TCSS Security Commentaries #039

Utkarsh Verma, PHD Student at IDAS, NCCU

This year, China hosted its annual political event called Two Sessions (兩會) in the first week of March. Firstly, the Chinese People’s Political Consultative Conference (CPPCC), an advisory body, met to discuss various policy issues and submit proposals that have no obligation to be adopted by the state council. Approximately 2200 delegates from social work, sports, religion, and economics deliberated on the operation of the communist party. Secondly, the legislative body called the National People’s Congress of China met to make laws for the nation. It is a once-yearly assembly of representatives of the people that discusses the CCP’s predetermined agenda. It is often called a rubber stamp of the Communist Party of China(中國共產黨) due to its strict control of the working of the assembly. This year, the assembly passed seven laws, one of which gave the CCP more stringent control over the State Council, thus strengthening the already highly centralized system under the Xi administration. Approximately 3,000 delegates have been elected to attend the grand assembly of the second session. The two sessions were scheduled in a more restricted fashion with the cancellation of the annual press conference.

China is coping with several foundational issues that are harming its economy, society, and potential for future progress, as has become more evident in recent times. These policy initiatives aim to address each of these factors. The 14th Five-Year Plan’s goals and tasks were outlined by Premier Li Qiang, who also emphasized the significance of adhering to Xi Jinping’s ideas on Socialism with Chinese Characteristics and the “strong leadership of the Party Central Leadership with Comrade Xi Jinping at its core.” This article will examine the policy shifts by analyzing Premier Li Qiang’s speech from the ‘Report on Work of the Government’, which provides information on the course of action of the second largest economy in the world. The Chinese government hopes to achieve its stated goals for the year and jump-start the already slowing economy with the following reforms.

Develop productive forces and modernize the industrial system.

In the report, China emphasized the use of AI and big data, launched the AI Plus project, and established internationally competitive digital industry clusters. The United States has prohibited companies receiving federal subsidies to develop semiconductor manufacturing plants in China through the Chips and Science Act. By 2025, China hopes to produce about 70% of the chips it needs domestically. Beijing must spend more in its high-tech manufacturing sector under this pretense, particularly in lithography technology, where it still trails despite importing the majority of machinery from Japan and the Netherlands. Self-dependency in all aspects of chip manufacturing is essential for China as it still depends on Taiwan for its Semiconductor needs, giving birth to the much-discussed ‘Silicon-Shield’.

Commitment to the Belt and Road Initiative

Premier Li has worked to “carry out the eight major steps” that PRC President Xi Jinping declared during his speech at the Belt and Road Forum last year about the BRI activities. These eight steps include building a multifaceted BRI connectivity network, boosting financial support from the Chinese Development Bank and the Export-Import Bank of China, and promoting an open global economy by eliminating all barriers to foreign investment access in the manufacturing sector. Maintaining the focus on the BRI projects demonstrates the CPC’s rationale in trying to solve all of its issues with the biggest infrastructure development initiative. The Belt and Road Initiative (BRI) aims to establish a growing market in Africa, Europe, Asia, and other regions to support Chinese industries and exports in the future. One characteristic of Chinese investment projects is that they are situated in countries with an abundance of natural resources, which guarantees a consistent supply of resources vital to the Chinese economy, which is seeking room to grow.


Maintaining Stability in the Agriculture Sector

By implementing lessons from the Green Rural Revival program in Zhejiang Province(浙江), the government hopes to guarantee stable production and supply of grain and other major agricultural products. Xi Jinping, the Party general secretary from the Zhejiang committee at the time, launched this program as its flagship initiative in 2003. The report focuses on the necessity of maintaining food security for the second-most populous country through the use of a “category-based, region-specific, and phased approach.” The Local Government Financial Vessels ( 地方政府融资平台) were introduced as a cushion to support local governments in response to the growing local government debt in China. Despite this, the LGFVs have not shown to be particularly effective in reducing local government debt, which is now approaching the 60 trillion-yuan threshold. All things considered; these policy changes serve as a continuation of the actions the government has already made in earlier years. These so-called policy interventions seek to strengthen the BRI, step up attempts to draw in foreign capital, and offer some respite to China’s existing foreign-funded businesses. The stimulus is of a limited kind and quantity, indicating the cautious approach used by the CPC to achieve stability over time. The housing crisis, the US trade war, the high-tech penalties against Chinese manufacturing, and the escalating geopolitical tensions make everything more complicated for China, which may not want to pause and consider its options for the future.

Utkarsh Verma, PHD Student at the International Doctoral Program in Asia-Pacific Studies (IDAS), National Chengchi University