Meeting of the year gets underway

One burning issue dominates as the 2024 session of China’s legislature gets underway this week: the economy.

The National People’s Congress annual meeting, which opens tomorrow, is being closely watched for any signals on what the ruling Communist Party might do to reenergise an economy that is sagging under the weight of expanded government controls and the bursting of a real-estate bubble.

That is not to say that other issues won’t come up. Proposals to raise the retirement age are expected to be a hot topic, the state-owned Global Times newspaper said last week. And China watchers will parse the annual defense budget and the possible introduction of a new foreign minister.

But the economy is what is on most people’s minds in a country that may be at a major turning point after four decades of growth that propelled China into a position of economic and geopolitical power.

The National People’s Congress is largely ceremonial in that it doesn’t have any real power to decide on legislation. The deputies do vote, but it’s become a unanimous or near-unanimous formalizing of decisions that have been made by Communist Party leaders behind closed doors.

The reports and speeches during the congress can give indications of the future direction of government policy. And while they tend to be in line with previous announcements, major new initiatives have been revealed at the meeting.

The first thing the legislature will do tomorrow is receive a lengthy “work report” from Premier Li Qiang that will review the past year and include the government’s economic growth target for this year.

Many analysts expect something similar to last year’s target of “around 5%,” which they say would affirm market expectations for a moderate step up in economic stimulus and measures to boost consumer and investor confidence.

Many current forecasts for China’s GDP growth are below 5%, but setting a lower target would signal less support for the economy and could dampen confidence, said Jeremy Zook, the China lead analyst at Fitch Ratings, which is forecasting 4.6% growth this year.

Conversely, a higher target of about 5.5% would indicate more aggressive stimulus, said Neil Thomas, a Chinese politics fellow at the Asia Society Policy Institute.

There will be positive messages for private companies and foreign investors, Thomas said, but he doesn’t expect a fundamental change to Xi’s overall strategy of strengthening the party’s control over the economy.

“Political signals ahead of the congress suggest that Xi is relatively unperturbed by China’s recent market troubles and is sticking to his guns on economic policy,” he said. — AP

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