China's 'Two Sessions' Commence as Leaders Aim to Restore Economic Optimism

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This week, thousands of delegates from all over China are coming together in Beijing for the country’s biggest annual political event. Leaders will outline their plans for steering the world’s second largest economy in the coming year and address growing concerns about the challenges it is currently facing.

Chinese leader Xi Jinping and his top Communist Party officials are expected to focus on projecting confidence during the "two sessions," a highly choreographed event where China's rubber stamp legislature and top advisory body convene.

This year, the largely ceremonial gathering holds increased significance as China's economy faces challenges such as a property sector crisis, local government debt, deflation, a stock market downturn, and tensions with the US in the tech sector. These issues have raised concerns about whether China will be able to achieve its goal of becoming a developed global power without losing momentum.

Xi is facing increased scrutiny due to economic challenges causing discontent in China. This scrutiny comes after he began his third term as president, consolidating power within the party and appointing officials based on loyalty rather than experience.

A year later, doubts are growing about Xi's leadership as the expected post-Covid recovery has not fully materialized. Young people are struggling to find jobs, investors are dealing with market losses, and small business owners are fighting to survive. Xi has also made changes within his own political team, adding to the uncertainty surrounding his leadership.

Xi, China's most powerful leader in decades, may not be threatened by these challenges. However, how his team tackles these issues will impact not just China and its 1.4 billion citizens, but also the global economy. Xi's top officials are likely feeling the weight of this responsibility as they enter the meeting.

Policymakers, investors, and business owners worldwide will be closely monitoring the situation. This is especially crucial in a year marked by America's presidential election, which could further strain the relationship between the world's two largest economies.

According to Chen Gang, a senior research fellow at the National University of Singapore’s East Asian Institute, the government is using this platform to reassure the public that China’s economy is stable and heading in the right direction.

With concerns and uncertainties surrounding the new administration, particularly with regards to economic management, the government is eager to demonstrate that Premier Li Qiang and his team are capable of effectively addressing economic challenges.

People attend a job fair in China's southwestern city of Chongqing last spring.

People attend a job fair in China's southwestern city of Chongqing last spring.

AFP/Getty Images

Delegates converge

The annual gathering in Beijing's Great Hall of the People is the only time when the 3,000-person legislature, the National People's Congress, meets face-to-face.

However, the body has limited authority to determine the country's future direction, as the party's elite members make key decisions behind closed doors throughout the year.

The two sessions are a crucial platform for China's government to share its plans for economic, social, and foreign policies. They also reveal key indicators like China's economic growth target, budget deficit limit, and military spending for the upcoming year.

During the sessions, elite leaders have the chance to listen to delegates from various regions and social sectors. However, opportunities for such exchanges have decreased as Xi Jinping has strengthened ideological control and cracked down on views that differ from the party's stance.

On January 1, 2024, in Beijing, China, the Guard of Honor of the Chinese People's Liberation Army (PLA) proudly escorted the Chinese national flag to Tian'anmen Square during a special flag-raising ceremony.

BEIJING, CHINA - JANUARY 01: The Guard of Honor of the Chinese People's Liberation Army (PLA) escorts the Chinese national flag to Tian'anmen Square during a flag-raising ceremony on New Year's Day on January 1, 2024 in Beijing, China. (Photo by VCG/VCG via Getty Images)

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Xi has recently focused on purging the military. The question arises: why have powerful generals fallen out of favor? In addition, there have been controls put in place in discussions about the economy. Some well-known economic analysts have faced social media restrictions, which appear to be aimed at limiting their ability to express their opinions.

Xuezhi Guo, a political science professor at Guilford College in the US, mentioned that the regime frequently uses the annual conference to gain support from Chinese society and boost confidence in the market. He emphasized that this is essential, especially in light of challenges such as China's real estate downturn, stock market crisis, high unemployment, and weakened demand.

Observers will be paying attention to how leaders address important topics such as China's stance on Taiwan, its relationship with the US, and efforts to boost innovation while the US tightens restrictions on tech exports.

