What to watch for at China's Two Sessions this year

The Two Sessions (两会, Lianghui, annual sessions of the National People's Congress (NPC) and the Chinese People's Political Consultative Conference (CPPCC), kicks off in Beijing on 4 March. Judging from the huge turnout for the CPPCC press conference on 3 March, this year's Two Sessions has largely overcome the impact of the pandemic since 2020, and resumed its pre-pandemic level of engagement.

The CPPCC session, starting on 4 March, would be attended by all of China's upper echelons. But the CPPCC meeting is just the appetiser of the Two Sessions, with the main course being the NPC meeting to be held on 5 March, during which Chinese Premier Li Qiang would give the first government work report since he assumed office.

In the next week or so, the more than 2,900 NPC deputies and more than 2,100 CPPCC members will conduct reviews and discussions revolving around Li's report. In fact, the Chinese premier's government work report is the key thrust of the Two Sessions every year.

Last year's Two Sessions saw the changing of the guard for China's State Council, NPC, CPPCC and the Central Military Commission. But in the past few months, State Councilor and Defence Minister Li Shangfu as well as State Councilor and Foreign Minister Qin Gang, both appointed during last year's Two Sessions, were removed from their positions.

Several military officers were also dismissed from their positions as deputies by the NPC, and some chiefs of military-industrial enterprises were booted from the CPPCC.

However, former naval commander Admiral Dong Jun was appointed to take over as defence minister, while Politburo member and director of the Chinese Communist Party (CCP) Office of the Central Commission for Foreign Affairs Wang Yi was reappointed as foreign minister. The NPC and the CPPCC also do not need to replace new deputies or members for those removed, so personnel-related matters are not compelling issues for this year's Two Sessions.

With regard to personnel changes, the key questions have been whether Wang Yi would pass on his role as foreign minister to Liu Jianchao, the director of the International Liaison Department who is favoured by external observers for the role; as well as whether Dong and Liu - if the latter is appointed as foreign minister - will be promoted to state councilors.　　

However, according to media reports, personnel appointments were absent from the agenda for the NPC released on 4 March by the official Xinhua News Agency, suggesting that there might not be any personnel moves announced during this year's meeting and Wang would likely remain foreign minister for at least the near future.

The key talking points for this year's Two Sessions would mostly come from Li's government work report. This includes China's GDP growth target and increase in military spending; how China would push forward reforms in key areas including state-owned enterprises and financial systems; how it would enhance the business environment for private firms; how it would boost consumption; how it would develop AI, the green economy and other new sources of productivity; how it would protect the livelihoods of the people and stabilise employment, especially for high school graduates and migrant workers; and how it would continue to open up and stabilise foreign investment.

Li's government work report could set a GDP growth target of around 5%, keeping pace with last year's target. The basis for this analysis mainly comes from the information released during the recent provincial and municipal Two Sessions in China. Most regions have set their economic growth targets at not less than 5%.

China's GDP growth last year hit 5.2%, which was higher than the target set by the officials. However, public opinion in the West is not optimistic about China's economic growth this year. A Reuters report on 1 March said that in the face of a property crisis, deepening deflation, a stock market rout, and mounting local government debt woes, there is enormous pressure on China's leaders to take momentous policy decisions that will put the economy on solid footing for the long-term. However, the NPC agenda is likely to focus more on near-term support for the sputtering economy after a post-pandemic rebound quickly floundered. For China to realise its target of 5% economic growth, it would face even more pressure.

But Chinese officials do not think that the Chinese economy is in trouble. The official judgement is that while China indeed faces the challenges of insufficient effective demand, overcapacity in some industries and weak social expectations, the Chinese economy is still headed towards the basic trend of rebound and improvement in the long term.　

On 1 March, the Chinese State Council approved an action plan to promote large-scale equipment renewal and trade-in of consumer goods, and called for the facilitation of equipment renewal in fields including construction, municipal infrastructure, transport, agriculture, education and medical treatment. It also underscored the need to promote the trade-in of consumer goods such as automobiles and home appliances.

Some analyses have it that China's new government is again using central resources to boost domestic consumption since the subprime mortgage crisis in 2009. They predict that the scale of this drive could be larger than ever before in order to reverse the lack of effective demand.

Large-scale equipment renewal and consumption stimulus are expected to be hot topics at the Two Sessions this year. Xinhua reported on 3 March that delegates to the Two Sessions will actively make recommendations and suggestions on how to support the construction of a modern industrial system, promote a new round of large-scale equipment renewal and consumer goods trade-in, expand effective investment, cultivate new dynamics in foreign trade, and strengthen the protection of the real economy.

In the face of severe external pressures and disputes on both sides of the Taiwan Strait and the South China Sea region, it was predicted that the growth rate of China's military spending this year may be significantly higher than last year's 7.2%.

Between 2011 and 2015, the growth rate of China's military expenditure has remained above 10%. Since 2016, China's annual defence budget growth rate has remained under 10%, and stayed around 7% in recent years.

While the growth rate of China's military spending has slowed in recent years, as China's GDP continues to expand and the degree of military-civilian integration continues to deepen, the People's Liberation Army has upgraded the equipment of all military branches in recent years, significantly improving the capability to conduct joint operations and the working conditions of military personnel as compared with previous years.

Unless war breaks out, maintaining an annual growth rate of about 7% in China's military spending is sufficient to ensure the modernisation of the military in peacetime. Thus, China's military spending is unlikely to see a double-digit growth this year.　

Another annual highlight of the Two Sessions has been the premier's press conference after the NPC. However, it was announced on 4 March that Premier Li Qiang would not hold a press conference after the close of this year's annual meeting, ending a tradition maintained for three decades since 1993.

Li was praised for his steadfast tone and down-to-earth approach at the press conference during last year's Two Sessions. He was expected to answer questions more confidently and display more experience in dealing with reporters after a year in his post.

While the NPC said the decision was made because there would be more briefings by government ministers during the annual meeting where senior cabinet officials will talk about issues on diplomacy, economy and people's livelihoods, it is expected that many observers and journalists will be disappointed with the decision.

This article was first published in Lianhe Zaobao as "今年两会有哪些看点？".

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