- Hamsini Hariharan
China's Two Sessions, the economy and Hong Kong
This article first appeared in CNBC TV-18 on March 08, 2021 and can be accessed here.
It is time for the most important policy meeting in China – the Two Sessions or the lianghui (两会) began on March 04 and will continue next week until March 11. The legislative consultative bodies of the Chinese state National People’s Congress and the Chinese People’s Political Consultative Conference meet once a year to decide on the most crucial policy decisions, economic and otherwise. In 2020, because of the pandemic, the Two Sessions was postponed to May. For the first time in thirty years, China had not declared any growth targets. However, this year, the Chinese government is keen on telling its citizens and the world that the Chinese economy is back on track.
The government declared that the Chinese economy grew at 2.3%, which is the lowest growth it has faced since 1976. However, it is essential to remember that this growth remains higher than most other countries in the world. In comparison, the Indian economy contracted by 7.7% because of the disruptions caused by lockdowns.
The highlight of the Two Sessions is the annual work report by the Chinese Premier, which details the critical economic and social indicators and updates on the military and diplomacy. For 2021, Premier Li Keqing declared an ambitious growth target of 6% and the creation of 11 million urban jobs. The government is keen on shifting goalposts to focus on the quality of growth’, notably as Xi Jinping declared that China would become carbon neutral by 2060.
But the problems of the Chinese economy are also more structural. After three decades of consistent double-digit growth, it is facing the possibility of entering a ‘Middle Income Trap.’ Particularly over the last year, unemployment is rampant particularly among young college graduates and migrant workers who lost their jobs as factories shut down during the lockdown. To meet its first centenary goal, the Chinese government has declared winning the war on poverty; however, the problems of unequal growth, particularly in rural areas, are now more apparent than ever.
In this context, one of the most important policy decisions from this year’s Two Sessions is the 14th Five Year Plan. The draft outline of the Plan released late last year emphasized innovation, self-reliance, building domestic demand, and the environment. The draft presented to the Congress this week is similar and lays down significant goals for the government to meet. The other significant legislation is relating to Hong Kong. The 2019 protests spurred Beijing to take a harsh response to the small island, which is supposed to retain its autonomy until 2047. Over the last year, an increasing number of pro-Hong Kong business people, legislators and students have been arrested. The new legislation would mean that the Communist Party needs to vet all election candidates -essentially spelling the end for Hong Kong’s independence.
Another trend that strikes out this year is the place of Chinese President Xi Jinping. Analysts have pointed out that the Two Sessions coverage this year is even more striking because of how newspapers like the People’s Daily stress on Xi Jinping, possibly intent on cementing him ideologically within the party’s structure. In the 1990s, the Chinese government restricted the President to two terms, but these limits were removed in 2018, prompting discussion about whether this would allow Xi Jinping to remain President for life. As Xi Jinping reaches the end of his second term, this reprised at the National Party Congress in 2022. Therefore, the increasing centrality of Xi Jinping in Chinese politics remains a significant issue to follow for the next year.