China wrapped up its annual meetings of the Chinese People’s Political and Consultative Congress and National People’s Congress, commonly known as the ‘Two Sessions,’ on Monday. On the economy, Beijing announced a target GDP growth rate of “around five per cent,” the same target set for 2023.
But many observers are dubious of China’s ability to achieve that growth rate. Its economy is facing strong headwinds from a distressed real estate sector, depressed consumer demand, staggering levels of local government debt, and geopolitical tensions that have put a significant damper on foreign investment.
There is also a deepening skepticism of China’s official reporting on its economy, given the growing opacity of the data on which these forecasts are based. The U.S.-based Rhodium Group expects that China’s real GDP growth rate this year will be closer to three to 3.5 per cent.
The meetings were indicative of an ongoing shift in Chinese government priorities away from ‘growth at all costs’ towards ‘high-quality’ development focused on advanced manufacturing and technological innovation, with national security and self-reliance beginning to overtake economic growth as the Chinese Communist Party’s (CCP’s) driving priority.
Another longer-term shift accelerated by the Two Sessions was an amendment to the Organic Law of the State Council that will give the CCP tighter control over the cabinet, downgrading members from active contributors in state policymaking to mere implementers of CCP decree.
Premier’s news conference gets cancelled
And an interesting, headline-grabbing development from this year’s Two Sessions was something that didn’t happen: the premier’s press conference that normally provides a rare opportunity for high-level officials to directly respond to reporters’ questions about China’s policy goals. This practice, established more than three decades ago, was abruptly cancelled this year without explanation, prompting observations that Chinese politics is once again “retreating into the black box.”
Implications for Canada a mixed bag
Given its economic challenges, the Chinese government is keen to attract foreign engagement and investment, including from the U.S., EU, and Canada, “that may offer openings for Ottawa to pursue ‘pragmatic diplomacy’ with Beijing and seek collaboration on issues of joint concern, including climate co-operation and countering the illicit trade in narcotics,” Vina Nadjibulla, APF Canada’s VP, Research & Strategy, told Asia Watch. But, she adds, “greater Party control over state institutions and the obscuring of Chinese policymakers’ thinking will make doing business with China increasingly more difficult.”
