Who doesn't want global growth? Reflection on China’s political sessions

By Digby Wren

There is a new vibrancy emanating from China today. Economic growth continues unabated at over 6.5 percent and  literally hundreds of millions of Chinese are reaping the rewards of high speed rail, digital and mobile everything, affordable housing, foreign travel, electric vehicles and cleaner air. How is this seemingly unstoppable transformation happening?, and how does the Chinese Government keep the engines of growth moving forward?; are two questions many awestruck foreigners and their nation’s politicians increasingly ask themselves.

The high-speed train G3002 runs past the Guiding section on a newly-opened rail line in Guiding County, southwest China's Guizhou Province, June 18, 2015.[Photo: Xinhua]

In Beijing this week over five thousand, yes that’s right, five thousand politicians, businessmen, actors, sports stars, farmers and workers who make up the two national bodies that constitute the Chinese parliament, the Chinese People’s Political Consultative Conference (CPPCC) and the National People’s Congress (NPC) are meeting to examine, discuss and finally, decide the plans for China’s next five years. Although the peoples representatives, started arriving in Beijing on Sunday along with a multitude of reporters, analysts and commentators from around the globe, in itself a relatively new phenomenon, it was on Monday morning that Premier Li Keqiang delivered an extensive and detailed Government Work Report. Now, normally these kinds of reports are full of facts and figures that leave the audience politely and patiently waiting for the end. Not this time, the 2018 report, delivered an absolutely astounding set of growth figures, the economy expanded from USD$8.51 trillion to USD$13 trillion over the previous five years, but also an entire range of integrated reforms, programs and development initiatives that promise the continuing transformation of China and that also has transformative implications for global trade and investment, the digital economy and AI , and approaches to the environment and economic development. 

Let’s have a quick look at the facts and figures for the last five years. China' s gross domestic product (GDP) rose from USD$8.51 trillion to USD$13 trillion, registering average annualized growth of 7.1 percent. More than 66 million new urban jobs were added, and in a country with a population of over 1.3 billion, China has achieved relatively full employment. Personal income has increased by an annual average of 7.4 percent, outpacing economic growth and creating the world' s largest middle-income group. Chinese tourist departures grew from 83 million to over 130 million and constitute the single largest group of international purchasers of goods and services globally. More than 68 million people were lifted out of poverty, a truly amazing feat that I have witnessed in the more remote areas of China’s southwest. And, this is really an amazing statistic, the number of days of heavy air pollution in key cities has fallen by 50 percent due to a steadily declining release of major pollutants into the atmosphere. Moreover, both energy and water consumption per unit of GDP have fallen by more than 20 percent.

A key marker for Chinese leaders is the need for China to keep annual growth above 5 percent in order to achieve its Two Centenary Goals in 2020 and 2050, while implementing major initiatives like the Belt and Road, poverty alleviation, ecological improvements and substantive progress in supply-side structural reform. The report didn't disappoint in this regard and Premier Li Keqiang articulated realistic GDP growth of around 6.5 percent and a CPI increase of around 3 percent. Combined with a projected steady rise in import and export volumes and a basic equilibrium in the balance of payments, it is reasonable to expect that the reports target for jobs, income and overall economic growth will also be realised. Maintaining basic parity in personal income growth and economic growth will be powered through gains of 11 million new urban jobs, a surveyed urban unemployment rate within 5.5 percent and a registered urban jobless rate within 4.5 percent. The report  also pointed to a deficit, as a percentage of GDP, of 2.6 percent, 0.4 percentage point lower than last year and a substantial reduction of taxes on businesses and individuals of more than USD$126.2 billion yuan. And, as if that wasn’t enough, a targeted reduction of at least 3 percent in energy consumption per unit of GDP and continued cutbacks in the release of major pollutants will help ensure bluer skies across the country. 

While Donald Trump is inflicting foreign steel producers with stiff tariffs, China, which provides only USD$2 billion of US steel imports, is cutting steel production capacity by around 30 million metric tons and further empowering renewables by cutting coal production capacity of approximately 150 million metric tons. Implementation will require steady hands, but with progress in replacement industries generating jobs, a move to cleaner and higher quality in production and continued investment in renewables these targets are doable. 2018 will see USD$115.43 billion invested in railway construction, USD$284 billion invested in highway and waterway projects and USD$157.8 billion in continuing water conservancy projects.

There were major moves for foreign investors and international businesses seeking to gain access to the Chinese market too. The general manufacturing sector is set to be opened to all comers with provisions for access to sectors like telecommunications, medical services, education, elderly care, and new-energy vehicles. Lower import tariffs on automobiles, the Geely-Daimler deal starts to look smart now, and a wide range of everyday consumer goods looks particularly attractive for Australia, Europe and yes, the US. The active expansion of import sectors will be promoted in a big way when China hosts the first China International Import Expo, and we know how well China does these events, cast your mind back to the Beijing Olympics, Shanghai World Expo and last year’s Belt and Road Forum. 

Taiwan, as always, got a mention with peaceful growth of cross-Strait relations, on the basis of the 1992 Consensus, and advancement of China’s peaceful reunification processes. The Belt and Road’s importance in China’s overall foreign policy was highlighted with Premier Li stating China’s continued adherence to the promotion of coordination and cooperation among major countries, the deepening of friendships and common development with neighbors, China has a lot of neighbours, and a commitment to enhance unity and cooperation with other developing countries. South-South cooperation, Asian security and Africa all received attention too, when Li pointed to the efforts China will devote to the annual conference of the Boao Forum for Asia, the Shanghai Cooperation Organization Summit and the Summit of the Forum on China-Africa Cooperation.

There will be many naysayers in the foreign press and political elites about the Two Sessions and how they only ‘rubberstamp’ policy decisions. There will be criticisms of some of the proposed constitutional amendments and there will be those that only look at defence spending, still well below other major countries, but for this commentator, the key elements of the report were twofold. Firstly, the consistency of policy and organisational execution throughout the conception, planning and deployment of the Two Session’s outlined objectives. Secondly, the inbuilt capacity of the organisational structures of the government to adapt policy implementation to the evolving internal requirements of its population, especially in regards to poverty reduction, transport, housing and infrastructure and the external pressures of trade frictions, security concerns, Brexit, RMB internationalisation and major global issues such as, climate change, conflict zones and terrorism. All in all, China’s continuing effective and measured control of its economic transformation and the enormous economic impetus the rest of the world derives from that growth, especially in Asia, Oceania, Africa and increasingly Latin America, strengthens China’s case for peaceful economic development and is good news globally.

(Digby Wren is a visiting international relations scholar at Sichuan Normal University)