A Crucial Step towards Economic Confidence Repair

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Thousands of delegates from China are gathered in Beijing for the “two sessions,” the country’s most prominent annual political event.

The leaders will signal their plans for the world’s second largest economy and address challenges it faces.

Chinese leader Xi Jinping and his top Communist Party officials are expected to prioritize projecting confidence.

This year’s economic turmoil has sparked growing frustration within China. The gathering comes one year after Xi began a norm-shattering third term as president, having consolidated power and stacked leadership with loyal officials.

China’s National People’s Congress, led by Premier Li Qiang, is holding its annual gathering in Beijing’s Great Hall of the People, the only time the legislature meets in person.

The gathering is crucial for the government to broadcast its strategy for economic, social, and foreign policies, announce key indicators, and hear from delegates from various social sectors.

However, the space for such exchanges has shrunk as Xi has tightened ideological control and suppressed views that deviate from the party line.

This has led to some prominent economic analysts being subjected to social media restrictions.

The regime often uses the annual conference to secure support from Chinese society and bolster confidence in the market, especially given challenges like China’s real estate downturn, stock market crisis, high unemployment, and weakened demand.

Observers will be observing China’s leaders’ discussions on key issues such as Taiwan’s self-governing status, US relations, and innovation efforts.

It is possible that Xi may adopt a more conciliatory stance towards the US, temporarily shelving confrontational ‘wolf warrior diplomacy’ and redirecting efforts towards supporting the bureaucracy and technocrats to ensure stability in China’s economy.

This tone shift could also be signaled by the appointment of a new foreign minister at this year’s gathering.

The role has been filled by senior diplomat and former Foreign Minister Wang Yi since the sudden ousting of Qin Gang and the removal of Defense Minister Li Shangfu.

Analysts say the surprise shake-up raises questions about Xi’s judgment, with lingering vacancies from those removals still a reminder.

China’s cabinet may fill two high-ranking posts, previously occupied by Li and Qin. The government is preparing for economic growth, but not releasing major stimulus.

Beijing plans to announce tactical measures to boost short-term confidence without altering Xi’s state-led development strategy.

Premier Li’s announcement of the economic growth target for 2024 is expected to be a key focus during the two sessions.

Analysts predict a relatively ambitious growth target of around 5%, indicating policymakers’ focus on economic growth despite challenges.

Market responses will also be closely monitored. While projections of confidence and measures may not restore optimism, Xi Jinping’s power is unlikely to be dented.

Economic problems are eroding people’s trust in the leadership’s ability to deliver higher growth and improved livelihoods.

However, Xi’s focus is on elite control rather than popular approval, and the economy seems to be far from collapse that could overwhelm the party’s repression apparatus.