One country, two sessions, multiple tweaks

Contrary to Western doom and gloom interpretations, China’s two sessions now taking place in Beijing offer a fascinating mix of realpolitik and soft power. Every year, the two sessions involve the National People’s Congress (NPC) – the legislative body – and the Chinese People’s Political Consultative Conference (CPPCC) – the political advisory body – laying down the Chinese equivalent of the state of the union.   

Premier Li Keqiang’s report acknowledged that Beijing foresees “graver and more complex” risks and “both predictable and unpredictable” challenges, with the conclusion that  China must be “prepared to fight tough battles” in 2019. It was undiluted realpolitik.

An economic growth target in the range of 6.0% to 6.5% is still massive in terms of the expansion of global capitalism – irrespective of the usual suspects carping on about China “stalling” or mired “in deep crisis.”

A deficit-to-GDP ratio set at 2.8% – slightly higher than the 2.6% last year – is not exactly a problem for such a huge economy.

What’s quite intriguing is how “Made in China 2025” – the full designation – simply vanished from the 2019 Government Work Report.

Yet the policy remains – transmuted in the report on the expansion of “smart plus.” By extending tax cuts for manufacturers and small-business taxpayers, Beijing will keep driving no holds barred toward what Li defined as “building up a powerful manufacturing country” – from industrial development to tech innovation.

Prosperity, Sun Tzu-style

The Sun Tzu tweak is that Beijing will tone down promoting the Made in China 2025 drive in public. Yes, the Chinese are learning soft-power techniques – fast.

Beijing’s top targets remain, well, on target; to lift 30 million rural residents from poverty and to double per capita income by next year from a decade earlier, thus arriving at the cherished status of “moderately prosperous society.” By any measure, this is a groundbreaking achievement of historic proportions. 

It’s virtually impossible for the West to understand the intricacies of how decisions are made in China. First you consult – broadly, vertically and horizontally. Then you reach a – strategic – consensus. The results are firmly set in annual meetings such as the two sessions and in detailed five-year plans.

The New Silk Roads, or Belt and Road Initiative (BRI), are broadly planned all the way to 2049. We are still in the planning stage – implementation, officially, has not even started.

In parallel, geopolitical and geo-economic twists and turns are addressed by constant tweaks and tactical adjustments. That’s the “prepared to fight tough battles” emphasis on Li’s report.

And here lies the challenge posed by the Deng Xiaoping–conceived Chinese system to the mud wrestling of Western democracy. Terminology is irrelevant; call it “socialist democracy” with Chinese characteristics, what matters is if it works. For China.   

Terminology actually matters – but only in a Chinese context. Take for instance dixian siwei – which can be loosely translated as grassroots thinking. You hold on to what you have, and rest on a solid foundation, and you stay “sober and strategically focused” when facing new challenges, in the words of President Xi Jinping, who has been using the concept widely. The concept is actually an upgrade of Deng’s “crossing the river while feeling the stones.” 

From a Western point of view, what may be open to wide debate is the basis of the concept: “To fully adhere to the party’s political line.” Well, for better or for worse, there’s no other line in the market in terms of 21st-century China. Call it “keep calm and carry on” with Chinese characteristics.

‘Smart plus’ meets BRI

The very few informed China analysts with a Western background, such as Andy Rothman, are adamant: China won’t “collapse” any time soon. Rothman makes a pretty straightforward case: China has already structurally changed, a swift process that crystalized last year. 

In a nutshell, economic growth is now driven by consumption, the economy is becoming less and less dependent on exports, and there’s no more pre-eminence of state investment. 

And that leads us to the external vectors – and the role of BRI.

This is to a large extent a China goes West strategy. That’s how Beijing has conceptually framed this massive connectivity drive – increased connectivity across the Global South shields emerging markets everywhere from shocks provoked by what can only be construed as Western instability.

Minxin Pei, who now holds the chair in US-China relations at the Kluge Center of the Library of Congress, is among those accusing the BRI of sliding “into obscurity.”

Yet it’s not a question of “taking money away from Chinese pensioners to build a road to nowhere in a distant land,” as Pei wrote in the Nikkei Asian Review. It’s about BRI as the international partner of Made in China 2025.

And it’s about Beijing offering a unique path, for instance to Central Asian and Southeast Asian neighbors – the BRI as a framework for long-term sustainable development, and mixing industrial, agricultural and hybrid economic models.

And that explains why Beijing is becoming responsive to reconfiguring BRI projects in Malaysia, Myanmar, Pakistan or Sri Lanka. 

Once again, it’s dixian siwei on the move. It’s as if Team Xi have been listening, softly, to that famous closed-door speech in September last year by Deng Pufang, Deng Xiaoping’s son. He urged China to “know its place” and not be “overbearing.” That is now translating into “keep calm and carry a ‘smart plus’ strategy.”