17.03.2017 Author: Vladimir Terehov

Some Implications of an Ordinary Session of the Chinese Parliament

76543435At the beginning of March of this year, the National People’s Congress (the Chinese National Parliament) held its ordinary annual meeting. The National Committee of the Chinese People’s Political Consultative Conference and the Chinese People’s Political Consultative Conference are considered (in a rather broad sense) the Congress’s two Houses. The Chinese press has christened this event “the two sessions”.

While, at first glance, this event, which usually results in the passing of the country’s budget for the current year, seems rather ordinary, it has piqued public interest both in China and abroad. There are several reasons for that. The main—a desire to stay current on the changes in the life of one of the two world’s major powers.

Last year the world was “on the edge of its seat” watching the development of a seemingly routine presidential election process in another geopolitical “heavy weightier”, which turned into a “political soap opera”.

Speaking about the recent session of the Chinese National People’s Congress, many were looking forward to hearing the Chinese leadership’s assessment of the results of the first year of the five-year plan, adopted by the “two sessions” in March 2016, and its perception of the substantial global changes driven (to a greater extent) by the outcome of the US presidential election.

A year ago, the NEO briefly discussed the country’s transforming economic landscape. The changes proclaimed last year were no less radical than a 180-degree turn in the state policy initiated 30 years ago by Deng Xiaoping.

The main outcome of the last year’s “two sessions” was the publication of NPC’s resolution “Main Objectives and Tasks for the Twelfth Five-Year Plan“. The core objective of this 14-paragraph document was spelled out in its first paragraph “Growth”. According to it, the Chinese leadership was committed to double the country’s GDP and income per capita by 2020 and, at the same time, it would strive to bolster the country’s “innovative, coordinated, green, open and shared development”.

The underlying message of this document was that the Chinese economy had developed some serious ailments: overproduction of certain semi-finished products (e.g., steel), the demand for which on the external markets has been long sliding down; high level of pollution (due to the development of power stations running on “cheap” fossil fuel); inadequate consumption of domestic goods and services.

These and other problems manifested themselves in a deficit-ridden budget. 2013 was the first year which China finished with fiscal deficit of 1.2 per cent of the country’s GDP. This number has since been steadily increasing. In 2017, China set its budget deficit at 3%, which comes approximately to $350 billion in monetary terms. For the first time in three years, China announced a negative foreign trade balance at the end of February 2017.

A radical overhaul of the country’s economy initiated a year ago was a response to the stiffening internal and external challenges. It was quite clear that the country has to take steps to change the situation. However, the beginning of an era of transformation means that the country is entering a transition period with all adversities (including an upswing in the unemployment rate) associated with it.

Despite such bleak perspectives, the Chinese leadership has being demonstrating a firm intention to follow the strategy termed the “supply-side structural reform”. The decision to reduce the production of coal and steel by 50 and 150 million tons respectively in the current year taken by the National Development and Reform Commission demonstrates the Government’s wholehearted commitment to change. This decision was taken in during the “two sessions” period.

Commenting on its implications, The Global Times stressed that adherence to “the supply-side structural reform” would “optimize the Chinese economy”.

Today the Chinese Communist Party has to ask itself whether Chinese would remain confident in the relevance of the ruling party’s line in the situation when the gap between the dominating ideology and reforms is widening.

The ideologically uncomfortable questions will be inevitably popping up, especially when Chinese hear their leader saying at the summit in Davos that the development of the country’s private sector should be given a green light. China had to deal with the same exact problems 30 years ago on the cusp of Deng Xiaoping’s reforms. Most probably, and that is what happened 30 years ago, officials will come up with conciliatory passages able to fix the growing ideological gap.

Discussing the defense issues, delegates of the “two regular sessions” reinforced the long-standing general trend toward the creation of high-tech armed forces with focus on quality over quantity. The plans to make 300,000 military personnel redundant by the end of 2017 were announced back in 2015 during the festivities dedicated to the 70 anniversary of the end of the Pacific War.

