Chinese plans for the future

 

More than 5,000 members of China’s political elite have converged on Beijing this week for the biggest event on the political calendar. Known as the "two sessions", or lianghui , the annual gatherings of the Chinese People’s Political Consultative Conference (CPPCC) and the National People’s Congress (NPC) are a window on the central government’s priorities and plans for the coming year. On Friday morning, Premier Li Keqiang read out to NPC delegates the government’s Work Report, which reviews the government’s accomplishments over the last year and gives general guidance on the government’s social and economic policy direction this year.  The NPC session began under tight security and strong Covid controls.  Some key takeaways from the report:

Beijing sets a GDP growth target of “above 6 per cent” for this year.   The GDP target is generally in line with the expectations of those analysts who predicted there would be a growth target for this year. China’s economy is widely expected by analysts to grow by more than 8 per cent this year, helped by the low comparison base from last year’s weak growth.     Setting the target below expected annual growth is meant to emphasize the sustainable level of growth on a quarterly basis over the course of the year, government officials said. And, as expected, Beijing cut back its fiscal support for the economy as it starts to taper off economic stimulus and re-emphasises debt reduction The central government’s budget deficit-to-GDP target to 3.2 per cent, down from the target of 3.6 per cent last year     It also cut back the local government special purpose bond issuance quota to 3.65 trillion yuan (US$564 billion) from 3.75 trillion yuan last year.      Beijing will not issue additional “Covid-19” bonds this year after selling 1 trillion yuan last year to fund coronavirus relief     No numerical target set for money supply growth this year. M2 growth to be in line with nominal GDP growth.  Other economic targets were set in an "appropriate range" Create 11 million new jobs this year, up from target of 9 million last year and actual growth of 11.86 million.     Surveyed unemployment rate of 5.5 per cent this year, down from target of 6 per cent and actual 5.6 per cent     Consumer inflation target of “about 3 per cent this year, down from 3.5 per cent target last year and actual growth of 2.5 per cent

Hong Kong   China to "close loopholes" in Hong Kong electoral system to prevent foreign interference The central government will ensure the “comprehensive and accurate” implementation of the 'one country, two systems' doctrine, with the "Hong Kong people governing Hong Kong" and the city enjoying a "high degree of autonomy," Li said.     "We will resolutely guard against and deter external forces’ interference in the affairs of Hong Kong and Macau. We will support both regions as they grow their economies and improve people's lives, so as to maintain the long-term prosperity and stability of Hong Kong and Macau," he said.     Further elaborating on the plan to reform Hong Kong electoral system, NPC vice-chairman Wang Chen said there were loopholes in Hong Kong that allowed foreign forces to interfere with the city's affairs. Some even used their public office to call for such interference.     "The risks in the system need to be removed, and a democratic electoral system with Hong Kong characteristics need to be established," he added.     Candidates for Legco will still need pro-Beijing body’s approval

China will increase lending by big banks to small businesses by more than 30 per cent this year, continue fintech clamp down   China plans to increase the number of "inclusive" loans offered by its biggest banks to micro and small businesses by more than 30 per cent in 2021, Li said.  It will also continue to enact new lending rules and increase its scrutiny of the nation’s financial technology (fintech) industry.     As part of the new five-year plan, banks will be encouraged to increase credit loans and first-time loans and provide "targeted support" for companies and sectors that continue to be affected by the fallout from the coronavirus pandemic.     Beijing will also expand its efforts to stop monopolistic behaviour in the tech industry and curtail the "unregulated" expansion of capital, Li said.

