Economic recovery high on agenda as China’s annual parliamentary session meets this weekend

This comes at a challenging time for China, which last year saw its worst economic performance since the 1970s.

Elizabeth Law

Elizabeth Law

The Straits Times


China saw its worst economic performance since the 1970s last year. PHOTO: AFP

March 2, 2023

BEIJING – China’s biggest political event of the year will kick off in Beijing this weekend with economic recovery high on the agenda, and the potential reorganisation of party and state entities.

After three years of Covid-19 disruptions which led to truncated sessions, nearly 5,000 delegates from the legislature and the nation’s top political advisory body will gather at the cavernous Great Hall of the People for the full series of meetings, which are expected to run for more than 10 days.

The meetings of the National People’s Congress (NPC) and advisory body Chinese People’s Political Consultative Conference run concurrently, and are collectively referred to as the Two Sessions.

During the opening session of the NPC this coming Sunday, outgoing Premier Li Keqiang will deliver the government’s work report, setting national goals and targets for the year, including the annual gross domestic product.

This comes at a challenging time for China, which last year saw its worst economic performance since the 1970s.

Economic activities were stalled by strict Covid-19 control measures – including a bruising two-month lockdown of financial hub Shanghai last spring. Youth unemployment last year hit a high of 20 per cent; the property sector has been battered by a government crackdown on spending; and the population registered a decline for the first time last year.

Early estimates based on provincial and regional targets suggest the central government is likely to target growth of between 5 per cent and 5.5 per cent, with policies likely to boost sluggish domestic consumption and infrastructure spending.

“The government is likely to initiate steps to redistribute fiscal responsibility between central and local governments,” the Economist Intelligence Unit wrote in a research note.

“Land sales revenue has dried up, and local governments have resorted to cutting social welfare and delaying salary payments.”

Worsening relations with the United States have also choked off Chinese access to cutting-edge technologies, and Beijing is expected to announce more specific policies aimed at boosting home-grown expertise in science and technology.

The government has previously talked about “high quality” development in a wide range of industries but these might be hard to implement because the industries are broad-based and what constitutes “high quality” is extremely specific for each segment, said Ms Iris Pang, ING’s chief economist for Greater China.

“The feedback effect of deterring China from having access to advanced technology in the global economy cannot be ignored, and the damage will feed back to the Chinese economy like a vicious circle,” she wrote.

On the social side, there are likely to be more family-friendly policies to increase fertility rates, said Dr Zhao Litao, senior research fellow at the National University of Singapore’s East Asian Institute.

“But on the macro scale, there has been a change in societal attitudes of people marrying later, having fewer children, or simply not having children at all,” he told The Straits Times.

“Raising the retirement age has long been talked about but faces a lot of opposition. If the government takes this opportunity to push for change, it’s likely to be a ‘small step’ adjustment rather than a landmark announcement.”

It is also the first such gathering since the Communist Party of China’s (CPC) twice-in-a-decade party congress last October, which saw Chinese President Xi Jinping secure a rare third term of five years.

He also stacked the country’s apex decision-making body, the Politburo Standing Committee, with allies who will be endorsed in government positions by the NPC.

Former Shanghai party chief Li Qiang, who is now ranked second in party hierarchy, is all but certain to take over as premier.

The NPC is also set to discuss plans for a “wide-ranging” and “intensive” reorganisation of state and CPC entities, reported the official Xinhua news agency, following a meeting of the party’s central committee.

This could mean further consolidation of power and represents a further blurring of the lines between the party and the government, said Assistant Professor Lee Jonghyuk of the S. Rajaratnam School of International Studies.

“The appointment of Li Qiang vividly shows the increasing influence of the party on the government,” he said.

“The party-state relationship has completely changed from emphasising government autonomy during (the Jiang Zemin and Hu Jintao eras) to aligning with the party under Xi.”

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