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Where is China Headed?: An Interview with Eunice Yoon

*This interview was conducted on June 21, 2022.

Eunice Yoon is a correspondent and bureau chief with CNBC based in Beijing. She is most recently recognized for her coverage of the pandemic from the initial reported outbreak in China as well as her insights on the tense U.S.-China relationship. Prior to CNBC, she worked as an anchor and correspondent with CNN International among other networks. At CNN, she was among the first journalists to reach the Sichuan earthquake zone in 2008 and together with her team received the prestigious DuPont Award for coverage of the Asian tsunami in 2004. Yoon has a Bachelor of Arts with Honors in Political Science, Magna Cum Laude from Brown University.

Miles Munkacy: There’s a lot of talk about the upcoming National Congress this fall. Do you expect there to be any major changes to the Communist Party’s agenda, or any major political wrangling or surprises?

Eunice Yoon: Right now the baseline assumption is that President Xi is going to get an unprecedented third term. Up until now, we’ve generally seen a regular transition of power at the top and, for years, there’s been collective leadership. However, it now looks as if China is increasingly moving toward one-man rule. That has a lot of implications for China as well as the rest of the world.

You mentioned some possible political wrangling. Some factions of the party may try to change a thing or two; that’s always the case. However, all of that goes on behind closed doors and most people, except for probably a very small number of people, really don’t know what’s going on at the top. There has been some rumbling that President Xi may not get a third term or that he won’t be able to have all the deputies that he wants because of some of the criticism that his administration has now faced from the zero-Covid policy. You could argue that if China was a democratic society then he could potentially be in for a very rough election, but that obviously doesn’t happen here. So, while there may be rumors, most people still believe that there will be few surprises, if any, and that he is going to be getting his unprecedented third term.

MM: How has China’s zero-Covid policy changed its domestic political situation? Is it as dramatic as most Western news media have reported, or is the situation on the ground less severe?

EY: There’s definitely been pushback against zero-Covid. There are a lot of people who’ve been very disgruntled by the way it has been implemented. From the Chinese government’s perspective, zero-Covid has been wildly successful because it has generally achieved its goal of containing the pandemic. The country has not seen the hundreds of thousands of deaths that you’ve seen in the United States and other parts of the world. So, you have to give them credit; they are saving lives. The question now, though, is whether or not you can actually achieve those successes without what has been seen outside of China (but also within the public here) as excessive and sometimes abusive behavior on the part of different officials in order to achieve zero-Covid. There are a lot of arguments being made that it can be done in a way that would make it more tolerable for the population. For example, making sure that people locked down have enough food, or perhaps not splitting children who test positive from their parents.

MM: Another major political headache for China has been the problems with Evergrande, as well as the Chinese property sector in general. There’s been a lot of analysis on what the Chinese government and public think about that issue, but what about the private sector and the business community? How are they experiencing the property sector crisis?

EY: The property sector has been such a huge driver of the economy for so long and most companies just thought that would always be the case. China is a huge country with massive cities, so there are a lot of people who need housing. For the most part, property was seen as a good investment from both a company and individual perspective, especially considering that China’s stock market still isn’t very developed. However, the government recently saw that there was a lot of money in debt that was pumping up the prices, and so they decided that it was better to try to get rid of some of that debt because they were worried about what that could potentially mean for China down the road. However, I think some private companies saw the methods that they used to do that as quite harsh, especially some of the measures that led to Evergrande, and eventually other real estate companies, starting to become much more unstable. It has now led to a situation where regular people are wary to invest in homes because it’s no longer seen as a safe and stable investment, even if at some point in their lives they definitely want to own a home. So, right now I don’t think that many private real estate developers are too happy about the situation.

MM: There’s also been a lot of news about another major change to China’s economy: the implementation of the eCNY, the Chinese Central Bank Digital Currency. How important is the eCNY for consumers and businesses on the ground right now?

EY: I think it’s going to take some time before it’s used widely for everyday transactions. It’s still being used in different places as part of a pilot program, and the government is trying to encourage its use. They mainly want to have a digital currency because it’s seen as more efficient than paper money. There’s also the argument that it can be traced better. So, while the government has a big vision for its future, the eCNY isn’t currently used for day-to-day transactions on a large scale. At this point, more people are using private digital payment methods like Alipay and WeChat Pay.

MM: There’s been a lot of hope in the West in recent decades that China will become a more open economy. However, it seems as if China has moved further away from that goal in the last few years. As someone who reports on the Chinese economy every day, what do you think about its trajectory toward or away from market economy status?

EY: Well, China is becoming, or at least wants to become, a more self­-sufficient economy. At the same time, you’re seeing a lot of talk within the United States about making sure supply chains are secure, which is a polite way of saying that Biden doesn’t want the United States to rely as much on China. Because of those two forces at play, it makes it much more difficult for businesses, especially American businesses, to decide whether they’re going to invest more in China even if it maintains that it will remain welcoming to foreign investment.

Covid-19 restrictions are also a huge concern for businesses. There are a lot of companies who are now trying to figure out if they want to have their production based in China because they’re worried about their factories suddenly being shut down for a month.

However, I think something that doesn’t get as much attention as bilateral trade and investment relationships is the fact that so many American companies and companies from around the world are looking at China as a place to invest in to sell their products locally. Companies such as GM or Starbucks are looking to expand within China. That adds to this very complex moment in the very important US-China relationship. While both countries definitely want to be more self-sufficient, that’s a much harder thing to do in practice given that there are just so many economic links between the two that have been cultivated for decades.

*This interview has been edited for length and clarity.