China’s yearly parliamentary meeting, the National People’s Congress (NPC), wrapped up on March 13. This important gathering is used by the Chinese Communist Party each year as a high-profile stage to announce new initiatives and policies.
What did we learn from this consequential meeting of nearly 3,000 delegates from across China? Here are a few takeaways.
•Xi Jinping secured a third term as president of China, a power grab which began five years earlier. In 2018 Xi and the National People’s Congress changed the constitution to remove the two-term limit on the presidency, effectively allowing him to remain in power for life.
Xi’s consolidation of power also involved placing those loyal to him in top positions while not designating a successor.
This included the appointment of Li Qiang, Xi’s protégé and former Communist Party boss of Shanghai (who oversaw the draconian two-month COVID lockdown of China’s largest city), as the new premier of China. Li has been tasked with reviving China’s post pandemic economy.
•Xi also abandoned the collective leadership framework used by China over the past 40 plus years by making sweeping changes to the country’s government bureaucracy. The changes entrench the Chinese Communist Party into state agencies, giving the party power over decision making and oversight.
These measures strengthen Xi’s control over the policy making process while attempting to streamline governmental structure and decision making.
The changes involve the creation of new regulatory bodies for data and finance as well as resources to modernize and expand the Ministry of Science and Technology. These measures support efforts to develop technological independence and strengthen China’s self-reliance in semiconductor manufacturing, an industry which has faced severe sanctions from the United States and its allies.
According to reporting by Bloomberg, the new financial regulatory body will assume some of the People’s Bank of China’s functions, allowing the central bank to focus on economic and financial stability management.
As companies move production from China to Vietnam and India, Xi also committed to boosting high end manufacturing which he said was crucial to the nation’s economic growth. He also stressed the need to develop centers for innovation and to support small and medium-sized businesses.
•China set in place a modest 5% economic growth target as it seeks to recover from its harsh three-year zero-COVID protocols and grapple with its uncertain property market. According to analysts, this indicates that China will not pursue large-scale stimulus packages, opting for now to allow the economy to revive on its own as restrictions are lifted.
Many of China’s top economic officials were kept on including People’s Bank of China Governor Yi Gang in addition to the ministers of commerce and finance. It was also notable that Xi-ally He Lifeng was appointed as a vice-premier which China watchers think may be an indication that he will at some point become China’s top economic official, replacing Liu He.
•China announced that risks remain in the property sector and that it will guard against “disorderly” expansion by developers. This signals Beijing’s plans to manage its worst property downturn to date without setting off a crisis in the broader economy.
•To bolster self-sufficiency and food security, China vowed to increase the budget for its grain reserves by 13.6% to US$19.2 billion in 2023. This comes amid the backdrop of fears of supply shortages relating to Russia’s invasion of Ukraine and global market uncertainties.
•As tensions with the United States rise, China announced that it would increase defense spending by 7.2% in 2023 to US$230 billion. This increase marked two consecutive years of defense spending topping 7%, exceeding the 7.1% increase in 2022.
•General Li Shangfu, an aerospace engineer who has worked on modernizing China’s space and cyberwarfare capabilities, was named the new defense minister. A complicating factor involving General Li is the fact that the U.S. sanctioned him in 2018 for purchasing Russian-made S-400 surface-to-air missile equipment and Su-35 combat aircraft.
•China has become more aggressive in its criticisms of the United States. In particular, it has accused the United States of being the source behind deteriorating relations and alleged that the U.S. seeks to suppress China’s development.
In his NPC remarks, Xi bluntly claimed that Washington was behind the “containment”, “suppression” and “encirclement” of China, while new Foreign Minister Qin Gang warned “there will surely be conflict and confrontation” if America “doesn’t hit the brakes” in its conduct towards Beijing.
The 2023 National People’s Congress announcements are an acknowledgement of the external pressures facing China as tensions rise with the United States and its partners. The NPC announcements are also an indication of the seriousness Beijing places on fortifying internal security, developing self-reliance and addressing the structural imbalances in the economy.