In the course of the last “two sessions”, however, it was underlined that the Chinese army would be reducing its ground forces, while “reinforcing” the country’s Navy, Air Force and Strategic Nuclear Force reserves. In 2017, the defense budget will see just a 7% and not 10-12% increase as in the previous years.

China’s responses to the transforming global landscape were covered during a two-hour press conference given by Mr.Wang Yi, Head of the Chinese Ministry of Foreign Affairs on March 8 on the sidelines of the parliamentary session. Over 500 journalists from different countries attended the event.

The Chinese journalists, majority of whom believe that 2016 was marked by a large number of highly unpredictable “black swan events”, demonstrated a genuine interest in the press conference.

A modern-day scientist Nicholas Taleb, who studies effects of accidental events on the global economy, pioneered the «black swan event» concept in 2007. Mr. Wang Yi masterfully dispelled fears associated with this mystical phenomenon and assured journalists that the Chinese diplomacy was well prepared to ward off the challenges posed by the “black swan”.

The Chinese see an unexpected victory of the new US President Donald Trump, who made a series of controversial statements concerning the Beijing’s “One China” policy, as one of such “black swan events”. Referring to the latest (February 10) telephone conversation between the leaders of the two countries, Mr. Wang Yi expressed satisfaction with the “respect” for the “one Chine” principle reaffirmed by Mr. Donald Trump as well as with the leaders’ “pledge to push China-US relations to greater heights from a new starting point“.

The Chinese Minister believes that in the development of the China-US relations the parties should be guided by the “win-win cooperation” principle and act for the benefit of humanity instead of engaging in a zero-sum game. Mutually beneficial cooperation between the two powers should not be impeded by “the differences in the social systems” either.

Responding to the question of a Reuters’s journalist regarding China’s perception of the situation on the Korean Peninsula, Mr. Wang Yi criticized both Pyongyang’s violation of the Security Council resolution and the ongoing large-scale joint military exercises of South Korean and US combat units. The “security dilemma” can be broken if both countries change their attitude, believes the Chinese Foreign Minister.

Mr. Wnag Yi decried the agreement between Washington and Seoul on the deployment of a THAAD Missile Defense System in South Korea. The Chinese Minister made it clear that China would take retaliatory steps, thus lowering the level of security currently enjoyed by South Korea.

Mr. Wang Yi’s stance on the “denuclearization of the Korean Peninsula” is also noteworthy. He called upon North Korea and the United States to seek a solution and resolve the crisis. When describing the role of China, he used the “next door neighbor” metaphor saying that being such, China is “indispensable to the resolution of the nuclear issue”.

The Chinese Foreign Minister also touched upon the popular topic of “the end of era of Western domination”, and, basically, confirmed the paradigm shift. He also underpinned a growing role of the New Silk Road project, BRICS and the Russian-Chinese relations in the global affairs. The Chinese Minister disapproved of the withdrawal of the UK from the EU and expressed his hope for this “first world economic union” to maintain its capacity.

Responding to the question about China-Japan relations, Mr. Wang Yi said that China is interested in their improvement. At the same time, the Minister pointed out that Japan’s inability to give a clear assessment of its recent past and China’s comprehensive growth was slowing down the process.

Addressing journalists’ questions, the Chinese Foreign Minister, has, basically, provided a brief outline of the Chinese foreign policy, which has been discussed in NWO articles in the past.

A conclusion that can be drawn from the results of the “two regular sessions” is that China reaffirmed its commitment to radical reforms and not only in the economy sector.

The 19th National Congress of the Communist Party of China scheduled for this autumn will evaluate the first results, amend (should it be necessary) the country’s new policy and offer an ideological platform supporting the emerging changes.

Vladimir Terekhov, expert on the issues of the Asia-Pacific region, exclusively for the online magazine New Eastern Outlook.”