Economy, Talking Point

Question time

What messages has the annual NPC gathering sent out?

Reporters raise hands during China's Premier Li Keqiang's annual news conference following the closing session of the National People's Congress in Beijing

Following the script: Li Keqiang takes 17 questions in his third formal press conference

Placido Domingo’s performance of Otello so excited an audience in Austria that he was once given a record-breaking 80-minute standing ovation.

“You don’t know what to do,” the opera star recalled. “You go out, and the public is still there. And you say, ‘Well, what are we doing?’ And you come out again, and you take a little longer to come next time. And you say, ‘I hope they go.’ But no, they continue.”

Few politicians have felt the love in quite the same way as the Spanish tenor, bar the portly North Korean pariah Kim Jong-un, whose people routinely weep with joy on making his acquaintance.

Alexander Lukashenko, the strongman president of Belarus, has taken an alternative view of applause, classing it as subversive after opponents of his regime took to showing their dissent by clapping loudly.

The subsequent clampdown was ridiculed internationally, especially when a court in Minsk punished a one-armed man for applauding in a public place.

Delegates at Chinese political meetings are usually keen to come across as complimentary, of course, with the media reporting 52 rounds of applause during Li Keqiang’s keynote address to the National People’s Congress (NPC) on March 5.

Still, there was room too for a disapproving voice, in this case from Bai Yansong, a news anchor at the state broadcaster CCTV. Bai felt that all the clapping had disrupted the Chinese premier’s rhythm as he dispensed his annual review to delegates.

Disjointed appreciation was another of Bai’s bugbears. “On some occasions, only two or three applauded,” he griped, “causing the people next to them to start laughing, and then the applauders felt the clapping was inappropriate and stopped.”

The NPC drew to a close on Sunday. Was there much for people to be happy about?

What is the purpose of the gathering?

The 10-day session of the National People’s Congress, the Communist Party-controlled legislature of 2,965 delegates, meets once a year to approve the government’s plans. It is often derided as a rubber-stamp affair. Although delegates can abstain or vote “no” on every proposal and even Li Keqiang’s policy address, these votes are always a tiny minority and have no real influence over the meeting’s outcome. Policy ideas tend to have been discussed and formulated well in advance of the gatherings, and surprise announcements are very (very) rare.

Still, because they provide a glimpse of the government’s priorities, the yearly get-togethers are watched carefully by the global markets for clues as to the future direction of the world’s biggest economy (a rank bestowed by the IMF last December when it measured Chinese and US GDP using purchasing power parity).

The tone is often as important as the specifics on an occasion that is usually higher-profile for China’s premiers than their more senior presidential colleagues. Li Keqiang, rather than Xi Jinping, was the man scheduled to be in the spotlight this month, for instance, because the session opens with the premier giving the State Council’s ‘work report’, and concludes with questions at a press conference – an event now regarded as the media occasion of the year in Chinese politics.

Anything of note in the work report this year?

The headline news related to China’s ‘new normal’ – i.e. lower economic growth, with the announcement of the lowest GDP target for a generation of 7% for 2015.

Last year the goal was 7.5%, but growth came in slightly below that at 7.4%. This was the first miss in more than 25 years, says Qu Hongbin, HSBC’s chief China economist. Policymakers probably won’t want the same to happen again, so they’ve lowered the target.

“The target growth rate of approximately 7% takes into consideration what is needed and what is possible,” Li explained.

Another of the key missions – creating 10 million new jobs a year – is the same as last year. Unlike the GDP threshold, this was exceeded in 2014 when more than 13 million jobs were created despite the slowing economy.

“It’s true we have adjusted down somewhat our GDP target but it will by no means be easy for us to reach this target,” Li later told reporters at the Great Hall of the People. He also called for perspective, noting that the economy has exceeded $10 trillion, and that a 7% increase is equivalent to adding the economy of a medium-sized country.

There were more reassuring words too. “In recent years we have not taken any strong, short-term stimulus policies,” Li advised. “So we can say our room for policy manoeuvre is relatively large. We have many tools in our toolbox.”

HSBC’s Qu agrees that policymakers have options for monetary easing, including cuts to lending rates and lower reserve ratios at the banks. On the fiscal side, policymakers included a higher deficit target (increased to 2.3% of GDP, from an actual figure of 1.8% last year), as well as new proposals for special-purpose bonds that would help struggling local governments to meet their financial commitments.

So more of the same: reform, but reassurance too?

Li has made similar remarks about the economy, the environment and fighting corruption for three years in a row since becoming premier.

Like last year, he also said that China’s debt situation is manageable. Bankrupt companies would be allowed to fail, he repeated, as long as they did not trigger systemic risks.

