On March 4th and 5th, the annual “Two Sessions” of the Chinese Communist Party officially kicked off in Beijing. Although the Two Sessions have now become primarily a formality to ratify Xi Jinping’s top-level design rather than a platform for proposing suggestions and insights, there are still many points of observation. Experts analyze that Xi Jinping’s power within the CCP is still in crisis.
This year, being the final year of the so-called “14th Five-Year Plan” and a year of continued economic stagnation, the topics most discussed by the CCP are mostly related to rescuing the economy, as Beijing is currently facing the onset of a period of political and economic turmoil.
Veteran commentator and independent analyst Cai Shenkun stated on New Tang Dynasty TV’s “Elite Forum” program that prior to the Two Sessions, there were expectations for a possible written performance report to Xi Jinping. It was thought that if his power had been weakened, such a report would not be necessary. However, large-scale propaganda campaigns were still carried out, indicating that Xi’s power had not been significantly affected. Despite this, there are still many signs showing that his power is being challenged.
For instance, there have been recent reports of Deng Pufang sending an open letter criticizing Wang Yi, which is actually seen as a criticism of Xi Jinping as well. Engaging in wolf warrior diplomacy, it is unlikely that Wang Yi would continue without Xi Jinping’s approval, especially as he is already 69 years old and has been elevated to specifically oversee foreign affairs as a member of the Politburo. These indications point to ongoing challenges to Xi’s power.
Therefore, it is not a stagnant situation, as numerous signs indicate. Deng Pufang’s letter might hold significance, as there seems to be a consensus both within and outside the Party. The shift from Deng Xiaoping’s policy of “keeping a low profile” in foreign affairs has led to a more passive and isolated state, which may in turn intensify international pressure affecting domestic politics significantly.
Li Jun, also speaking on the “Elite Forum,” highlighted the central focus on the economy as evident from Xinhua’s emphasis on it. Before the Two Sessions, Xinhua provided an overview of six key talking points related to boosting the economy that the representatives would discuss in the sessions.
These six critical points include the conclusion of the 14th Five-Year Plan, boosting consumption, artificial intelligence, long-term capital market entry, private economy, and combating the trend of overwork. Of these, the most critical is boosting consumption, with a focus on trading in old for new products and enhancing consumer willingness. However, these measures may not address the root cause of insufficient domestic demand.
Li Jun proposed three key areas that could alleviate consumption issues: addressing unemployment, significantly reducing taxes for private small and micro-enterprises, and directly providing welfare vouchers to low-income households. Addressing these areas could potentially stimulate significant domestic demand.
Moreover, two economic experts at Minsheng Bank raised ten noteworthy points for the Two Sessions, primarily economic in nature. Apart from domestic consumption and the private economy, they also touched on broader topics such as a more proactive fiscal policy and looser monetary policy. The extent to which these policies will be pursued remains a matter of concern for many.
Recognized media persona Guo Jun mentioned on the “Elite Forum” the recent emphasis on supporting private enterprises beginning in the second half of 2024 by the CCP. Official publications elaborate on Xi Jinping’s purported support for private enterprises, a stark shift from the previous anti-capitalist rhetoric. This sudden change in narrative reflects a significant departure in policy approach.
It is pertinent to note that the Chinese economy operates within a unique political framework, where the individuals in power largely determine economic policies. Despite any leader’s proclamations or slogans, the country’s political structure fundamentally shapes economic outcomes. In particular, a reliance on top-down designs rather than learning from positive experiences may result in delayed initiatives and subpar economic results, as seen in various ambitious projects in recent years.
Guo Jun provided insight into the CCP’s shift from idealism to serving the interests of established power holders. Reflecting on historical examples like Yugoslavia, which saw the rise of a new ruling class under communist leadership, Guo Jun argued that without systemic change, private enterprises in China are unlikely to thrive. The era of private enterprises supported by Wall Street in the last two decades has seemingly come to an end.
Cai Shenkun further discussed Xi Jinping’s attempts to restore confidence among private entrepreneurs by pointing to specific cases like that of Sun Dawu. Sun fell out of favor with the authorities despite having a positive outlook on Xi Jinping and the CCP, underscoring the risks faced by those not in alignment with the regime. For entrepreneurs, restoring confidence would require concrete actions such as returning seized assets, offering fair compensation, and minimizing political uncertainties.
Reflecting on the content of the first central policy document released on February 23, Cai Shenkun highlighted the focus on deepening rural land reform in China. The proposed changes aim to improve land transfer mechanisms, promote moderate-scale land use, and boost land utilization effectiveness. However, the sensitive and complex nature of reforming land tenure systems presents formidable challenges due to historical contexts and societal implications.
Guo Jun further raised concerns about rumors of large state-owned enterprises entering the agricultural sector, potentially restricting land access for individual farmers. The trend signals a dangerous shift towards centralized control, jeopardizing the livelihoods of rural populations. Such developments underscore the need for clear policies during the ongoing sessions to address the looming challenges.
As discussions at the Two Sessions progress, it remains essential for policymakers to navigate the delicate balance between necessary reforms and preserving established structures to ensure sustainable growth and social stability. The evolving landscape of economic policies in China necessitates thoughtful consideration of the systemic implications in enhancing livelihoods and fostering innovation.
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