NOTION OF STABILITY AND THE TWO SESSIONS/LIANGHUI

China’s political elite gathered in Beijing for the most important annual policy meeting of the year: the Two Sessions or Lianghui. Over the course of six and a half days between March 5^th and March 11^th, the National People’s Congress (NPC) and Chinese People’s Political Consultative Conference (CPPCC) outlined development targets for 2022 and discussed the government’s performance over the past year. The two plenary meetings of the NPC and CPPCC were held on March 5^th and March 8^th, detailing the roadmap for China’s future development. Delegates discussed the work reports of several key political and government bodies, deliberated amendments and draft laws and reviewed development plans and budgets. Following the conclusion of the Beijing Winter Games, the Two Sessions have set the tone for the 20^th Party Congress in October 2022, when President Xi Jinping is on track to secure a third term as General Secretary of the Chinese Communist Party (CCP). What were the key takeaways from these critical sessions and what do they suggest regarding China’s immediate future?

Stability emerges as key theme

The Government Work Report (GWR) unveiled as is tradition by the Premier of the State Council, Li Keqiang, at the first plenary session remains the most significant policy document in China. It provides a glimpse of economic priorities and development plans of the top leadership for the coming year. The document set economic and development targets for 2022, prioritizing domestic stability, sustainable economic growth and improvements in social policy. For instance, the GDP growth target for 2022 was set at 5.5% and defense spending was raised by 7.1%. Overall, the Two Sessions highlighted efforts made by the Party to combat the pandemic, reiterated the centrality of Xi Jinping at the Party core and emphasized the general guiding principle of seeking progress while maintaining stability. 

Ultimately in the build-up to the 20^th Party Congress in October 2020, stability is vital for President Xi and the Party and emerges as the central goal. The emphasis on stability is revealed by the 5.5% GDP growth target set for 2022, which is the lowest GDP growth target set by China in 30 years. 

Parallel to this, the government has planned to keep growth in personal incomes in line with growth in GDP. The need for stability is also reflected in Xi’s calls to ensure food security, which is threatened by the ongoing conflict in Ukraine. According to Tang Renjian, Minister of Agriculture and Rural Affairs, heavy rainfall and flooding have delayed the seeding of about one-third of China’s winter wheat crop. He warned that this year’s winter crop could be the worst in China’s history. The GWR has set a domestic production target of over 650 million metric tons of grain output and pledged to ensure that the area of farmland remains above the redline of 120 million hectares. Hinting at domestic self-sufficiency, Xi pointed out that China cannot rely on international markets for food security and that ‘the rice bowls of the Chinese people must be mainly filled with Chinese grain’. Food security, if threatened, could have massive implications for Xi’s popularity. The Two Sessions also proposed to address the challenges confronting the domestic economy: slowing growth, downturns in the real estate market and sagging consumption. To manage uncertainties emanating from the global economy, the government vowed to maintain consumer price rise of 3%, reduce the deficit to GDP ratio to 2.8% and offer tax refunds and cuts to the tune of 2.5 trillion yuan. Moreover, China hopes to support small and low-profit businesses by halving their Corporate Income Tax (CIT) liability and exempting small-scale taxpayers from value-added-tax (VAT) for a certain period of time. 

The GWR suggests that China will continue to rely on infrastructure investments to sustain economic activity at the provincial level. Infrastructure spending has typically been used to stimulate economic activity after a crisis, like during the 2008 financial crisis and the 2016 US-China trade war. Premier Li announced that the central government would increase transfer payments to local governments by 18%, expanding the scope of use for Special-Purpose-Bonds which are typically regulated by commercial viability and revenue generation capacity. However, he also stated that these funds would be employed in projects that directly affect people’s well-being: water conservancy projects, energy infrastructure, flood and drainage facilities and comprehensive transportation networks. Given that unemployment is a major source of discontent, the government plans to create 11 – 13 million new urban jobs and maintain the unemployment rate at below 5.5%. Last year, the GWR of 2021 set a target of creating 11 million new jobs and managed to create around 12 million new ones. The GWR also prioritized consumption, which has slowed significantly in the latter half of the year partly due to recurring Covid outbreaks, disruptions in energy supply and natural disasters.

