China's 14th National People’s Congress: Focus on economic recovery and party reforms

What happened?
On 13 March, China concluded the first session of the 14th National People’s Congress.  During the first session, the Chinese government released a number of reports on cyberspace governance, central and local budgets, the national economic and social development plan, and the report on the work of the NPC Standing Committee.  

President Xi delivered a keynote address at the session and said: “I was elected at this session to continue to serve as the president of the PRC. I would like to express my heartfelt gratitude for the trust placed in me by all the deputies and the Chinese people of all ethnic groups. The people's trust has been my greatest source of strength to go forward and also the greatest responsibility on my shoulders.” 

Furthermore, Xi also appointed the new ambassadors to Austria, Brunei, Bahrain, Mexico and the United Nations. Lastly, the Communist Party of China has issued a plan to reform the party and state institutions and called for the efficient implementation of the plan. The CPC introduced two new agencies: the National Financial Regulatory Administration and the National Data Bureau. The party has also introduced a new financial regulatory body called the National Financial Regulatory Administration (NFRA). 

What is the background?
First, the two sessions. The two sessions refers to an annual political event in China where the National People’s Congress and the Chinese People’s Political Consultative Conference hold their respective meetings separately during the same week. The political gathering convenes to decide on new promotions, key positions and their appointments, and amendments. The President officially appoints the newly elected candidates for the post of the Premier, and other ambassadorial positions.  

Second, the focus on the economy. The current session is the first after the coronavirus pandemic. In the last two years, the focus remained heavily on curbing the spread of the virus while maintaining a modest economic growth. In 2022, however, China was unable to achieve the economic growth target of 6 per cent set by the government. The growth was recorded at 3 per cent. The government has set a target of 5 per cent for 2023. There is a renewed focus on strengthening the economy and promoting the production and manufacturing industry in the country.  

Third, display of political stability. In the last quarter of 2022 and in the beginning months of 2023, numerous accounts of civil unrest within China were reported. Protests against the COVID-19 restrictions, unfair pay, unfair removal from jobs, and protests calling for Xi Jinping’s resignation were observed. However, with the two sessions, Xi Jinping has officially taken on as the President for the third time. There are no more reports of mass demonstrations coming from the country. Xi is now seen as the most powerful Chinese leader after Mao Zedong.  

Fourth, increased control by the CPC. In the rare third term as the President of China, Xi aims to establish stronger control over China’s law and order. Under the anti-graft campaign, more than 4 million officials and other professionals have been detained and investigated. The introduction of the new agencies and a financial regulator hint at the party’s tightened focus on the economy and cyberspace. The recent attack on the alleged weather balloon in the US and the subsequent accusation of sending spy balloons to China has led the administration to undertake a stronger position on AI and data protection. 

Fifth, the military. On the first day of the two sessions, then Premier Li Keqiang announced a 7.2 per cent increase in military spending despite the drop in the country’s economic growth. The rising threats from the West was cited as the reason for the second-largest defence spending in the world. There is also a constant call for intensifying military preparedness and training.  

What does it mean?
The heightened focus on economic recovery also shows that the country is concerned about the slow economic growth and realizes the urgency to lift up the economy quickly. The IMF and World Bank also reported that China’s economic growth is essential for uplifting the world economy. 
 
The emphasis on military spending despite the slow-paced economic growth describes the CPC’s priorities. Many analysts have also connected the increase in spending with the Ukraine war and suspect that China may provide weaponry support to Russia in the long term.  

Lastly, Xi Jinping’s consolidation of power and party reforms depict an increasingly closed off China. The country will be tightening its grip on data inflow and outflow while removing obstacles to Xi’s rule in the CPC and national politics.