China sets comprehensive plan to become advanced manufacturing powerhouse   China sets out comprehensive plan to upgrade its manufacturing capabilities by 2025 in eight priority areas, The plan focuses on rare earth and special materials, robotics, aircraft engines, new energy vehicles and smart cars, high-end medical equipment and innovative medicine such as vaccines, agricultural machinery, major equipment used in shipbuilding, aviation and high-speed rail, and industrial applications of China’s Beidou global navigation satellite system.     The strategy would help offset rising production costs, reduce reliance on foreign technologies and enhance competitiveness against the US.      The advanced manufacturing plan forms an integral part of the country’s 14th five-year plan, which spells out the country’s economic and development goals for 2021 to 2025.      The new plan comes after Beijing played down its previous "Made in China 2025" industrial strategy

The need for continued vigilance on Covid-19; may not open border until 2022   Efforts to contain the Covid-19 pandemic must not be relaxed, Li said, and the nation must work to address the remaining weak points in its control efforts. China may not relax border controls until 2022 as vaccination plan makes slow progress     Preventing imported cases from sparking local outbreaks is ‘the priority among the priorities’, NDRC says in annual report at NPC.     Herd immunity in China will not be achieved until the middle of next year at the earliest, head of Chinese Centre for Disease Control and Prevention says     Measures are still needed to stop the emergence of cluster outbreaks     The government shall provide free vaccinations to all citizens.     Authorities throughout China together spent more than 400 billion yuan (US$62 billion) on containing the coronavirus last year.     China provided 220 billion masks, 2.3 billion pieces of protective gear, and one billion test kids to other nations.

Beijing increases military budget more than expected   Beijing will increase spending on its military more than expected this year The military budget for 2021 will increase by 6.8 per cent to 1.355 trillion yuan. The increase is slightly higher than the 6.6 per cent growth last year and higher than the 6 per cent expected by most analysts given the country’s continued battle against the coronavirus.     Training for the People’s Liberation Army will be boosted to raise their readiness for battle.  and a better coordination to address security risk is needed.     A separate document on the nation’s upcoming five-year plan said measures have to be taken to ensure the building of a strong military by 2027. Those measures include upgrading weapons, focusing more on disruptive technology.

Beijing hopes for "appropriate" fertility level this year, will gradually extend retirement age   China is hoping for an "appropriate" fertility level this year as the country faces up to its growing demographic challenge. But vague reference is seen as the best the government can say  while it awaits the data on new births in the population census due in April.     China will gradually extend China’s retirement ages during the 2021-2025 five year plan, Li said, without providing details.     The government will also ensure 95 per cent of its citizens would have access to a basic pension during the five year period.

