16 October 2018
Some found Chinese Premier Li Keqiang’s message at the National People's Congress lacking new initiatives. Photo: China Daily
Some found Chinese Premier Li Keqiang’s message at the National People's Congress lacking new initiatives. Photo: China Daily

Reforms stall ahead of party congress

In the breakfast room, a large television was broadcasting interviews and announcements from China’s parliament, the National People’s Congress, whose annual meeting had closed the day before.

As they drank soup and ate dumplings, four Chinese were competing with funny stories to amuse each other. No one was watching the television. Why not? “The NPC has nothing to do with us,” said one of them.

As is the custom, the prime minister gave a news conference on the day after the NPC closing. Li Keqiang said that China did not want to see a trade war with the United States. It supported free trade and globalization and would open its door wider and wider, he said.

Foreign companies are skeptical. “The key word of the NPC this year was stability and no initiatives,” said the chief executive of one foreign company. “Nothing major will be announced until the Communist Party Congress in the autumn. The reformers in the government are silent.”

The domestic media stressed that, while the economy was slowing, its growth was faster than that of the other five biggest global economies – United States, Japan, France, Britain and Germany. The government says it has the tools to reach the 2017 target of GDP growth of 6.5 per cent.

With the export market and domestic consumption weak, the main tool will be government investment, which will drive up already high levels of public debt. A World Bank report in 2015 said that the state retained control over almost 95 per cent of the banking sector, giving rise to “distorted incentives and poor governance structures.”

In 2013, President Xi Jinping proposed hundreds of bold reforms; few have been implemented. State firms receive the lion’s share of credit, to the detriment of Chinese and foreign private companies.

“Xi has little interest in the economy,” said one European diplomat. “Since he took office, his priorities have been the army, ideology, foreign affairs, the secret service and an anti-corruption campaign that has removed most of his political rivals. I hear that he devotes no more than 30 minutes a day to economics. He believes that is for other people to manage.

“His vision is for the state to continue its domination of key sectors of the economy, like finance, oil, aviation, telecommunications and petrochemicals. It is a traditional Communist agenda,” he added.

Shortly before the NPC opened, the EU Chamber of Commerce in Beijing issued a 70-page critique of the country’s industrial policy, known as China Manufacturing 2025.

“The broad set of policy tools that are being employed to facilitate CM2025’s development are highly problematic,” it said. It criticised the plan’s reliance on state spending and setting of precise targets for market share, both domestic and foreign, in 10 priority sectors. It is the state and not the market that will drive the policy.

“A former minister told me that 2025 would create waste,” said one of the authors of the report. “We need markets. We in the government are bad at picking winners.”

Beijing was not happy with the report. It urged the chamber to delay the release until after the NPC, in the interests of ensuring a stable meeting. Instead, the chamber decided that a release ahead of the NPC was best, in an effort to put the contents on its agenda. While the document was widely covered by the international media, there has been limited reporting of it in the domestic media.

The NPC offers the media, both Chinese and foreign, a rare opportunity to question state leaders, including the Premier. For some ministers, it is their single news conference of the year.

One German reporter who has reported the NPC for more than 10 years said that this one was tightly stage-managed. “Most of the questions and answers were scripted in advance. Journalists likely to ask difficult questions were not invited to speak. We applied to interview NPC delegates who said different things to other members but did not receive permission to see them.”

It is this careful management that leaves a majority of the public indifferent to the proceedings. They know that nothing unexpected will come out; so they pay no attention.

“For me, what the NPC means is blue skies and worse traffic jams,” said Li Jinguo, a taxi driver. “They close factories in Hebei and Beijing to ensure the delegates see the sky and do not suffer the pollution we put up with every day. There are traffic controls in place, to facilitate the movement of the delegates and the leaders. This means more queues and waiting for the rest of us. I am not concerned with what they talk about.”

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Hong Kong-based writer, teacher and speaker

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