplanes and craft below 1000m. It's like the Jetsons. Everybody's going to be going around in in high speed, low altitude aerial vehicles, new materials, quantum computing. And there's a there's a list. But the point is that they're all, quote, new productive forces, unquote, according to XI Jinping, but directed at strengthening China's military industrial capability for the war that he sees coming.

Yeah. Okay. Great question. So two things. One very striking emblem of this switch of focus from a reform and opening to control, especially with a security minded mentality. One is that the central bank, the people's Bank of China, which was pro-reform and pro-market for decades, has been degraded. It had a new commission put over the top of it, Communist Party commission put over the top of it. So it's been crushed in the power hierarchy. The Ministry of State Security has been elevated, and it has its own Twitter account and various other Weibo accounts. Starting last year, it's given and been given a new voice and authority in the system. So that's a good, uh, you know, institutional, um, rearrangement that helps us envisage in a material way, how XI Jinping's priorities have changed your question of, okay, well, what are the alternative industries? The government published a new list at the NPC National People's Congress. And what they've done is XI Jinping has adopted a new catch cry called, with emphasis on what he calls, quote, new productive forces, which obviously is a contrast to real estate, which is not considered productive, especially residential. And he's nominated a series of new priority industries, and all of them have a specific role in, uh, boosting China's capability for the war to come. And they range from some fairly straightforward things that you'd expect about, um, lithium batteries, aerospace, especially what he calls the low altitude economy. That means flying manned and unmanned aeroplanes and craft below 1000m. It's like the Jetsons. Everybody's going to be going around in in high speed, low altitude aerial vehicles, new materials, quantum computing. And there's a there's a list. But the point is that they're all, quote, new productive forces, unquote, according to XI Jinping, but directed at strengthening China's military industrial capability for the war that he sees coming.

And it's interesting, though, because at the same time, you pointed out in your latest column that China's Foreign Affairs Minister, Wang Yi, he spoke in Sydney last week and he was saying, everything's fine, everything's as usual. China's economy is growing as per usual. So I'm just wondering what you made of that statement. I mean, do you see that as an attempt to smokescreen over what you're saying? Is XI Jinping's real intention with, you know, what he's done to the economy here?

And it's interesting, though, because at the same time, you pointed out in your latest column that China's Foreign Affairs Minister, Wang Yi, he spoke in Sydney last week and he was saying, everything's fine, everything's as usual. China's economy is growing as per usual. So I'm just wondering what you made of that statement. I mean, do you see that as an attempt to smokescreen over what you're saying? Is XI Jinping's real intention with, you know, what he's done to the economy here?

It's really interesting, Samantha, one of the things that the Chinese Communist Party has done best in recent decades is to create a sense of inevitability. As XI Jinping says, one of his favorite phrases the East is rising, the West is declining to give it a historical parent inevitability. And everything is about, you know, China's ten feet tall, unstoppable, untouchable. And everybody has to just step back and let us do as we please. That's the subscript. And it's been successful. So to have your average rate of economic growth halved and your overseas investment and all that stuff suddenly dwindle, punches a big hole in that story. To have your economy stall is a big problem for that story, which is one of the reasons that they've made it illegal in China to talk talk down the economy. It's one of the reasons Wang Yi, as you said last week in Sydney, started simply tried to project an area of business as usual and said, we're still on this enormous urbanization drive. We've got 55% of the population now in the big cities, but we've got another 20% to go. In other words, it's all just going to keep running on as it has been. And that's again to create the sense of an unstoppable Chinese rise. So this is the image they continue to want to project to the world. Of course. Uh, it doesn't simply doesn't accord with the fact, by the way, XI Jinping has this, um, ascetic Marxist view that excess personal consumption is corrupting and bourgeois and illegitimate, and he doesn't promise most, most politicians in democratic countries promise their people prosperity, growth, endless prospect of, you know, work hard and you'll get rich, right? XI Jinping doesn't. He has a completely different mentality. He's back to Mao Zedong. He's not Deng Xiaoping. Deng Xiaoping used to say, to get rich is glorious to shocking concept. For a country that had just come through Mao's Communist era. Right now, you have XI Jinping, and one of his lines is to promise the people of China happiness. Us through struggle. Imagine Anthony Albanese grabs the microphone tomorrow and says, People of Australia, I promise you only happiness through struggle. You know the good times are over. It's going to be hard hardship from now on. No Democratic politician would even dream of that. But that's what XI Jinping is saying. He's not interested in speculative or even price gains in the real estate market. XI Jinping is saying, no, I'm promising you not more domestic consumption, not more luxury, not more money. I'm promising you happiness through struggle.

