Hello,
Welcome to ‘The Beijing Debrief’, our series of short notes in collaboration with the excellent Trivium China. The aim is to get a monthly look at what is occupying the minds of senior policymakers in Beijing, and why it matters from a British political and business perspective.
We deliberately keep these notes short and punchy. Should you, your department, embassy, company or fund want a fuller joint briefing on any of the issues discussed, we’re more than happy to oblige.
On that note - Trivium and Beijing to Britain are hosting a joint debrief of the Two Sessions this Thursday. Join us for free to hear what happened and why it matters to the UK-China bilateral.
Sam Hogg
The Beijing Debrief is a monthly look at what is occupying the minds of senior policymakers in Beijing.
Brought to you in collaboration with Trivium China.
The view from Beijing
Over the past month, the focus of attention in Beijing has been on the run-up to the legislature’s (NPC) annual session, which began on March 5. Held every March, the NPC is the venue in which the Premier unveils the Government Work Report (GWR), which sets key economic targets and policy priorities for the year ahead. In addition to the GWR, the macro planner (NDRC) releases its priorities for the year ahead, the Ministry of Finance submits the government budget, and the NPC sketches out its legislative agenda for the year ahead.
The NPC’s annual session is always a big deal, but this year’s proceedings generated an unusual amount of excitement and anticipation. That’s because this was the first GWR to be overseen by Premier Li Qiang, who took over as premier in March 2023. China’s economy underperformed in 2023, and observers both inside and outside China were eager to see if the government would unveil a policy package to get the economy back on track.
On March 5, Li unveiled a pro-growth agenda. The government set an ambitious GDP growth target of “around 5%.” Li also signaled that the government will spend to support growth, announcing that the government will issue RMB 1 trillion in special treasury bonds to support strategic initiatives. The legislature promised to do its part by announcing that it will fast-track a Private Sector Promotion Law that should help to improve the operating environment for China’s dynamic (and beleaguered) private sector.
However, the policy package laid out at the NPC was overshadowed by the fact that Premier Li cancelled his annual press conference this year – and for the foreseeable future, ending a tradition dating back to the early 1990s. The cancellation will make China’s already opaque government apparatus even more so. This increased uncertainty creates policy risks for companies, and has already served to undermine business and household confidence.
The Party arguably has one last chance to regain the trust of the business community – by announcing a new reform program at its much anticipated Third Plenum. Unfortunately, until now, the Party has refused to set a date for the plenum, although there have been indications of late that the plenum will be held in the first half of this year. The meeting will map out China’s reform priorities for the coming five years, if not longer. There has been talk that the meeting could unveil a new round of market liberalization; that would go a long way to reinvigorating animal spirits. But until that happens, uncertainty will continue to hang over the business environment.
–Trey McArver, Co-founder Trivium China
Five things from Beijing
On March 5, Premier Li Qiang delivered the 2024 Government Work Report, which sets major economic targets and policy priorities for the year ahead. The government is aiming for GDP growth of “around 5%” in 2024; this is an ambitious target that will be difficult to achieve given headwinds to the economy.
On March 4, it was announced that the premier’s annual press conference, traditionally held in mid-March at the conclusion of the legislature’s annual session, has been canceled indefinitely. The cancellation makes China’s opaque government even more so and will dent business and investor confidence.
In a speech titled “A Staunch Force for Stability in a Turbulent World” delivered at the Munich Security Conference on February 17, Foreign Minister Wang Yi sought to position China as a reliable partner. Wang was trying to play up increasing anxieties in Europe about the US’s commitment to the continent given the current inability of the US Congress to pass support for Ukraine and the looming possibility of a NATO-skeptic Trump presidency.
The Party held its annual Taiwan Affairs Work Conference on February 22-23. The conference signaled that “peaceful reunification” remains Beijing’s aspiration, and no major change to Taiwan policy is in the offing.
A Politburo study session on February 29 focused on promoting “new energy.” This signals continued policy support for renewable energy, lithium-ion batteries, electric vehicles, and hydrogen power, among others.
All of these developments (and much more) are covered by Trivium’s Neopol service. Sign up here for a free trial of Neopol.
The view from London
Thanks Trey,
Any China-interested policymaker worth their salt in Westminster will have been paying attention to the Two Sessions, so it’s handy to have such a punchy overview. In the UK, we’ve just had the Spring Budget, which in theory gives the Government a chance to set out its fiscal stall ahead of the next year (or in this case, the next election). I’m struck by some of the similarities between the two events, especially the efforts to convey a story of economic growth to a sceptical audience.
Having read through Trivium’s coverage of the Two Sessions, and ahead of our own joint briefing in a couple of days (free to attend when you sign up here), here are some updates and discussions that caught my attention.
Proper analysis of the Chinese Communist Party’s annual Taiwan Affairs Work Conference is always helpful, alongside the coverage of Xi Jinping’s meeting with delegates from the Revolutionary Committee of the Chinese Kuomintang (RCCK) (which has no affiliation with the KMT today). That was particularly handy because there had been frenzied speculation over the omission of the “peaceful reunification” wording around the Party’s plan for Taiwan in the 2024 Government Work Report. As noted, “Xi’s speech should calm nerves” because he called on the RCCK to “[e]xpand support for national reunification, and jointly advance the peaceful reunification of China.”
Earlier in the year, I covered the news that Britain had suddenly cancelled its planned ‘UK-African Investment Summit’, due to take place next month, citing diary issues. The last one of these gatherings in person took place four years ago, despite a promised new effort to get the diplomatic relationship back on the road by a former Foreign Secretary. It’s embarrassing, and stands at odds with how the United Kingdom needs to be behaving. I note Trivium’s point that top Party diplomat Wang Yi used his Two Sessions presser last week to hammer home China’s support for the Global South, stating that “[China is] a crucial force for the development and prosperity” of the region, and a champion of their causes, including around United Nations reform and trade practises. This is an area the Westminster establishment needs to refocus on as a priority.
Finishing on economic signals, and that evergreen question of if/how should companies invest in China. It sounds like the planned Private Economy Promotion Law - with the primary goal to create a level playing field for private firms vis-à-vis state-owned counterparts - could be worth British diplomats, business people and foreign companies watching closely, especially as the Party attempts to woo the private sector. The Government Work Report’s nod to China’s critical role as a green technology exporter, and its plan to prioritise “emerging and future-oriented industries” should provide investors with some signals as to what areas Government attention will be particularly focused on, and should remind Western policymakers that China is doubling down on its efforts in these critical spaces.
- Sam Hogg, Founder Beijing to Britain
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