Beijing (AFP) – China’s leadership gathered at their largest political event of the year in Beijing on Tuesday, seeking a response to US President Donald Trump’s latest salvo of tariffs targeting an already sluggish economy. The closed-door meetings, known as the “Two Sessions,” are concurrent talking shops of China’s rubber-stamp parliament and a separate political advisory body. Voting is tightly controlled, and legislation is pre-approved by the ruling Communist Party.
Proceedings kicked off Tuesday at 3:00 pm (0700 GMT) with the opening ceremony of China’s People’s Political Consultative Conference (CPPCC) attended by President Xi Jinping and other party top brass, an AFP journalist in the hall said. The political gathering will offer a rare glimpse into how Beijing plans to meet its economic growth target — which analysts say would likely be five percent — while it faces down an unpredictable United States.
Ahead of the meeting, parliament spokesman Lou Qinjian acknowledged that the Chinese economy faced “many difficulties and challenges.” “World economic and political uncertainty is increasing… domestic demand is insufficient, and some companies are facing difficulties in production and operation,” he told a news conference. Lou also expressed confidence in the economy’s ability to weather those headwinds, saying it had “stable foundations, many advantages, strong resilience and great potential.”
The opening of proceedings coincided with the implementation of additional US tariffs, against which China announced countermeasures on Tuesday. All eyes will also be on possible stimulus to boost domestic demand, sorely needed to counter a potential drop in tariff-sensitive exports.
Economy in focus
Tuesday’s CPPCC is low-stakes compared to the almost simultaneous gathering of China’s legislature, the National People’s Congress (NPC), which starts on Wednesday. Premier Li Qiang will deliver a speech expected to unveil economic targets during the NPC’s opening session. Analysts polled by AFP broadly agreed that Beijing will set a goal of around five percent growth — the same as 2024. Observers say this is ambitious given the economic headwinds China is facing.
Analysts expect policymakers to widen the scope of a consumer goods trade-in programme initiated last year that allows shoppers to exchange older home appliances and other items. China is also grappling with a prolonged property sector crisis and high youth unemployment, issues that have dampened confidence in the economy — which long enjoyed double-digit growth but has struggled to make a full recovery since the Covid-19 pandemic.
Investors will also be watching for signs of further support for the private sector following Xi’s rare talks with Chinese tech tycoons last month. Officials will try to send a positive message that China is “still in good shape,” said Alfred Wu, an associate professor at the Lee Kuan Yew School of Public Policy in Singapore. However, specific policies may not be announced during the meetings, with impact on the markets likely “limited,” he said. “In the past, the NPC meeting was more about agenda-setting. Now, it’s more about sending a message and propaganda,” Wu said. “Now, it’s one-man politics.”
Trump’s back
The talks will be closely watched for signals about how China plans to deal with an increasingly unpredictable United States, its largest trading partner and strategic rival. Donald Trump has overturned the international order and proven even more mercurial than in his first term in just over a month back in the White House.
“People will be watching (for) how Xi might be responding to the uncertainties and unpredictability set before him by the challenge that is the current Trump administration,” said Chong Ja Ian, an associate professor of political science at the National University of Singapore. Pressure from Trump could motivate Beijing to strengthen the kinds of support for the economy seen last year — interest rate cuts, easing local government debt pressure, and expanding subsidy programmes for household goods.
“We expect China to increase policy support in response to greater external shock from the US,” Wang Tao, chief China economist at UBS, told AFP. China will also announce its annual military budget this week. Analysts expect an increase as Beijing navigates deepening tensions in the South China Sea and the Taiwan Strait. “I expect further investment in capability, especially in terms of missiles, aircraft, artificial intelligence that boost the military,” Chong said. For years, China’s defence budget has expanded at a faster rate than its economic growth target.
© 2024 AFP