Although he recognised the challenges in pushing ahead with China’s reform agenda, Li made clear that policymakers were steeled to see it through.

“This is not nail clipping, instead it is like taking a knife to one’s own flesh,” Li insisted. “However painful [the reforms], we are determined to continue,” referring to the powerful vested interests that are resisting change.

Anything unexpected at the press conference?

Question-and-answers at the prime minister’s media session – which traditionally happens at the end of the NPC – are heavily controlled, with press enquiries filtered in advance. This year there were a few unscripted moments, including a shouted question from the back about Li’s thoughts on a bomb attack on the Chinese border with Myanmar. Another reporter asked about the potential for further relaxing the one-child policy. Li chose not to answer directly, saying simply that the government would only make changes after a careful review of the options and the wider demographic challenges.

Despite a series of promises over the past two years to reform some of the largest state-owned enterprises, Li was silent about his plans.

On the environment, he was more forthcoming. “The progress we have made still falls far short of the expectation of the people,” Li admitted. “Last year, I said the Chinese government would declare war against environmental pollution. We’re determined to carry forward our efforts until we achieve our goal.”

Enforcement of the environmental laws “should not be a cotton swab but a killer mace,” Li said.

This followed a question from a foreign reporter about the environmental documentary Under the Dome (see last week’s Talking Point), including allegations that China’s largest energy firms – CNPC and Sinopec – bear some responsibility for the country’s filthy air.

Li didn’t respond to the mention of the energy majors but others are inferring deeper meaning simply from the fact that the question was asked.

According to this reasoning, the naming of CNPC and Sinopec must have been significant because officials had approved the question in advance. Later, the reporter confirmed that his query had been vetted, including the identification of the state giants.

Less about Li, and more about Xi…

A broader interpretation of events in Beijing last week should turn to China’s leader, Xi Jinping. While Li is said to have been frustrated by some of the limitations of his influence, Xi has consolidated his grip on power, emerging as the primus inter pares on the Politburo’s Standing Committee, the seven-man cabinet that runs the country.

Already a quarter of the way through his likely period of office, Xi has established himself as a much more powerful figure than his predecessor Hu Jintao and seems confident enough in his authority to move forward with a two-year anti-graft campaign that has netted some unexpectedly senior Party members, such as former security tsar Zhou Yongkang.

He has also begun the process of establishing himself in doctrinal terms by starting to espouse his theory of the ‘Four Comprehensives’ since the end of last year.

As a general guideline for taking China into a new era, the theory aims to (1) establish a moderately prosperous society; (2) continue the determined effort to deepen reforms; (3) create a nation based on the rule of law; and (4) ensure strict enforcement of discipline in the Party.

Concepts like these can sound bland and uninspiring, acknowledges Chris Buckley in the New York Times. But the slogans play an important role in projecting an image of confidence and coherence around the leadership team.

Xi’s Four Comprehensives is likely to be canonised in a similar fashion to Mao Zedong Thought, Deng Xiaoping Theory, Jiang Zemin’s ‘Three Represents’ and Hu Jintao’s Theory of Scientific Development.

It may also help Xi’s star to shine brighter than those of his predecessors. In the front-page commentaries covering the Four Comprehensives in the People’s Daily in the final week of February (there were five such pieces), neither Mao, Jiang or Hu got a mention. There was a passing reference to Deng, but Xi’s name featured 23 times.

Naturally, the state media has been extolling the Four Comprehensives in suitably glowing terms.

“Each ‘comprehensive’ is in itself a system of thought grounded in reality, forging a way to the future and possessing distinctive features,” the People’s Daily explained in a typical piece.

“Combined, the four complement each other so each shines more brilliantly in their shared company, and this is a new leap in innovating the Party’s strategy for governance and wise rule to keep up with the times while combining Marxism with Chinese practice.”

Yet even the most determined stage management can go awry. That emerged when an awkward blooper saw printed copies of the official work report omit any reference to Xi’s final bullet point about tightening Party discipline.

This was a glaring error, according to an eagle-eyed reporter from the South China Morning Post who was monitoring the scene with binoculars moments before Li Keqiang made his opening speech on March 5.

Fortunately Xi spotted the mistake in the text and could be seen gesticulating to it, the reporter noted. Li incorporated the missing material on the fly in his remarks, and the NPC secretariat later published an amended document, saying that the omission had been a technical error created by the tight schedule involved.

Of course, for many in the Party’s senior ranks, the anti-graft effort is still the most contentious initiative undertaken by Xi and his team. But the campaign shows little sign of running out of steam. Only a few hours after the NPC had finished, two more of its delegates were detained for questioning.

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