"It is possible that Xi Jinping may choose to take a more cooperative approach towards the US, setting aside the aggressive 'wolf warrior diplomacy' for now. Instead, he may focus on supporting government officials and experts to maintain stability in China's economy," Guo suggested.

A new foreign minister could be appointed at this year's meeting, signaling a potential change in tone, according to analysts.

Senior diplomat and former Foreign Minister Wang Yi has been holding the position temporarily since July. His successor Qin Gang was unexpectedly removed after disappearing from the public eye.

Just weeks after the dramatic moment, another one of Xi's hand-picked officials, Defense Minister Li Shangfu, disappeared and was subsequently removed and replaced. This move, done without explanation, was part of an anti-corruption drive and apparent purge within China's military.

Although analysts mentioned that the sudden shake-up didn't pose a threat to Xi's firm hold on power, it did bring into question his judgment. The lingering vacancies from these removals serve as a reminder of this.

Analysts predict that at this year's two sessions in China, besides the foreign minister role, two other high-ranking positions previously held by Li and Qin could potentially be filled.

An unfinished apartment complex in China's central Henan province is one of many projects across the country left incomplete by developers amid a property sector crisis.

An unfinished apartment complex in China's central Henan province is one of many projects across the country left incomplete by developers amid a property sector crisis.

Pedro Pardo/AFP/Getty Images

Economic challenges

The signs before the meeting indicate that the Chinese government is getting ready to prioritize supporting economic growth in the coming year. However, it is unlikely that China will introduce any significant stimulus measures.

"Neil Thomas, a fellow at the Asia Society Policy Institute’s Center for China Analysis, predicts that during the two sessions, Beijing will introduce tactical measures to enhance immediate confidence in China’s economy. These measures are expected to align with Xi’s overarching strategy of state-led development."

Customers shop for vegetables and fruit at a supermarket in Fuyang, in eastern China's Anhui province on February 8, 2024. Chinese consumer prices fell in January at their quickest rate in more than 14 years, data showed on February 8, piling pressure on the government for more aggressive moves to revive the country's battered economy.

Customers are seen purchasing vegetables and fruit at a supermarket in Fuyang, located in eastern China's Anhui province on February 8, 2024. According to data released on February 8, Chinese consumer prices experienced a significant decline in January, the sharpest drop in over 14 years. This puts pressure on the government to take stronger actions to stimulate the struggling economy.

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China sinks deeper into deflation as prices fall at fastest rate in 15 years

The announcement of the economic growth target for 2024, scheduled to be revealed by Premier Li on Tuesday, is a key topic to pay attention to during the two sessions.

Analysts anticipate that Li will disclose a growth target of "around 5%," indicating the government's continued emphasis on economic growth despite facing various challenges.

Observers will be closely monitoring the market's reaction to the event. Many doubt that the confidence projections and measures announced will be sufficient to boost optimism. However, even if they fall short, it is unlikely to diminish Xi's influence.

“The country’s economic problems are causing regular people to lose faith in the leadership's capability to achieve better growth and living standards,” Thomas from Asia Society remarked.

Despite this, Xi Jinping does not have to compete in elections, so what holds more significance for him is maintaining control over the elite rather than seeking approval from the general population. Additionally, the economy is far from experiencing a collapse severe enough to overpower the party's advanced system of control.

CNN’s Laura He and Nectar Gan contributed to this report.

Editor's P/S:

This article provides a comprehensive overview of China's upcoming "two sessions" political event, highlighting the significant challenges and uncertainties facing the country. The article effectively captures the concerns surrounding China's economic trajectory, including the property sector crisis, local government debt, and tensions with the US in the tech sector.

It accurately portrays the scrutiny faced by Chinese leader Xi Jinping due to economic challenges and his recent consolidation of power within the party. The article also sheds light on the potential impact of these challenges not only on China and its citizens but also on the global economy. The insights from experts and analysts add depth to the analysis, providing a well-rounded perspective on the significance of this political event. Overall, the article effectively conveys the complexities and importance of the upcoming "two sessions" in shaping China's future and its global impact.