The real worry for China is how to put its economy back on track.
China’s “Two Sessions” refers to the convening of the annual meetings of the National People’s Congress (NPC) and Chinese People’s Political Consultative Conference (CPPCC). The former, which has close to 3,000 deputies “elected” by provincial people’s congresses, according to China’s Constitution, is the highest organ of state power, and the latter, with over 2,000 representatives, is NPC’s advisory body consisting of eminent personalities from “political parties” and civil society. The real power, however, is wielded by the one who holds the posts of President, General Secretary of the Communist Party (CPC) and Chairman of the Central Military Commission (CMC). Usually convened in March, this year’s “Two Sessions” were delayed because of the outbreak of Covid-19 and were held from 21 May to and 22 May simultaneously, an indication that it is business as usual in Beijing—or is it so?
At the outset, as international political and economic pressure builds on China in the wake of Covid-19, President Xi Jinping, at least since early February has been in the forefront of the “people’s war” against the coronavirus. The “mishandling” of the corona crisis by the West, which China pronounces as the “incompetence” of the West, has indeed deflected the wrath of the Chinese people against their leader’s initial laxity in fighting the virus and a possible “cover up” as alleged by the West. Thus, reinforcing the narrative that only the development path, system and ideology chosen by China have the capacity and capability to deal with a crisis of such magnitude, mobilise people and resources, which no other country can match. Without any doubt, the “two sessions” have reiterated their faith in Xi Jinping as the “core leader”.
Secondly, two major goals identified for the first centenary in 2021 are—to double the 2010 GDP of China and make China a moderately prosperous society by totally eradicating poverty. In fact, China has achieved both goals in advance. In 2010, the Chinese GDP was 6.09 trillion US dollars, which in 2020 has been projected at 13.9 trillion US dollars. As regards poverty, China alleviated the poverty of 800 million people in the last 70 years, lifting almost 70% of the world’s poor population, and meeting the objectives of SDGs almost a decade ahead.
Rather, the real worry for China would be, how to put its economy back on track as it shrunk by 6.8% in the first quarter of 2020. As projected by the IMF, China, like other Asian countries, may see very little or zero growth in 2020. During the Asian financial crisis in 2008, China’s stimulus stood at 586 billion US dollars, but since the magnitude of economic depression his time is much larger, the stimulus could be two-three times bigger than in 2008. China is likely to identify key sectors mostly from its “Made in China 2025” strategy or the so called “new infrastructure” focusing on technology innovation and information networks to support high-quality growth. China is estimated to spend 1.4 trillion US dollars in these sectors by the year 2025, aiming to achieve 40% “self-sufficiency” by 2020, and 70% “self-sufficiency” by 2025. Nevertheless, the rising unemployment, 25 million workers sitting in their homes in the rural areas, and another 75 million working from home on slashed salaries, plunging retails and investment, US tightening noose around Chinese tech firms, weak global demand etc., will be the riders to the recovery. Though China has promised to create 9 million new jobs in 2020, but in the face of these facts, it will be a herculean task.
Thirdly, as China comes under attack from the global community and its rivalry grows with the US in the Asia Pacific, its behavior would be more assertive, as has been reflected in its “wolf warrior” diplomacy. Surprisingly, the Government Work Report of Premier Li Keqiang has recommended 6.6% of the GDP (178.2 billion USD) for the People’s Liberation Army, not a significant decrease from last year (7.5%), especially when growth has dipped to negative. It is also believed that the real spending is much higher than the officially declared budget. For example, in 2019, the SIPRI pegged China’s nominal defence spending at 261 billion USD, 1.5 times larger than the official figure of 177.5 billion USD.
Fourthly, in the face of the West’s threat of decoupling with China, which at this stage remains exaggerated, China will do its best to keep its industrial and supply chains stable, prop up foreign capital utilization in free trade ports like Hainan, and other regions such as Greater Bay and Xiong’an areas. Greater Way Area has certain advantages as 20 of world’s top 500 enterprises such as telecom, finance, automobiles, real estate and home appliances are based here, however, the perennial Hong Kong democracy movement, and a new security law (read sedition) proposed by the NPC on 22 April for Hong Kong may impact negatively for the region. These areas, along with other nodes in the coastal belt and hinterland, will be instrumental in supporting the Belt and Road Initiative of the Chinese government on the one hand and emerge as new innovation centres for supporting the “new infrastructure” on the other.
Finally, as the US falters from assuming global leadership and continues to move away from multilateralism, weaken global institutions, and embrace protectionism and nativism, China will not shy away from stepping in and filling the vacuum. For example, when the US suspended aid to the WHO, China announced an aid of 20 million US dollars, followed by 2 billion USD to the United Nations. Internally too, China has earmarked 141 billion US dollars to fight Covid-19. It has already advocated the notion of community of shared future, which has found greater appeal in developing countries. When UN’s sustainable development goals (SDGs) such as poverty alleviation, universal education, gender equality, child mortality, pandemics like HIV, environmental protection, global partnership for development are still around us, and many countries find it difficult to get rid of, a collective approach in dealing with these that is inclusive, open ended, will bring mutual benefits and common development. China has benefited immensely from the liberal order; therefore, it will continue to support international organizations and call for greater cooperation against the pandemic in various groupings like SCO, BRICS, G20 etc.
