Standing at the podium in the Great Hall of the People in Beijing, President Xi Jinping talked about his second term vision at the National People’s Congress last year. The economy was purring, the markets were fizzing and trade tensions were still bubbling beneath the surface.
Twelve months later, and the picture is distinctly different for next week’s 13th National People’s Congress, the country’s de facto parliament.
Along with a slowing economy, Xi has had to balance the fallout from the trade war with the United States and increased concerns abroad about China’s naval build-up in the region.
“Looking ahead, [the] key policy challenge is to manage trade-related headwinds while maintaining efforts to limit financial risks,” the World Bank said in a recent report.
“To stimulate the economy, fiscal policy [should] focus on boosting household consumption rather than public infrastructure,” it added.
Last month, the International Monetary Fund added weight to that argument when it warned that ripples from sluggish growth in China have started to have an impact on the wider global economy.
In a move to reverse the trend, the powerful Politburo has rolled out a raft of measures, which look certain to be rubber-stamped by the 2,975 Communist Party delegates during the Congress.
Broad in scope, they include “efforts to improve the business environment, foster and strengthen new growth drivers, develop a robust domestic market” and “implement poverty alleviation and rural vitalization programs,” according to a statement released last week.
‘Fiscal policy’
“The government must implement a proactive fiscal policy and prudent monetary policy, and give high priority to employment in 2019,” the Politburo added.
But, perhaps, for the international community, and especially for the US and the European Union, attention will focus on China’s proposals to further open up to global competition.
A new foreign investment law has been drafted to ban “forced technology transfer and illegal government interference in foreign business practices,” the state-run Xinhua news agency has reported.
Washington has been pushing Beijing for concrete measures on this during months of trade talks, with Xi’s administration agreeing to make “significant changes.”
Vice-Premier Liu He, a confidant of the president, talked openly about dealing with these issues last week. Putting them into practice would certainly end years of “promise fatigue.”
Liu’s comments came after Justice Minister Fu Zhenghua said at the end of January:
“[There is an] urgent need for such a law as current legislation can hardly catch up with the changing requirements in building a new system [for an] open economy.”
It will be interesting to see if Xi mentions this “new open system” when he addresses the Congress in his keynote speech.
Indeed, this is a big year for the Communist Party as it celebrates the 1949 revolution.
Already the CCP has told party members to stick to Marx and Lenin and not believe in “ghosts and spirits” from the past or practice “liberalism,” as it tightens its grip on power.
On Wednesday, Xinhua issued a detailed statement on how best to strengthen the CCP’s role and the ruling leadership.
‘Ghosts and spirits’
“[We must] resolutely prevent not believing in Marx and Lenin and believing in ghosts and spirits [superstitious practices] … not believing in the truth and believing in money,” the Party communique said.
“[We must] resolutely oppose all forms of mistaken thought that distorts, misrepresents or negates Marxism,” it added.
Those remarks are certain to be endorsed by Xi in his address with a heavy sprinkling of soundbites relating to “reforms,” “opening up” and the battle to eradicate “poverty” by 2020.
“This year and the next mark a decisive period for the country to complete the building of a moderately prosperous society in all aspects, and many tough tasks in association with agriculture, rural areas and rural residents must be fulfilled,” the State Council stated in a policy document last week.
Another crucial area will be China’s military budget. In 2018, spending increased by 8.1% to 1.11 trillion yuan (US$231 billion). Reports suggest it will rise again this year.
“Faced with profound changes in the national security environment, we must treat the Party’s goal of building stronger armed forces for the new era as our guide,” Premier Li Keqiang said on the eve of last year’s Congress.
Since then, a great deal has changed for his boss Xi. The economic mood has altered while international relations have resembled a diplomatic minefield at times.
Still, that will be forgotten next week when the most powerful man in China mingles with the Party faithful. After all, he will be preaching to the converted.
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