Economy, economy, economy. China opens the political cycle this week – following the break of the lunar new year holidays – with the financial front of a recovery that has not yet come together as the main dish on the menu. But other underlying currents move under the table that will determine many of the great geopolitical disputes in this year of electoral transition in the world. During the annual plenary meeting of the National People’s Congress (the Chinese legislature, with little oversight power and subject to the control of the Communist Party), which begins this Tuesday, signs are expected from the Chinese leadership that will indicate where it seeks to shift the weight of the balance. in the tense struggle between national security and economic growth, possible more forceful responses to the inauguration in May of the new president of Taiwan, and signs regarding the direction of the Asian giant in a planet with several war fires.
On Tuesday, during the opening day of the Assembly, which brings together some 3,000 delegates, China is expected to announce the growth target for 2024, a good indicator of how Beijing sees the economic landscape. The Defense budget data will also be disseminated, among others, which has grown steadily in recent years (7.2% in 2023), as the country modernizes and strengthens its Armed Forces, one of the cornerstones cornerstones on which the “new era” that the president, Xi Jinping, envisions, gravitates, and a source of tensions with the first planetary superpower, the United States.
In parallel, starting this Monday, the meetings of the Consultative Conference will take place, a multitudinous and colorful advisory body, with the capacity to propose legislative initiatives, of which the actor Jackie Chan and the basketball player Yao Ming, among others, have been part. The Conference constitutes the other leg of what Beijing usually calls “the two sessions.”
The appointment has something of a period of reflection (regarding the past year) and a conclave of new resolutions (for the coming year). It is mainly of national content, but signals tend to emerge from it that must be taken into account in all areas. Premier Li Qiang, elected by nearly 3,000 delegates last year, will appear before the plenary for the first time to present his work report on Tuesday. Li, number two in the Communist Party and Xi’s faithful squire, still retains part of his aura as an open-minded friend of business: he was in charge of attending the Davos forum in January and spreading the friendly message that China welcomes “with its arms open” investments by foreign companies and seeks to foster a “market-oriented, law-based” business environment.
Reading his report will give clues regarding his room for maneuver in the economic task in the face of the growing control deployed by the State, often going over finances and arousing concern among Western businessmen. Beijing’s record in this field is confusing and contradictory. If in recent months the country has allowed visa-free entry for a handful of European countries (Spain among them) in order to revive exchanges, stagnant following the pandemic, and fan the flame of business, last week it approved the first reform of the State Secrets Law since 2010, whose articles expand the scope of what is considered “work secrets” and may further complicate companies’ access to relevant information for making investments. “China’s increasing attention to national security has created uncertainty for companies,” Jens Eskelund, president of the European Union Chamber of Commerce in Beijing, immediately reacted.
The measure follows a trend that has long worried a large part of the business community, especially the Western one. In 2023, authorities have acted once morest consulting companies with ties abroad through raids and arrests linked to counterespionage measures. The anti-espionage law has been reformed, and the Ministry of State Security, in charge of counterintelligence, has redoubled its presence through an active Weibo account (the Chinese X), in which it has published a list of reasons that can taking a citizen to be interrogated (“invited to tea,” they say) by his agents, to a comic in which he recounts a real espionage investigation (without specifying which one). The climate of pressure fits with President Xi’s words spoken just a year ago before the Assembly, when he was unanimously re-elected for a historic third term. He made the priorities clear: “Security is the foundation of development, while stability is a prerequisite for prosperity.”
Being Xi’s word, and so recent, few doubt that China will persist in this approach of greater state control. But in the opaque world of Chinese politics, every noun and every comma will be scrutinized in the coming days to try to glimpse, as an oracle, the designs of the second economic power on the planet. Trivium China analysts, even before the meeting, perceive a change of priorities in this fight between stability/security versus development/prosperity. They estimate that the Central Commission of Financial and Economic Affairs, the highest economic policy body of the Party, chaired by Xi, has shown, in a recent article, that “security at the expense of everything else, including economic growth, has gone too far,” according to a recent bulletin. The article from the aforementioned Commission said: “Only by expanding economic strength (…) will we be able to effectively resist all types of risks.”