Besides the economic targets laid out in the GWR, the Two Sessions also held deliberations on key legislation and development plans. For example, delegates discussed a sixth amendment to the Organic Law of the Local People’s Congress and Local People’s Governments, highlighting whole-process democracy and people-centered philosophy of development. Delegates at the Two Sessions also reviewed the execution of the 2021 plan for National Economic and Social Development (Development Plan) and the draft 2022 Development Plan. According to the 2022 Development plan, all projected targets for the year 2021 were met satisfactorily and indicators of technology innovation, environmental protection, resource conservation and social security continued to improve.

Social Policy, Party Politics and SARs

The Two Sessions were an opportunity for Xi Jinping to enhance his popular appeal before the 20^th Party Congress by implementing the common prosperity agenda. Accordingly, the GWR proposed several measures to tackle social and political challenges facing China, like the slowing population growth, corruption and income inequality. Following a three-child policy initiated in May 2021, the GWR proposed to initiate measures that will ease the burden of raising children. Compared to the 2021 GWR, this year’s report laid out concrete measures that incentivize citizens to have more children. In line with Xi’s common prosperity agenda, the GWR also prioritized high-quality development that addresses the problem of income disparities at the regional level. The government also planned to continue improving the fairness and quality of education after the crackdown on for-profit tutoring in the country last year. These populist measures announced ahead of the 20^th Party Congress dovetail with the anti-corruption campaign and other initiatives to tackle income inequality. They promise to boost Xi Jinping’s popularity and legitimacy as leader of China.

Besides enhancing Xi’s popularity through a raft of populist measures, the GWR reaffirmed his position at the core of the party several times in the 2022 GWR. The document mentioned Xi Jinping’s core position nine times compared to six times in the 2021 GWR document, highlighting the importance of leadership stability in a year of massive significance for China’s political future. The reiteration of XI’s position as paramount leader warns adversaries and rival factions in the party from moving against him before the Party Congress in October. The government promised to persist with Xi’s anti-corruption campaign against party cadres for dereliction of duty and other excesses. However, it is likely that President Xi will tone down the anti-corruption campaign leading up to the 20^th Party Congress to avoid stoking resentment and discontent within the party.

The Two Sessions also proposed to enhance the integration of Special Administrative Regions (SAR) like Hong Kong and Macau by promoting the governance of SARs by patriots. The Work Report of the Standing Committee of the NPC, presented by Li Zhanshu, revealed that China plans to amend the process by which the Chief Executive and Legislative Council members are selected. On the issue of Taiwan and reunification, Premier Li reiterated China’s commitment to the one-China principle and the 1992 Consensus. Although the GWR promises to continue peaceful development of cross-strait relations, it is possible that with a renewed mandate in October, Xi could pursue the Taiwan issue with greater force and aggression.

Global Engagement

Although most of the GWR was focused on China’s domestic issues, it did address China’s global engagements like the Belt and Road Initiative (BRI) and Global Development Initiative (GDI). The government promised to deepen high-quality joint construction through the BRI, expand areas of cooperation and promote the construction of new land-sea passages in the West. The government also promised to pursue high-quality FTAs and promote the implementation of the Regional Comprehensive Economic Partnership (RCEP). Highlighting the country’s contributions to the fight against Covid-19, Zhang Yesui, spokesperson for the 13^th NPC pointed out that China provided 2.1 billion vaccine doses to more than 120 countries and international organizations, accounting for a third of all vaccines administered outside of China. China plans to sustain its public diplomacy and development diplomacy initiatives to further enhance its image as a credible development partner and benign great power.

The Two Sessions reflect Xi Jinping’s preference for stability in a year of massive importance for China and the CCP. Xi plans to manage the uncertainty stemming from the global economy and the slowdown in economic growth that could adversely affect his credibility and legitimacy. Xi also has to contend with recurring covid outbreaks that dampen China’s economic growth momentum, while persisting with the zero-Covid policy that threatens to exact greater costs from China economic future. From a political standpoint, the Two Sessions serve to demonstrate China’s whole-process democracy in action. As delegates of China’s rubber-stamp parliament deliberate legislation and development plans for the future, the Two Sessions cultivate the perception of China as a democracy or as a society moving towards some form of democratic arrangement.