Senior officials at the opening session of the 19th National Congress of the Communist Party in Beijing last year. Photo: Reuters / Damir Sagolj
Senior officials at the opening session of the 19th National Congress of the Communist Party in Beijing last year. Photo: Reuters / Damir Sagolj

Tucked away near the northern gate of the Great Hall of the People on the edge of Tiananmen Square in Beijing is the “ministers’ passage.” All the key political players travel along this walkway before arriving at the Communist Party of China’s imposing legislative chamber.

Known as the “ministers’ red carpet”, this is where selected members of the media corp will be able to grab snatched interviews with high-ranking officials and deputies attending the National People’s Congress on March 5.

They will also be there for the National Committee of the Chinese People’s Political Consultative Conference two days earlier, which is all part of this annual political talkfest.

At times it will be long on rhetoric and party dogma while short on detail.

Still, the outside world will be watching to glean insight into an array of crucial issues, such as further opening up the world’s second-largest economy, the pace of reforms and the solutions envisaged to curb rising debt problems.

Restructuring lumbering state-owned enterprises will also be high on the agenda, while a personnel reshuffle at the very top of President Xi Jinping’s administration is widely expected.

Major new roles are seen for close aides Liu He, the head of the Central Leading Group for Financial and Economic Affairs, and the former anti-corruption tzar Wang Qishan.

Naturally, plans to accelerate economic reforms will be carefully scrutinized. They were rolled out during last year’s 19th National Congress of the Communist Party of China, which was held in this same hallowed hall.

“China’s reform process has been very sluggish,” Liu Li-gang, the chief China economist for Citigroup, has been quoted as saying. “We need to watch whether reforms can accelerate. If we continue to be disappointed, then sentiment on China will turn for the worse.”

Encompassing the entire economy, these “reforms” include a continued push to streamline bloated state-owned enterprises and turning off the subsidies drip on “zombie companies.”

Increasing overseas access to the banking and financial sectors, as well as the manufacturing and services industries, has also been outlined by Beijing. Strengthening intellectual property rights and “balancing trade” are other priorities.

Yet analysts point out that these promises have been made before and that the government must relax its grip and cede control over the economy, allowing markets to determine prices while encouraging competition in the financial arena.

“It’s a key message that China continues to open up and make its financial markets more international and market-oriented,” Shen Jianguang, the chief Asia economist at Mizuho Securities Asia in Hong Kong, told the media. “How important a role foreign financial firms can play remains to be seen.”

Just as relevant will be getting to grips with China’s shadow banking sector, which is worth 70 trillion yuan ($11 trillion), according to Xu Bin, a professor of economics and finance, as well as associate dean of research, at the China Europe International Business School.

The International Monetary Fund has also warned about the deteriorating situation.

“There is a very high potential for a debt crisis because China’s shadow banking sector is so large, while there is clearly a real estate bubble,” Xu told Caixin, a media website. “But they [can be] contained because of the strong economy and powerful government.”

To tackle the problem, President Xi’s confidante Liu is expected to be handed a new portfolio. This could involve him taking over as governor of the People’s Bank of China, or central bank, as well as being elevated to vice-premier in charge of financial affairs.

“Should Liu He become the PBOC chief, China may move towards a super-regulator model, which will give the central bank more power to combat financial risk,” Tommy Xie, the head of Greater China research at OCBC Bank in Singapore, said in a note to Reuters News Agency.

Wang is also likely to be brought back after running the flagship anti-corruption campaign. The position of vice-president has been mentioned.

“It is clear that [President] Xi has been able to keep his right-hand man [Wang] at his side all along,” the Nikkei financial newspaper reported, referring to his projected role inside the corridors of power.

Against this backdrop, President Xi looks almost certain to stay on after his 10-year term expires in 2023 following a communique from the Communist Party of China at the end of last week.

With such a heady mix in the air, you can be sure that every “red carpet” platitude will be picked over syllable by syllable in the next few days.

Read: The dark side of the Great Hall in Two Sessions

Read: President Xi turns to old friends to manage economy