The economic progress is, at the moment, one of the main sources of anxiety in Beijing. In year 1 of the post-covid era in China, this past 2023, the first following dropping the strict anti-pandemic measures that gripped the country, the Asian giant’s GDP has grown by 5.2%, slightly above the objective set by Beijing and well ahead of the EU (0.5%) and the United States (2.5%). But China has continued to show signs of slowdown: the real estate sector remains in more than low hours, consumer confidence is bordering on minimums, inflation has been negative for four months, private investments fall, the Chinese stock markets in Shanghai, Shenzhen and Hong Kong They carry million-dollar losses, youth unemployment reached its peak in 2023 (until Beijing suspended the publication of the data and reformulated the criteria). The cocktail even has the capacity to become a source of social instability.
A rare public opinion survey in Guangzhou, the southern manufacturing capital, collected by the think tank Merics, shows that there is growing discontent in the population regarding the progress of the economy, employment and salaries: it is at its lowest point since 2015. “The failure to apply the long-pending structural reforms to strengthening household well-being and income is beginning to show its effects,” reflects Nis Grünberg, principal analyst at Merics, in a recent article. “Xi will have to demonstrate that China’s approach securitization China’s state-driven economy benefits the population by introducing a more inclusive redistribution of wealth. Failure to do so will risk further eroding public sentiment.”
One of the issues to pay attention to is China’s repositioning vis-à-vis Taiwan, perhaps with a growing wave of military maneuvers around the island to apply pressure before Lai Ching-te, the president-elect, takes office. position in May. The Chinese Government showed a low-intensity reaction following the elections won by the least liked candidate in the Asian giant, although it stressed that his victory did not reflect the majority sentiment of the self-governed island that Beijing considers an inalienable part of its territory. “More assertive” language during the two sessions in the face of secessionist rhetoric “might indicate a justification for taking tougher actions,” said Helena Lagarda, also from Merics, during a talk online The last friday.
Analysts are also attentive to the possible appointment of Liu Jianchao, current director of the Department of the Central Committee of the Party, as Foreign Minister. His name has been circulating for weeks as a possible replacement. If approved, it would be a new episode of the political tragedy by fascicles that began with the disappearance in July of the previous holder of the portfolio, Qin Gang, barely half a year following taking office, and continued shortly following with the absence and dismissal of the Defense Minister Li Shangfu. Since then, neither of them have been seen, nor has an official explanation been offered regarding their departure. The veteran Wang Yi has assumed the role of Foreign Affairs since the summer, but various academics consider that his responsibility is possibly temporary.
On the radar, in the background, will be China’s vision of the international situation, with the war in Ukraine already in its third year and another raw war front in the Middle East. Barely a week following several Chinese companies have been subject to Western sanctions for their support of the Kremlin’s war machine – a move strongly denounced by Beijing – China has once once more sent Li Hui, its special envoy for Eurasian Affairs, tours the main European capitals, including the two belligerents, Moscow and Kiev, to explore solutions to what China still calls “crisis” or “conflict”, but not war. The lack of condemnation of the invasion, the calculated equidistance towards Russia, with which it shares many interests in the international order, and the sustained increase in trade relations between the two continue to be the main fault between Beijing and Western countries.
Although the feeling, in the Chinese capital, is that the Asian giant has started the year of the dragon by avoiding the geopolitical noise, while trying to recover the economic charm lost to a large part of the international community. The previous year, around this time, Washington and Beijing were fighting over the downing of an alleged Chinese spy balloon that was flying over American soil and relations between the two giants of the international arena were plummeting into the void. This 2024, the agreement signed in November between Xi and his American counterpart, Joe Biden, during their meeting in San Francisco, allows each president to take a breath, partially park the dispute and focus on domestic issues: Biden, in the November elections; Xi, in the economic stability that has not yet arrived.
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