Budgets, targets and how to deal with Trump: what to watch at China’s biggest political show

Annual ‘Two Sessions’ meetings will give insight into China’s economic and foreign policy direction for the coming year

PUBLISHED : Tuesday, 28 February, 2017, 10:02am
UPDATED : Tuesday, 28 February, 2017, 10:03am

It’s the Chinese equivalent of America’s State of the Union Address and the Queen’s Speech in Britain. Come March 3, at what’s known as China’s biggest political show of the year, thousands of the nation’s governing elite will descend on Beijing to discuss and decide on the most pressing issues facing the country.

This year’s “Two Sessions” meetings come amid intense uncertainty as the Communist Party prepares for its upcoming power transition and the government struggles to deal with the new US President Donald Trump and the fallout from Brexit, while juggling the country’s own daunting economic challenges.

The Two Sessions, or lianghui in Chinese, are the annual plenary meetings of China’s top legislative and consultative bodies, the National People’s Congress and the Chinese People’s Political Consultative Conference. Each year, the gathering is attended by more than 5,000 prominent officials, business leaders and other top representatives of Chinese society.

Among the key issues to watch this year include:

1. How much money will China devote to its military defence?

The answer is of great interest to world leaders and political and military experts alike, as tensions continue to simmer over the contested South China Sea, animosity grows between China and the United States under Trump, and Beijing pushes on with its military reform plans.

Last year, China set its military defence budget to grow just 7.6 per cent – the lowest increase in six years – to 954 billion yuan (US$139 billion). In the US on Monday, Trump sought a 10 per cent increase in America’s defence spending to US$603 billion.

We will soon find out whether more funds will be provided to China’s military this year. The People’s Liberation Army needs the money to modernise its troops and upgrade its weapons. The army is expected to conclude its massive downsizing by the end of the year, with 300,000 troops made redundant as part of President Xi Jinping’s plans to make the PLA a leaner, meaner fighting machine. The Two Sessions may reveal details on compensation for the personnel cuts.

2. How will the Trump administration and Brexit affect China’s foreign policy?

An increasingly protectionist America under Trump and Britain’s impending exit from the European Union have added great unpredictability to global politics.

Beijing faces the pressing issue of deciding how to deal with the combative new US president, who only last week called China the “grand champions” of currency manipulation and has threatened punishing tariffs on Chinese goods. In the Brexit fallout, declining confidence in globalisation and damage to London’s role as a global financial hub will likely also hurt the Chinese economy.

At the Two Sessions, China can be expected to lay out its stance on these and other tricky international issues that have an impact on its economic and geopolitical interests.

3. Who might get a seat among China’s next generation of top leaders?

Political watchers are keeping their eyes peeled for the rising stars ahead of the party’s 19th congress this autumn.

The upcoming congress will see a major leadership reshuffle when a handful of senior officials retire and new faces enter the Politburo or even the Politburo Standing Committee, the country’s top decision-making body.

No one knows for sure yet who the new power players will be. But at the Two Sessions, the party leaders of the five key municipalities and provinces – Beijing, Shanghai, Tianjin, Chongqing and Guangdong – are bound to attract the most attention. Others in the spotlight include Xi’s recently promoted former subordinates and the younger provincial and ministerial-level cadres.

These high-fliers, considered the most likely to ascend the party ladder, will be closely watched as their social skills and ability to handle the media are put to the test during the meetings.

4. Will China’s growth forecast convey even less confidence in its economy?

China’s economy grew 6.7 per cent in 2016, according to official statistics released in January. While the gross domestic product growth was better than the targeted “at least 6.5 per cent”, it was the country’s slowest expansion in 26 years.

The declining growth with each passing year does not inspire confidence in the world’s second-largest economy, as China continues to grapple with sluggish conditions at home and increasing uncertainty around the world.

Premier Li Keqiang will disclose this year’s GDP growth forecast when he delivers his government work report during the Two Sessions. State officials will debate economic policies including the Chinese currency and the real estate market, and will take questions from the media. Provincial leaders may also reveal how their provinces are doing on the economic front.

5. What message might Beijing send about its stance on Hong Kong’s upcoming chief executive election?

Hong Kong’s chief executive election looks set to be a three-horse race after two candidates on Saturday secured enough support to join the city’s former chief secretary Carrie Lam Cheng Yuet-ngor in the contest for the top job.

Former financial secretary John Tsang Chun-wah and retired judge Woo Kwok-hing will join Lam to compete in the polls on March 26. To win the chief executive post, a candidate needs at least 601 votes from the 1,194-member Election Committee.

When Xi shook hands with Tsang during meetings in 2015 and 2016, some analysts interpreted it as Beijing’s nod for him to become the city’s next leader. But the latest developments suggest Beijing’s preferred choice is Lam instead, as a source revealed to the media last week that two Chinese state leaders had already informed Hong Kong’s Beijing loyalists of its decision to support Lam.

None of the candidates will be at the Two Sessions but political pundits will be watching to see if Beijing will send any signal to delegates from Hong Kong that might reveal more about its stance in the polls.

Key dates

The annual session of the Chinese People’s Political Consultative Conference opens on Friday, March 3. The National People’s Congress starts on Sunday, March 5, during which Premier Li Keqiang will deliver his government report and host a press conference to take questions from both local and foreign journalists.