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Chinese President Xi Jinping takes his oath. Photo: EPA-EFE

Economy

Global Impact: what did we learn from China’s ‘two sessions’ so far?

Global Impact is a weekly curated newsletter featuring a news topic originating in China with a significant macro impact for our newsreaders around the world
In this edition, we break down events from the first week of China’s ‘two sessions’ in Beijing

Two Sessions 2023 (Lianghui)

Wendy Wuin Beijing

Published: 6:30am, 12 Mar 2023

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It is never boring for a China watcher to observe the “two sessions”, one of the most important events on Beijing’s political calendar. This year, a sense of urgency has surfaced to spearhead technological development and guard against economic headwinds.

With Xi Jinping starting a norm-breaking third term as the leader of the world’s second-largest economy, the attention of the new government will be on how to sustain economic growth in the coming five years, and also on how to carve out a place in the looming technology and science revolution.

On the opening day of the National People’s Congress (NPC), Xi singled out the US and accused it of suppressing China, during his first panel discussion. He also warned that risks and challenges confronting China will “only increase and become more severe”.

01:32

Chinese President Xi Jinping secures unprecedented third term by unanimous vote

The sense of urgency became more apparent when Beijing unveiled a plan to revamp the government in a bid to strengthen its capabilities in risk control and in the face of the tech war with the US.

It also plans to set up a super regulator to oversee 400 trillion yuan (US$58 billion) worth of financial assets as leadership continues to warn of “black swan” events that would undermine financial and economic stability.

It plans to create a national data bureau to oversee data security and spearhead the development of the digital economy. It will also restructure the Ministry of Science and Technology to better counter US technological containment and empower the Ministry of Agriculture and Rural Affairs to step up home-grown seed innovation and rural infrastructure.

The three reports submitted to the NPC on job priorities, the budget, and development plans did not offer much new insight into the new government, which is due to be fully revealed on Sunday.

They also fell short of mentioning how Beijing plans to address China’s demographic problems of a low birth rate and rapidly ageing population, and they failed to advance previous calls for common prosperity to address inequality.

Instead, the reports conveyed stronger concerns over the worsening external market and technology gap with its rivals in the West, compared with previous years. One of the reports said that uncertainties and unpredictability in external markets might be the “new normal”.

Beijing set moderate targets for the economy this year – gross domestic product is expected to grow around 5 per cent, and consumer inflation by around 3 per cent, while 12 million new urban jobs are created – all of which should be fairly easy wins for the new government.

It leaves more room for the new leadership line-up to tackle risks and carry out reforms amid intensifying geopolitical tensions, ballooning local government debt and a deepening demographic crisis. It is tasked with reviving confidence in the private sector and regaining its lost allure among foreign investors.

Xi delivered a charm offensive to private entrepreneurs during the two sessions, vowing to treat them as “one of us”, while also pledging to step up political guidance. He also said private firms should have “a sense of responsibility, brotherhood and love, while being rich”, calling on them to play a bigger role in common prosperity.

02:52

China's 'two sessions': Premier Li Keqiang emphasises achievements, economy in final work report

Concrete policies, rather than lip service, are eagerly awaited.

Meanwhile, details surrounding the government-restructuring plan, as well as the upcoming overhaul reform of the Communist Party institutions, remain to be seen.

This leaves observers to speculate on how much leeway the new premier will have, compared with the outgoing Li Keqiang. He advocated for entrepreneurship, opening up and streamlining government procedures over the past 10 years, but his power waned as Xi consolidated his.

Xi is also tasking the People’s Liberation Army with enhancing “integrated strategic capabilities” to build a world-class army, as Beijing doubles down on efforts to prepare for more intense competition with Western countries.

04:31

China’s new foreign minister Qin Gang hits out at US on Ukraine, rate hikes and Taiwan

Carrying a strong personal style, Qin Gang took aim at the US for a wide range of the global economic risks and geopolitical crises, at his first press conference as foreign minister.

He said Chinese diplomats have to “dance with wolves” to defend their country, and that the US should “hit the brakes” in its relations with China, in a strongly worded attack against the Biden administration.

Qin also said Asia should never be a chess board in a cold war, and that a Ukraine-style crisis should never be duplicated in the Asia-Pacific region.

One day after Qin’s press conference, the Ministry of Commerce delivered a conciliatory message, saying it is open to a visit by US Secretary of Commerce Gina Raimondo, while reiterating that dialogue is the only way to prevent a total derailment in relations.

60-Second Catch-Up

Xi Jinping starts third term as China’s president with unanimous support•

Why Beijing set a moderate target, and what it signifies for economic growth

Opinion: Economic shake-up aims to ensure China can continue its rise

Chinese Foreign Minister Qin Gang tells US to ‘hit the brakes’ as relations continue to deteriorate

Xi Jinping directly accuses US of leading Western suppression of China

Opinion: Xi’s Chinese dream is in danger of being hijacked by ultra-left nationalism

Beijing responds to US tech curbs, financial risks with sweeping regulatory shake-up

Deep Dives

Whatever happened to Likonomics? Chinese Premier Li Keqiang heads for the exit

Li promoted the private economy, foreign investment and simpler government procedures – even when his power waned
But he is ‘the least influential premier compared with his predecessors Zhu Rongji and Wen Jiabao’, says political analyst

After delivering his last government work report as Chinese premier on Sunday, Li Keqiang gave a customary bow to the audience in the Great Hall of the People and leaders on the rostrum.