B.R. Deepak is Professor, Center of Chinese and Southeast Asian Studies.
At the outset, as international political and economic pressure builds on China in the wake of Covid-19, President Xi Jinping, at least since early February has been in the forefront of the “people’s war” against the coronavirus. The “mishandling” of the corona crisis by the West, which China pronounces as the “incompetence” of the West, has indeed deflected the wrath of the Chinese people against their leader’s initial laxity in fighting the virus and a possible “cover up” as alleged by the West. Thus, reinforcing the narrative that only the development path, system and ideology chosen by China have the capacity and capability to deal with a crisis of such magnitude, mobilise people and resources, which no other country can match. Without any doubt, the “two sessions” have reiterated their faith in Xi Jinping as the “core leader”.
Secondly, two major goals identified for the first centenary in 2021 are—to double the 2010 GDP of China and make China a moderately prosperous society by totally eradicating poverty. In fact, China has achieved both goals in advance. In 2010, the Chinese GDP was 6.09 trillion US dollars, which in 2020 has been projected at 13.9 trillion US dollars. As regards poverty, China alleviated the poverty of 800 million people in the last 70 years, lifting almost 70% of the world’s poor population, and meeting the objectives of SDGs almost a decade ahead.
Rather, the real worry for China would be, how to put its economy back on track as it shrunk by 6.8% in the first quarter of 2020. As projected by the IMF, China, like other Asian countries, may see very little or zero growth in 2020. During the Asian financial crisis in 2008, China’s stimulus stood at 586 billion US dollars, but since the magnitude of economic depression his time is much larger, the stimulus could be two-three times bigger than in 2008. China is likely to identify key sectors mostly from its “Made in China 2025” strategy or the so called “new infrastructure” focusing on technology innovation and information networks to support high-quality growth. China is estimated to spend 1.4 trillion US dollars in these sectors by the year 2025, aiming to achieve 40% “self-sufficiency” by 2020, and 70% “self-sufficiency” by 2025. Nevertheless, the rising unemployment, 25 million workers sitting in their homes in the rural areas, and another 75 million working from home on slashed salaries, plunging retails and investment, US tightening noose around Chinese tech firms, weak global demand etc., will be the riders to the recovery. Though China has promised to create 9 million new jobs in 2020, but in the face of these facts, it will be a herculean task.
Thirdly, as China comes under attack from the global community and its rivalry grows with the US in the Asia Pacific, its behavior would be more assertive, as has been reflected in its “wolf warrior” diplomacy. Surprisingly, the Government Work Report of Premier Li Keqiang has recommended 6.6% of the GDP (178.2 billion USD) for the People’s Liberation Army, not a significant decrease from last year (7.5%), especially when growth has dipped to negative. It is also believed that the real spending is much higher than the officially declared budget. For example, in 2019, the SIPRI pegged China’s nominal defence spending at 261 billion USD, 1.5 times larger than the official figure of 177.5 billion USD.
Fourthly, in the face of the West’s threat of decoupling with China, which at this stage remains exaggerated, China will do its best to keep its industrial and supply chains stable, prop up foreign capital utilization in free trade ports like Hainan, and other regions such as Greater Bay and Xiong’an areas. Greater Way Area has certain advantages as 20 of world’s top 500 enterprises such as telecom, finance, automobiles, real estate and home appliances are based here, however, the perennial Hong Kong democracy movement, and a new security law (read sedition) proposed by the NPC on 22 April for Hong Kong may impact negatively for the region. These areas, along with other nodes in the coastal belt and hinterland, will be instrumental in supporting the Belt and Road Initiative of the Chinese government on the one hand and emerge as new innovation centres for supporting the “new infrastructure” on the other.
Finally, as the US falters from assuming global leadership and continues to move away from multilateralism, weaken global institutions, and embrace protectionism and nativism, China will not shy away from stepping in and filling the vacuum. For example, when the US suspended aid to the WHO, China announced an aid of 20 million US dollars, followed by 2 billion USD to the United Nations. Internally too, China has earmarked 141 billion US dollars to fight Covid-19. It has already advocated the notion of community of shared future, which has found greater appeal in developing countries. When UN’s sustainable development goals (SDGs) such as poverty alleviation, universal education, gender equality, child mortality, pandemics like HIV, environmental protection, global partnership for development are still around us, and many countries find it difficult to get rid of, a collective approach in dealing with these that is inclusive, open ended, will bring mutual benefits and common development. China has benefited immensely from the liberal order; therefore, it will continue to support international organizations and call for greater cooperation against the pandemic in various groupings like SCO, BRICS, G20 etc.
B.R. Deepak is Professor, Center of Chinese and Southeast Asian Studies.
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