It's really interesting, Samantha, one of the things that the Chinese Communist Party has done best in recent decades is to create a sense of inevitability. As XI Jinping says, one of his favorite phrases the East is rising, the West is declining to give it a historical parent inevitability. And everything is about, you know, China's ten feet tall, unstoppable, untouchable. And everybody has to just step back and let us do as we please. That's the subscript. And it's been successful. So to have your average rate of economic growth halved and your overseas investment and all that stuff suddenly dwindle, punches a big hole in that story. To have your economy stall is a big problem for that story, which is one of the reasons that they've made it illegal in China to talk talk down the economy. It's one of the reasons Wang Yi, as you said last week in Sydney, started simply tried to project an area of business as usual and said, we're still on this enormous urbanization drive. We've got 55% of the population now in the big cities, but we've got another 20% to go. In other words, it's all just going to keep running on as it has been. And that's again to create the sense of an unstoppable Chinese rise. So this is the image they continue to want to project to the world. Of course. Uh, it doesn't simply doesn't accord with the fact, by the way, XI Jinping has this, um, ascetic Marxist view that excess personal consumption is corrupting and bourgeois and illegitimate, and he doesn't promise most, most politicians in democratic countries promise their people prosperity, growth, endless prospect of, you know, work hard and you'll get rich, right? XI Jinping doesn't. He has a completely different mentality. He's back to Mao Zedong. He's not Deng Xiaoping. Deng Xiaoping used to say, to get rich is glorious to shocking concept. For a country that had just come through Mao's Communist era. Right now, you have XI Jinping, and one of his lines is to promise the people of China happiness. Us through struggle. Imagine Anthony Albanese grabs the microphone tomorrow and says, People of Australia, I promise you only happiness through struggle. You know the good times are over. It's going to be hard hardship from now on. No Democratic politician would even dream of that. But that's what XI Jinping is saying. He's not interested in speculative or even price gains in the real estate market. XI Jinping is saying, no, I'm promising you not more domestic consumption, not more luxury, not more money. I'm promising you happiness through struggle.

I mean, really, what you're talking about is a massive radical shift, you know, crack down on capitalistic wealth, a real return to the communist days of Chairman Mao, like you've mentioned. So how do you think global leaders might respond to this massive change?

I mean, really, what you're talking about is a massive radical shift, you know, crack down on capitalistic wealth, a real return to the communist days of Chairman Mao, like you've mentioned. So how do you think global leaders might respond to this massive change?

Yeah, very good question. And yeah, you're right. One of XI Jinping's phrases is and he's only began using this a couple of years ago, is the pursuit of what he calls common prosperity. Common not so not private ownership or private luxury, common prosperity. And he's used that as the rubric to crush these billionaires and and everything else that we've been discussing. But in the rest of the world, most countries have acted as if nothing has changed in China. They have been very slow to adjust to the new reality. Business people, investors and companies that have made their fortunes selling to China. Now, this is not universally true, of course, because many have some expertise and some have deep, larger ones. You see, many Australian exporters, for example, have no comprehension of of China. They've been duchesse around the place, have had tours and official banquets and lots of glad handing and reassurances from their Chinese business partners without ever understanding what's going on around them, without knowing deeply what's going on in the system, the political system, especially, uh, they don't understand the language. They don't know any of the culture. They certainly don't understand Marxist Leninism. And the Chinese have persuaded everybody that they're not really Marxist-Leninist. They're Westerners like us. We're business suits, and we're all about growth and capitalism. Uh, but this is poorly equipped, uh, businesses and many investors for the new reality. Our political class has been no different around the world, and leaders have broadly continued to expect that China will return to the path that was on the growth path, investing their futures in China's growth. But that future has turned out to be a mirage.

Yeah, very good question. And yeah, you're right. One of XI Jinping's phrases is and he's only began using this a couple of years ago, is the pursuit of what he calls common prosperity. Common not so not private ownership or private luxury, common prosperity. And he's used that as the rubric to crush these billionaires and and everything else that we've been discussing. But in the rest of the world, most countries have acted as if nothing has changed in China. They have been very slow to adjust to the new reality. Business people, investors and companies that have made their fortunes selling to China. Now, this is not universally true, of course, because many have some expertise and some have deep, larger ones. You see, many Australian exporters, for example, have no comprehension of of China. They've been duchesse around the place, have had tours and official banquets and lots of glad handing and reassurances from their Chinese business partners without ever understanding what's going on around them, without knowing deeply what's going on in the system, the political system, especially, uh, they don't understand the language. They don't know any of the culture. They certainly don't understand Marxist Leninism. And the Chinese have persuaded everybody that they're not really Marxist-Leninist. They're Westerners like us. We're business suits, and we're all about growth and capitalism. Uh, but this is poorly equipped, uh, businesses and many investors for the new reality. Our political class has been no different around the world, and leaders have broadly continued to expect that China will return to the path that was on the growth path, investing their futures in China's growth. But that future has turned out to be a mirage.

I thank you so much, Peter, for your time.

I thank you so much, Peter, for your time.

Pleasure.

Pleasure.

Today's episode of The Morning Edition was produced by Julian Castle, with technical assistance by Debby Harrington. Our executive producer is Ruby Schwartz. The Morning Edition is a production of The Age and The Sydney Morning Herald. If you enjoy the show and want more of our journalism, subscribe to our newspapers today. It's the best way to support what we do. Search the age or SM commu forward slash. Subscribe and sign up for our Morning Edition newsletter to receive a comprehensive summary of the day's most important news, analysis and insights in your inbox every day. Links are in the show. Notes. I'm Samantha Salinger Morris. This is the morning edition. Thanks for listening.

Today's episode of The Morning Edition was produced by Julian Castle, with technical assistance by Debby Harrington. Our executive producer is Ruby Schwartz. The Morning Edition is a production of The Age and The Sydney Morning Herald. If you enjoy the show and want more of our journalism, subscribe to our newspapers today. It's the best way to support what we do. Search the age or SM commu forward slash. Subscribe and sign up for our Morning Edition newsletter to receive a comprehensive summary of the day's most important news, analysis and insights in your inbox every day. Links are in the show. Notes. I'm Samantha Salinger Morris. This is the morning edition. Thanks for listening.