China focuses on booming post-Covid economy at annual meeting
The Chinese National People’s Congress, the annual session of the country’s rubber stamp parliament, will meet on Friday for a meeting that will focus on an issue many other countries wished they had: how to curb an economy that rebounded from the pandemic of coronavirus.
“There have been intense discussions about monetary and fiscal policy,” Wang Jun told the China Center for International Economic Exchange, a government think tank in Beijing. “The main objective is to stabilize the leverage effect, but if the policy [tightening] going too far too fast, this can have a negative impact on financial markets as well as on the real economy. “
The NPC will run for about a week and is usually a forum where previously agreed policy measures and goals are formally endorsed. Last year’s session, however, was dominated by the surprise announcement by Chinese President Xi Jinping of a national security law for Hong Kong after the city was rocked by anti-government protests in 2019.
The rally is also the biggest milestone of the year for Xi to project his undisputed grip on the Chinese government and Communist Party as he prepares for an unprecedented third term in office at the end of 2022.
China’s recovery from Covid stands in stark contrast to the situation in the United States, where the pandemic has claimed the lives of more than 500,000 Americans and President Joe Biden is pushing Congress to adopt a $ 1.9 billion economic stimulus package.
Guo Shuqing, one of China’s most powerful financial regulators, warned this week on the dangers of “extremely loose monetary policies” in the United States and other pandemic economies, saying the measures could cause “too much swings” in Chinese financial markets.
He added that Chinese real estate market was still plagued by “relatively large bubbles” and suggested lending rates would “rebound” this year. Guo, who heads the banking regulator and is also the party’s top official at China’s central bank, said late last year that the real estate industry was the “biggest gray rhino in the country in terms of financial risk. “.
Guo’s comments sparked a massive sale in regional markets, illustrating the difficult balance that he and other finance officials must try to find. Stimulus measures rolled out by Chinese President Xi Jinping’s administration early last year helped stimulate investment but also propelled the debt levels of the world’s second-largest economy to around 270% of GDP.
“Although executives feel confident about the path of the economy, there is still a lot of uncertainty,” said Andrew Polk of Trivium, a Beijing-based consulting firm. “The authorities must find a way to free consumption and relax industrial production and real estate investment.”
Shuang Ding, chief China economist at Standard Chartered in Hong Kong, said Beijing would likely reduce its budget deficit to 3% of GDP, from 3.6% last year. But he also predicted that the Chinese economy would grow by at least 6 percent year on year, with “a substantial margin of outperformance”, and create 11 million jobs.
“The most pressing economic issues are how to pull out of last year’s expansionary fiscal policy and how to increase consumption,” said Jia Jinjing, professor of economics at Renmin University in Beijing. “The central deficit budget will be lower than last year but still higher than 3%. We cannot rely too heavily on increased debt to stimulate consumption. “
AFN delegates will also formally adopt the party’s 14th five-year economic plan, which focuses on achieve “autonomy” in a number of critical technology sectors as well as ambitious environmental targets, including reaching peak carbon dioxide emissions by 2030 and net zero emissions by 2060.
The AFN session in 2020 was delayed by nearly three months by the pandemic and set over the imposition of the National Security Law in Hong Kong.
This year, he is likely to approve measures that will further reduce the representation of the pro-democracy camp in the city’s legislature. He is also expected to unveil rules consolidating Beijing’s grip on an already pro-establishment “electoral committee” that chooses the Hong Kong chief executive.
Dozens of democracy activists in Hong Kong, including publisher Jimmy Lai and jailed student leader Joshua Wong, have been charged with alleged offenses of the security law. In a speech last month, Xia Baolong, head of the Chinese government office responsible for Hong Kong, called Lai and Wong “extremely vile anti-Chinese elements.”
“There does not seem to be an end to the crackdown,” said Willy Lam, an expert on Chinese politics at the Chinese University of Hong Kong. “Xi has decided to completely suppress the Hong Kong opposition movement. For ordinary people, Beijing will insist on “patriotic education” in schools and the media. “
A Chinese scholar who advises Beijing on Hong Kong issues said the territory was “too unbridled” before the National Security Law was passed last year. “The central government had no other choice,” said the academic, who asked not to be identified. “The Hong Kong opposition overestimated its power.”
Additional reporting by Xinning Liu in Beijing