[Global Focus] Xi Jinping's Dream of Long-Term Rule... Next Month's Two Sessions as the First Step

Xiaokang Declaration, 100th Party Anniversary, Winter Olympics, 20th Party Congress and Other Political Events Ahead
Focus on Full Economic Normalization and Sustainable Growth in China This Year

[Asia Economy Beijing=Special Correspondent Jo Young-shin] From the perspective of Xi Jinping, President of China, this year is very important. It is the year of the 'Xiaokang (小康) society declaration' and the 100th anniversary of the founding of the Communist Party. It is also an opportunity to demonstrate the political power of the Communist Party both domestically and internationally and to firmly establish the foundation for long-term rule.

The Xiaokang society refers to a society where all people enjoy a comfortable and affluent life. In 2002, President Jiang Zemin presented the goal of building a Xiaokang society by 2020 at the 16th National Congress of the Communist Party.

The Xiaokang society declaration signifies that the Chinese Communist Party has kept its promise to the people. Last October, at the 5th Plenary Session of the 19th Central Committee of the Communist Party, President Xi declared, "The Party Central Committee will announce the construction of a 'Xiaokang society' after an internal evaluation in the first half of next year." Considering that the founding day of the Chinese Communist Party is July 1, President Xi is expected to officially declare the Xiaokang society as early as May or by June at the latest.

At the 100th anniversary celebration of the Party's founding, President Xi is expected to present a concrete goal of a socialist modernized power by 2049, the 100th anniversary of the founding of the People's Republic of China. The Beijing Winter Olympics scheduled for February 2022, an international sports event, is also one of the important political schedules. The Chinese leadership plans to showcase 'China's rise' to the world through the successful hosting of the Beijing Winter Olympics. This embodies the 'Chinese Dream (中國夢)' of the great rejuvenation of the Chinese nation.

The ultimate destination of the Chinese political events, including the Xiaokang society declaration, the 100th anniversary of the Party's founding, and the hosting of the Beijing Winter Olympics, is the 20th National Congress of the Communist Party expected around October next year. China holds a Party Congress every five years to elect new leadership. President Xi was elected General Secretary at the 18th Party Congress in 2012 and re-elected at the 19th Party Congress in 2017.

[Image source=Yonhap News]

President Xi's term is until 2022. However, the constitutional term limit provision that prohibited the President and Vice President from serving more than two consecutive terms was removed in 2018. This makes a third term for President Xi possible, and in some cases, opens the door for long-term rule. This is why political events this year and early next year are all aligned with the 20th Party Congress.

◆ Two Sessions, the first step for Xi's long-term rule = The Two Sessions (National People's Congress and Chinese People's Political Consultative Conference), China's largest political event starting from the 4th of next month, is the first major political schedule ahead of the 20th Party Congress next year. There is no disagreement that this year's Two Sessions are the first step for President Xi's long-term rule.

The Two Sessions are equivalent to our regular National Assembly, held once a year, usually for two weeks in March. The National People's Congress (NPC), which decides everything about China's economy including the economic growth rate, opens on the 5th.

The NPC is the highest authority institution under the constitution, deciding on matters related to state operation such as enacting and approving laws, electing national leadership, and reviewing the budget. Given the difficult situations China faces, including US-China conflicts and COVID-19, the world is closely watching the results of this year's Two Sessions.

The NPC will give final approval to major agendas discussed at last year's 5th Plenary Session, including the 14th Five-Year Plan. The core keywords of the Five-Year Plan are 'dual circulation development' and 'scientific and technological power.' Dual circulation development means adding domestic demand to the existing manufacturing and export-oriented economic paradigm to drive economic growth. Since manufacturing and exports now account for about 30% of China's economy, the leadership plans to add domestic demand as a new engine for economic development. This also includes a defensive strategy in preparation for the worst US-China relations.

The concept of a scientific and technological power also implies self-reliance. It is a policy considering China's 'semiconductor rise' and the modernization of the People's Liberation Army. Since the agendas of 'Made in China 2025' and the 100th anniversary of the founding of the People's Liberation Army coincide with the 14th Five-Year Plan period, the Chinese leadership is expected to establish and promote detailed plans to achieve these goals.

A source in Beijing said, "Various agendas presented to the 1.4 billion people by the Chinese leadership, as well as important political schedules such as leadership changes, are included in the 14th Five-Year Plan period," adding, "Since this year is the beginning of the 14th Five-Year Plan, the Chinese leadership will focus its efforts on revitalizing the economy."

◆ Will the Chinese economy return to normal track this year? = At this year's Two Sessions, the Chinese government is unlikely to set an economic growth target, as it did last year. However, based on the targets reported by provincial-level autonomous regions to the central government ahead of the Two Sessions, we can roughly forecast China's economy this year.

Last year, due to the outbreak of COVID-19, China's economic growth rate in the first quarter fell to -6.8% (year-on-year). It then achieved a 'V-shaped' rebound with 3.2% in the second quarter, 4.9% in the third quarter, and 6.5% in the fourth quarter, regaining stability. The annual economic growth rate was 2.3%, the lowest in 44 years since the negative growth recorded in 1976 after the Cultural Revolution.

Among the 31 provincial-level autonomous regions, 29 reported economic growth targets for this year ranging from a low of over 6% to a high of over 10%. Most targets are concentrated between 6% and 8%. Fifteen regions including Beijing, Shanghai, and Jilin set their economic growth targets at over 6%. Six regions such as Henan and Sichuan set targets above 7%, and five regions including Yunnan set targets above 8%. Hubei and Hainan set targets above 10%. The average of the targets proposed by the 29 regions is 7.2%.

A source familiar with the Chinese economy said, "Provincial-level autonomous regions seem to have set conservative economic growth targets," adding, "It appears that economic plans focus more on industrial restructuring, technological innovation, and consumption promotion rather than high growth."

◆ "Focus likely on stability rather than high growth" = The Chinese Academy of Social Sciences, a government think tank, presented a growth target slightly higher than those of the 29 provincial-level autonomous regions through its '2021 Economic Outlook Report Blue Book.' Li Xuesong, Deputy Director of the Industrial and Economic Research Institute at the Chinese Academy of Social Sciences, forecasted China's economic growth rate to reach 7.8%, considering economic indicators, industrial supply chains, employment, industrial upgrading, and domestic demand.

Leading international economic organizations have even more optimistic forecasts for China's economy. The International Monetary Fund (IMF) recently projected China's economic growth rate to reach 8.1% this year in its World Economic Outlook report. The Organization for Economic Cooperation and Development (OECD) also forecasts China's economic growth rate at 8.0% this year.

Major global economic forecast institutions including those covering China expect China's economic growth rate to be between 7% and 8%. Considering the base effect, this corresponds to about 5% growth. Given that China's economy grew at around 6% annually before COVID-19, this level cannot be considered a full normalization. Deputy Director Li said, "Although forecasts of over 10% growth exist, uncertainties such as risks from COVID-19 and US-China conflicts remain," adding, "While the outlook for China's economy is optimistic, domestic and international uncertainties must be kept in mind."

Some in the Chinese economic sector believe the Chinese government is likely to pursue a stable growth policy of 5-6% annually to minimize the negative effects of high growth such as wealth disparity. A source in Beijing's financial sector said, "The Chinese government is well aware of the various social problems arising from high growth," and predicted, "The Chinese leadership is likely to pursue a sustainable and stable growth policy instead of a high growth policy going forward."