As the People's Republic of China turns 75, its legacy of economic success faces challenges

In the 1990s, at the southern Chinese port of Xiamen, containers loaded on ships were declared to customs as containing valuable export goods.

At a time when China was working to expand global trade with the aim of joining the World Trade Organization (WTO), Beijing granted substantial tax cuts to logistics companies, transforming many 'among them as millionaires.

But there was a secret: many shipping containers were empty.

This fraud in China's maritime industry has seen exporters collude with customs authorities, exploit state subsidies and pocket large sums of money while creating an exaggerated narrative about the country's export boom.

This only came to light in the early 2000s, with the revelation of a notorious smuggling case involving businessman Lai Changxing, whose extravagant lifestyle and corruption shocked the Chinese public.

Today, China produces 98% of the world's shipping containers, which have become a symbol of the rise and fall of the economic superpower.

After selling “made in China” products around the world for nearly four decades, China's bubble was burst by the trade war with the United States and Xi's crackdown on key sectors such as real estate and technology.

The containers that boosted China's economy and global influence are once again empty, piled up in Chinese ports.

On On the 75th anniversary of the People's Republic of China, the Chinese Communist Party (CCP) faces its most significant political and economic turmoil since the Tiananmen Square protests of 1989.

As one of the longest-running authoritarian regimes in modern history, the CCP is grappling with challenges that reveal deep vulnerabilities and threaten the overall vision of party leader Xi Jinping, known as ” Chinese dream.

Economic decline threatens legitimacy

In 1978, China's first container ship sailed to Sydney and Melbourne, symbolizing the country's entry into global trade days before economic reforms introduced by then-paramount leader Deng Xiaoping.

Deng's first task was to address class divisions in the aftermath of the Cultural Revolution.

This approach was at the heart of the United Front's strategy to bring together diverse social classes to drive national development.

It also strengthened the party's control over patriotic education, propaganda media and the economy.

Since then, growth has been at the center of the party's propaganda.

The CCP is now working to get economic growth back on track, but the impact of Chinese stimulus measures has been marginal at best.

As the National Day approaches, the People's Bank of China released about $200 billion (nearly 1 trillion yuan) for loans, cutting interest rates from 1.7 percent to 1. 5 percent and reducing mortgage rates and down payment requirements.

Despite these measures, market sentiment and consumer confidence remain weak.

In major cities like Shenzhen, 30 percent of office buildings remain unoccupied, according to Chinese state media.

More than half of provincial governments failed to meet their tax revenue growth targets in the first seven months of the year, sending worrying signals about the financial health of local governments.

To make up for its significant pension deficit, Beijing has raised the famous retirement age, bringing it to 63 for men and 55 or 58 for women, depending on their profession.

The CCP's economic strategy now faces a decline in real estate demand, partly due to the impact of decades of one-child policy.

Middle-class parents who invested all their savings in real estate when the market boomed for three decades are finding them worth far less after Xi's crackdown on developers.

The younger generation is often made up entirely of children with little interest in getting married or becoming parents themselves, likely to each inherit at least one apartment, and show no signs of wanting to take over every vacant house .

Improving living standards has always been a key element of the party's claim to legitimacy.

But as the economy slows, the CCP must justify why it alone constitutes the legitimate ruling power for the country's 1.4 billion people.

Party building faces challenges

The CCP's assertion that “only the Communist Party can save China” is also increasingly contested.

In Lai's case, port customs officials were bribed with part of the tax cuts. The military, particularly the Chinese navy, also helped facilitate its operations.

Key political figures such as Xi and Jia Qinglin held important positions in Fujian province, where the city of Xiamen is located, when Lai's crime took place.

Both came from prestigious party families, neither of whom resigned to take responsibility.

The empty containers from the 1990s are just one example of the delicate relationship between senior party leaders and local officials.

In a one-man system, local officials often inflate statistics to meet their KPIs, while reaping lucrative rewards for their inaction.

Corruption has become a widespread problem in almost all sectors, with the party boasting nearly 100 million members.

Of course, corruption does not only occur in China, nor is it a problem unique to the Chinese shipping sector.

However, unchecked power could be more abusive than a democratic government, given its authoritarian nature.

Since the Tiananmen Square protests, this issue remains a fundamental concern for Chinese citizens.

Xi's anti-corruption campaign, launched early in his term, was initially well received by the public as an attempt to curb systemic corruption and restore trust in government.

However, with Xi's unprecedented crackdown on free speech and removal of checks and balances within the party, the rule of law and some basic human rights remain unaddressed.

The desire of the younger generation to join the party is diminishing, with the number of new members falling for the second year in July.

The repression against wealthy elites, perceived by public opinion as an attempt to save the economy, is also spreading.

However, the fact that high-profile officials are returning millions of dollars in bribes and facing expulsion appears to only further erode public trust in leaders.

Youth unemployment is high, private businesses are languishing under government control, and the party's long-standing economic success is being tested by an aging and declining population.

Xi now faces growing challenges that go beyond economic policy. It must tackle the growing social divide between the political elite and the people, fight corruption more effectively and ensure that the party's hold on power is maintained without jeopardizing the long-term future of the nation.

Whether this chapter in China's history is remembered as a dream or a nightmare will depend on how effectively Xi navigates these turbulent waters.