Author: Kerry Brown, King’s College London
China’s convening of its annual parliament, the National People’s Congress (NPC), delayed due to COVID-19, finally took place from 22 to 28 May. It delivered predictably mixed messages. On the economic front, the tone was almost conciliatory and focussed on the tried and tested message of delivering growth, opening up to the world and regaining the momentum of reform. On the political front, however, the message on Hong Kong showed a totally different aspect. Beijing reaffirmed, starkly and unequivocally, that the statement President Xi Jinping had delivered last November on the need to make the city stable and loyal was actually a command.
In these two respects, the NPC encapsulated the quandary of China today: seemingly so essential economically and so impossible politically.
On the economic front, the main headline was a removal of the GDP target. Having a target in the early era of reform was helpful in reducing a hugely complex issue — China’s economic performance — down to a single, compelling statistic. But for over a decade, quality of growth has taken precedence over quantity, especially as the figure has become, inevitably, less compelling. That the government is now no longer tied to this single indicator is a kind of liberation.
China’s main priority will be exactly the same as in the United States and Europe: jobs.
Historically, unemployment has remained between around 4–5 per cent in China. Now, COVID-19 has seen talk of the figure rising to 6 per cent — and probably even higher. Lack of employment post-COVID-19 is a recognised and serious issue in China, just as it is likely to be elsewhere. In his government work report, Premier Li Keqiang promised 9 million new urban jobs. It is likely that the government will need to overdeliver on this goal.
On trade, the environment and security, the United States and China speak increasingly different languages. On jobs, they now speak the same language.
Talk of fiscal stimulus along the lines of 2008 after the global financial crisis was lacking. Instead, transfers totalling 2 trillion RMB (US$280 billion) have been promised for local governments to address some of the problems that COVID-19 has brought them.
For all the changes we see in the country’s situation this year, one thing remains intractably the same: getting Chinese consumption to rise.
Routes to achieving that lie partly in talks of accelerating SOE reforms and opening up more sectors of the economy to outside investment.
The question here is not so much whether those outsiders will come. In view of the current political environment, were they not beset by their own colossal challenges economically, they would probably want to stay away. The main point is whether they will have any real choice about this. For all the wild rhetoric, blame and anti-Chinese sentiment from Canberra to London to Washington, faced with the kinds of growth drops and unemployment rises, pragmatism may well justify decisions that looked impossible a few years, or even months, before.
All of this depends on just how easily China can restore positive growth and to what extent. It might be that China gets stuck in a deep recession, leading to depression. But the outside world would be prudent to hold off celebrating this till they know whether or not they will be in the same boat, or whether it leads to questions about stability in China that create yet more uncertainty and sources of unpredictability that impact on them. COVID-19 has proved that what happens in China can reach everywhere else.
Many pundits in Europe and the United States newly aware of China have clearly decided that it being stable and strong is unacceptable. They might find dealing with a fragmented and unstable China not entirely to their liking either.
The economic approach of the NPC was rational enough. It carried the message of partnership and co-operation for those who want to engage. On Hong Kong, though, there was no such largesse.
This should not be a surprise. The clue was the statement made by Xi in November last year while at a BRICS summit. He reportedly stated that `the continuous radical violent activities in Hong Kong seriously trample rule of law and the social order, seriously disturb Hong Kong’s prosperity and stability, and seriously challenge the “one country, two systems” bottom line’.
It is following on from this that the NPC this year issued its intention of passing a new security law on the city. This will have very broad definitions and scope. In theory, it could be used against almost anyone deemed a problem by the government.
The proposed law follows the detention of a number of democracy activists in the city, including the eminent octogenarian Martin Lee, earlier in April. The message is stark: one country, two systems means what Beijing says it means. Like with the rest of China, Hong Kong’s economy is open to the world, but its political and security situation is Beijing’s business.
The rest of the world have expressed dismay at this approach. But as with the economic issues, their choice may end up being a stark one. Either cut China out of their economies even if it starts to outgrow everyone else or acknowledge there is very little that they can do once Beijing has decided to take this course. Who said dealing with China was ever easy. Post COVID19, it looks like it is going to throw up even sharper quandaries, and do this even more often.
Kerry Brown is Professor of Chinese Studies and Director of the Lau China Institute at King’s College London and Associate Fellow with the Asia Pacific Programme at Chatham House. He is the author of China’s Dreams: The Culture of the Communist Party and the Secret Sources of its Power (Polity, Cambridge, 2018).