Even Xi Jinping admits China has a painful road ahead despite the stimulus

• Amid hopes that China’s economy will bounce back, even Xi Jinping is sounding cautious.
• In his first major speech since the stimulus, Xi warned of “storms” ahead and the need to prepare for “rainy days”.
• While describing China as determined, Xi also tempered the idea that the country is on a sure path to victory.

China’s surprise stimulus sparked a massive rally in its shares last week, but not even its leader, Xi Jinping, is celebrating just yet.

In his first remarks on the state of the nation since the stimulus announcement, Xi warned of “violent storms” ahead and urged China to prepare for hardship, portraying it as determined to succeed.

“The way forward will not be smooth,” he said in a speech in Beijing on Monday. “There will certainly be difficulties and obstacles, and we may encounter major challenges such as strong winds, large waves or even violent storms.”

Xi was speaking on the 75th anniversary of the People’s Republic of China, using the occasion to push his usual messages such as modernizing the country and absorbing Taiwan under Beijing.

However, he did not mention the wide range of stimulus efforts his government unveiled on Tuesday. These included issuing $284 billion in sovereign bonds and cutting mortgage and short-term interest rates.

They have given way to increased optimism for China’s deep economy, although skeptics say the policy changes are unlikely to come close to solving the myriad problems behind the recession.

Xi’s words at the Great Hall of the People reflected that caution, although his administration on Monday took pains to portray China with pomp and pride. A large orchestral chorus sang the nation’s praises as clips of its industries and landscapes appeared on a towering screen before rows of officials.

The Chinese leader spoke of a “new era” for China with a “bright and shining prospect”, but at the end of his speech he quoted a traditional poem to say the nation was only halfway to its goals.

“We must prepare for danger, prepare for rainy days,” Xi said.

Beijing’s stimulus package came as its government urgently seeks to revive the sluggish sentiment in China’s economy.

The country has struggled with three years of strict lockdowns during the COVID-19 pandemic, which has sunk businesses and forced consumers to tighten their belts. And this has come on top of major headwinds in China’s already battered housing market.

Barclays analysts estimated earlier this month that households there lost a combined $18 trillion in wealth, averaging about $60,000 per household of three. That’s nearly four times the average annual salary of a typical city employee.