It was the opening of the annual parliament in Beijing and marked the end of Li’s two five-year terms – the maximum allowed under China’s constitution for premiership.

China’s ‘two sessions’ 2023: Premier Li Keqiang bows out with appeal for economic recovery

Li’s final government work report aims to chart a steady course for jobs, inflation and growth
To get there, the country will need to deal with a raft of domestic and external challenges, he says

Beijing aims to balance economic growth with risk management this year as it shakes off three years of pandemic controls and mounting challenges at home and abroad.

That was the message Premier Li Keqiang sent on Sunday when he delivered the annual government report to the National People’s Congress (NPC).

02:03

China targets to boost gross domestic product by ‘around 5%’ in 2023

China’s ‘two sessions’ 2023: Xi Jinping’s call for ‘common prosperity’ risks going unanswered by Covid-weary private firms

President Xi Jinping has urged entrepreneurs to give to charity and ‘share the fruits of growth’ as part of his ‘common prosperity’ drive
But Xi’s message could find a muted reaction among private firms still recovering from three years of Covid disruptions and policy uncertainty

Economic uncertainty and concerns over transparency in China’s philanthropic sector have left many private business owners hesitant to answer President Xi Jinping’s call to support his signature initiative to reduce income inequality.

On Monday, at a meeting with private sector representatives during the “two sessions”, Xi urged entrepreneurs to give to charity and “share the fruits of growth” with employees as part of his “common prosperity” drive.

China’s new foreign minister promises tough approach to ‘jackals and wolves’ in outside world – but hints softer tone may still be possible

In his first press conference in the role, Qin Gang signals China will not back down under pressure, but shrugs off ‘Wolf Warrior’ label
Analysts say he could take a more measured approach at times, but Beijing’s concerns about a hostile external environment may determine the tone he adopts

Qin Gang ’s reputation for being both “tough” and “measured” in different phases of his diplomatic career has left international observers wondering whether his recent appointment as China’s foreign minister is a sign of a shift in the country’s diplomacy.

On Tuesday the former ambassador to the United States gave his first press conference since taking up his new role at the “two sessions”, the country’s biggest political event of the year.

02:32

China’s top political advisory body kicks off annual session

China’s ‘two sessions’ 2023: Xi Jinping hails role of private firms, but will ‘actions speak louder than words’?

Xi Jinping’s comments come at high-profile meeting with upper-echelon party members and billionaire business leaders
The task of boosting the private economy will be divided into more detailed plans and be allocated to specific government agencies for implementation after ‘two sessions’

President Xi Jinping told private entrepreneurs and business representatives that they should “eliminate worries” and “lay down burdens” in their business development, calling them “one of us” at a high-profile conference on Monday.

It marked a sharp contrast to previous government endeavours to curb the disorderly expansion of capital, and it may herald a more supportive stance throughout Xi’s norm-breaking third term, especially with his most pro-business aide, Li Qiang, expected to take the premiership later this week.

China’s ‘two sessions’ 2023: Xi Jinping tells defence delegation new policy crucial for stronger army and nation

President says ‘enhancing integrated national strategies and strategic capabilities’ key to China’s aim of becoming a global power
Beijing encourages big-picture thinking and making best use of national laboratories to maximise ‘overall strategic capabilities’

Improving China’s “integrated strategic capabilities” is needed to fulfil China’s goal of national rejuvenation and building a world-class army, Chinese President Xi Jinping said.

In a meeting with the People’s Liberation Army delegation to the 14th National People’s Congress on Wednesday, Xi said the strategy was key to China’s aim of becoming a global power in an increasingly competitive and challenging world. The delegation includes representatives from the military and the People’s Armed Police – a paramilitary unit.

China’s ‘two sessions’ 2023: ChatGPT-like artificial intelligence is ‘difficult to achieve’, China’s tech minister says

Science and Technology Minister Wang Zhigang raised ethical concerns and said the country must ‘wait and see’ when it comes to catching up with ChatGPT
The hit chatbot from OpenAI has become a hot topic in China, but domestic tech giants must overcome censorship and chip restrictions to create rival products

China has some work to do in catching up to the hit artificial intelligence product ChatGPT, developed by San Francisco-based start-up OpenAI, the head of the country’s Ministry of Science and Technology said, as technological self-reliance remains a top priority for the central government amid heated trade tensions with the US.

ChatGPT has advantages in delivering results in real time, which is “very difficult to achieve”, Science and Technology Minister Wang Zhigang said at a press conference on the first day of the annual National People’s Congress (NPC) on Sunday.

China population: a shrinking workforce is chipping away at nation’s ‘demographic dividend’, so where are the new policies?

Policy influencers such as legislative delegates and demographers are calling for expedited reform after an earlier-than-expected decline in China’s population
Fresh policies were expected to be discussed at the ‘two sessions’ parliamentary gatherings, but critics say the government must be more swift and resolute

China has a closing window of opportunity to reform its antiquated restrictions on retirement and rural mobility, according to policy influencers who are concerned about the nation’s failure to better tap into its “demographic dividend” and address an urgent need to cultivate a larger working-age cohort to support fewer retirees.

A widening demographic imbalance – resulting from a low birth rate combined with a rapidly ageing population – continues to plague the world’s second-largest economy, which long benefited from a huge demographic dividend.

Global Impact is a fortnightly curated newsletter featuring a news topic originating in China with a significant macro impact for our newsreaders around the world.

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