Beijing to take steps to rein in housing prices and ensure affordability for first time buyers   China's government will make more land available for developers to increase the housing stock in the world’s largest property market to help reign in rapidly rising housing prices,  It will keep a tight lid on runaway prices to ensure that affordability is within the reach of the nation’s first-home buyers.     It will also increase the supply of subsidised rental homes and shared ownership housing to ensure well-regulated development of the long-term rental housing market     It will also cut taxes and rental fees.     "We will keep the prices of land and housing, as well as market expectations stable," Li said.      "We will address prominent housing issues in large cities [and] make every effort to address the housing difficulties faced by our people, especially new urban residents and young people." The ‘two sessions’: China stakes its claim to leading role in the world John Carter Senior Editor, Political Economy 13 March 2021   Chinese President Xi Jinping abandoned years ago paramount leader Deng Xiaopeng’s advice to “hide your strength and bide your time” and has taken a far more assertive approach to domestic politics and international relations. At last week’s “two sessions” meetings, Xi and the Communist Party leadership unveiled more details of their blueprint to push Chinese development to the next stage. We will all be watching to see how the plan unfolds. All the best, John Carter Senior Editor, Political Economy China laid out a new policy blueprint for coming years. Now it has to implement it.  The annual meeting of the National People’s Congress (NPC) and the Chinese People’s Political Consultative Conference (CPPCC) - the so-called two sessions - are the most important political meeting of the year, when policies for the coming year are refined and locked into place.  This year’s meetings were particularly important because they introduced the new five-year plan for 2021-25 and longer term vision for 2035, and put in place the first policies to meet the goals of those two plans. In addition, Chinese Communist Party officials used the occasion to trumpet the nation’s rise ahead of the party’s 100th anniversary in July this year.  The meetings started with Premier Li Keqiang reading the annual work report, which describes the government’s activities in the past year and its plans for the coming year. Here is our special newsletter on some of the key takeaways from that report.  On the last day of the week-long meetings, Li spent most of his time in his traditional press conference pledging further job creation and improvements in living standards ahead of the Communist Party’s 100th anniversary in July. He said he hoped US and Chinese officials would find some “common ground” in their talks in Alaska next week even if major disagreements remain, though US officials warned Beijing to brace for difficult discussions. Li also said Beijing was willing to talk to Taiwanese officials as long as they accepted there is one China.  On Thursday, the NPC took its most controversial action, passing an election reform plan for Hong Kong that would ensure that “only patriots” could run the city government and establish “democracy with Hong Kong characteristics”. A Beijing official claimed there were patriots among Hong Kong opposition members. Amid criticism of Beijing’s move by the US and European Union, Hong Kong’s top official warned foreign governments not to meddle in China’s internal affairs. Beijing will use “legal combination punches” in overhauling Hong Kong’s legal system and is prepared to accept the pain to “fix” Hong Kong.  Vice-Premier Han Zheng said the reform was not aimed at eliminating opposition voices. The new slate of Beijing-backed Hong Kong leaders are under pressure to tackle the city’s housing crisis, a key cause of last year’s anti-government protests. And a sharp debate has started whether the electoral changes allow any chance for democracy in the future.  On the economic front, the government set a modest growth target of “above 6 per cent” for this year, below expectations for actual growth of over 8 per cent, to give it room to address uncertainties in the economic outlook, trim the economic stimulus that Beijing introduced last year to combat the pandemic and reintroduced its deleveraging campaign to cut debt and financial risks. But it did not set a gross domestic product target for the new five-year plan to give itself flexibility to change course to meet new challenges during the period. The government also said it would pursue reform of the hukou household registration system to allow more migrant workers to become urban residents in an effort to boost growth.  The government’s budget calls for an 8.6 per cent increase in military spending this year,  but the military’s second in command called for yet more spending to meet the challenge from the US. President Xi called on the People’s Liberation Army to be ready to fight at any time given an increasingly uncertain external environment. And the new five-year plan also pledged to improve benefits for military veterans.  Beijing also rolled out policies to achieve Xi’s promise for the nation to be carbon neutral by 2060, including new emphasis on nuclear power and renewable energy sources. However, critics charged the policies outlined at the meetings did not go far enough. And heavy smog in Beijing during the meetings showcased the government’s difficult balancing act between industrial growth and environmental protection.  The government set ambitious goals for developing new technology and promoting advanced manufacturing as part of its overall effort to reduce dependence on foreign sources and so increase national security. Seven key sectors would get more money for research and development. China will need to attract foreign tech talent to meet its goals, but Taiwan is already responding to an attempted brain drain. Use of blockchain technology will also play a major role in the nation’s development over the next five years. But the country’s former industry minister warned that China is still 30 years away from matching the industrial prowess of the US or Germany. While the government promised a level playing field for private and foreign firms, it also boosted support of state firms. China’s Foreign Minister Wang Yi held a wide-ranging press conference during the two sessions, in which he warned the US from crossing the “red lines” on Taiwan and Hong Kong, called charges of genocide in Xinjiang “fake news,” said China and Russia should jointly oppose “colour revolutions,” promised that Beijing would live up to its word on the European Union investment treaty, reached out to Africa, Latin America and Southeast Asia in response to US efforts to build new alliances, and reached out to India and Japan ahead of the meeting of the Quad four nations. China’s foreign policy priorities are changing in a post-pandemic world. The two session’s focus on maritime law reflects its concerns about the South China Sea. The NPC also ratified the RCEP trade agreement ahead of schedule.