People's Congress: growth + military + priorities • China.Table

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Dear reader,

This year’s National People’s Congress is a particularly grueling affair. For the third time, its deputies have been meeting under Covid restrictions this weekend. And the party is under growing pressure to continue spreading optimism. While managing the economy is starting to prove difficult due to the imbalance in the real estate market, new troubles are emerging thanks to the Ukraine war. Russia has dragged China into a conflict that is reaching uncontrollable dimensions. Even if this turns Russia into China’s economic vassal, it has almost only political value. It does not increase prosperity significantly. The threat of a slump in the global economy weighs much more heavily.

China had hoped to finally leave Covid behind this year, like all other countries. The plan was to clean up the real estate market while normalizing lending and monetary policy. These grand plans are now failing due to the persistence of the virus and new uncertainties. Didn’t Premier Li Keqiang seem more serious and tense than usual when he delivered his work report? It certainly would be understandable.

Only one certainty remains: The military budget is rising disproportionately. This is hardly surprising, given that even Germany, which has been so hesitant up to now, is now stepping up its spending. However, since all other Asian nations are also increasing their defense budget, there is a risk of an arms race, analyzes Michael Radunski. If Li then follows up with threats against Taiwan, the general feeling of unease will increase considerably. After all, Putin taught us to listen carefully to dictators.

Frank Sieren then ranks the work report and the goals of this NPC kick-off again according to their priorities. According to his analysis, the prosperity of the people has absolute priority over all other goals, which is why reducing inequality and solving the social question remain among the priorities. Only then follow reform and opening up the country. Environmental protection and foreign trade are pretty far down the list. So the German economy should brace itself for ongoing tough conditions.

Crises and wars are getting closer – this also goes for us in our dealings with China, thanks to the Moscow-Beijing axis. Don’t let it get to you.

Your
Finn Mayer-Kuckuk

Feature

Stability for Xi – despite war, Covid and Evergrande

Although China is showing great resilience, it has lowered its growth target to 5.5 percent. In times of war and sanctions, there are simply no winners. The strong tendency toward autarky at the current People’s Congress is also bad news for German companies. The recently highly praised strategy of dual circulation, on the other hand, was not mentioned at all.

By
Finn Mayer-Kuckuk

It is part of the ritual of the National People’s Congress to refer to the great difficulties that lie ahead this year. Premier Li Keqiang, however, did not even mention the war in Europe once in his annual speech. He did, however, speak of a “grave and uncertain” outlook – and let a number speak for itself. The party has set its growth target at 5.5 percent, the lowest since 1991.

This figure, however, is exactly in the midrange of estimates by domestic and foreign analysts and, in this light, did not come as a surprise. In view of a difficult path away from the zero-covid strategy (China.Table reported) and impending shocks stemming from the war in Ukraine, a higher figure would have been unreasonable. A lower figure, on the other hand, would have spread pessimism and given the impression that the party does not have the power to absorb external shocks.

Li had some mixed messages in store for German companies. Stable growth, a commitment to openness, more money in citizens’ pockets, all that sound good at first. But the increasingly intense emphasis on economic and technical independence raises fears of further decoupling from international partners. German companies could lose further market share to domestic providers.

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