05.06.2020
On May 22-28 this year, the main domestic political event took place in China, which summarizes the results of the past year, evaluates the implementation of the five-year plan and determines the country’s development horizons. This is the so-called two sessions: The first is the All-China Committee of the People’s Political Consultative Council of China (the CPPCC VC, the body where “political advisers” who make recommendations for the development of the country meet), the second is the National People’s Congress (NPC, the Parliament of the People’s Republic of China).
Every year, Chinese deputies agree on new bills, adopt the country’s budget, approve appointments to important state posts and formulate new vectors for the development of the People’s Republic of China. Now, after some time, when the media published the maximum possible information from the agenda of the 3rd session of the NPC of the 13th convocation, it is possible to evaluate and highlight the most important results of this event and its significance for modern China.
It is obvious that COVID-19 has had its impact on the meeting of Chinese leaders and lawmakers. In 2020, for the first time in the history of the People’s Republic of China, the NPC session was held two months later (as a rule, it takes place annually in March). This year’s session was shortened from two to one week. 3 thousand people’s deputies who took part in the session of the NPC sat in masks, which have become a kind of significant symbol of the new era. In addition, the factor of the new coronavirus also affected the content of most of the state decisions taken.
FIRST, the report on the work of the Chinese government in 2019 presented key socio-economic indicators reflecting the current state of the second global economy.
On the first day of the National People’s Congress, a report on the activities for the past year was heard, which spoke about more than 1.3 thousand recommendations made by advisers on all the most pressing issues (combating the epidemic, restoring production and strengthening the force of law, etc.). In his speech, the head of the State Council of the People’s Republic of China Li Keqiang reflected the main indicators of the development of the Chinese economy.
Thus, according to the head of the Chinese government, China’s GDP growth amounted to 6.1%, and its total volume exceeded $ 14.4 trillion. In addition, despite the fact that the Chinese authorities refused to set a quantitative GDP target in 2020, based on the planned expansion of the budget deficit (to 3.6%), this year the country’s GDP may grow in nominal terms by 5.4%.
Also, other economic indicators were announced in the speech. For example, consumer prices increased by 2.9%, and the total volume of retail sales of consumer goods exceeded $ 5.7 trillion. Taxes and cash fees were reduced by a total of $ 334.7 billion. The growth of employment of the Chinese population in cities and towns amounted to 13.5 million people, unemployment is kept at a level below 5.3%. The number of low-income people in rural areas of China decreased by 11.09 million people, and the poverty rate decreased to 0.6%. The per capita income of the population exceeded $ 4,255.
An important political decision of the National People’s Congress was the confirmation of the decision to complete the construction of an “average prosperity society” (xiaokan) in China in 2020 (as planned), despite the impact of the epidemic. President Xi set this task in 2015 and it is important for China to implement it despite the challenges of our time. According to the plan, this level of social development includes 10 indicators, including the provision of citizens with computers and a high percentage of urban residents, poverty should be eradicated, and the indicators of the PRC’s GDP and per capita income should be doubled in comparison with 2010.
SECONDLY, as a result of the sessions, a Plan for the socio-economic development of China for 2020 was adopted.
This plan is of the greatest interest to the world community, because it should give an answer to the question of how the Chinese economy will recover after the epidemic.
Against the background of the COVID-19 pandemic, the social dimension of the national budget is of particular importance for the People’s Republic of China. Thus, the new document sets the tasks of creating 9 million new jobs in cities and towns, keeping unemployment at the level of 6%, calculated on the basis of sample studies, and registered unemployment at the level of 5.5%. The leadership of the People’s Republic of China is striving to keep the growth of consumer prices at the level of 3.5%. The fight against poverty, which is declared among the most important strategic development priorities, will also continue.
According to the results of the NPC, it was stated that the Chinese government will monitor the widespread abolition of unjustified restrictions in the field of employment, the development of all possible measures to increase it and the search for all possible ways to create jobs. The task has been set to bring the entire low-income rural population living below the poverty line out of a distressed state and to remove the “poverty label” from all underdeveloped counties.
The main efforts of the Chinese authorities in 2020 will be aimed at fighting poverty, providing jobs, as well as overcoming the crisis associated with the COVID-19 pandemic. In addition, in 2020, the” 14th five-year plan ” or the Development Program of the People’s Republic of China for 2021-2025 will be developed – its content will probably take into account changes in the economic situation in the world and the country that will develop in the coming months.
THIRDLY, in order to activate the economy, the State Council of the People’s Republic of China has developed a wide package of stimulating measures during the post-pandemic period.
The Chinese government plans to allocate about $ 840 billion (about 6% of GDP) to restore the economy after the pandemic. Almost 70% of these funds are aimed at maintaining the income of the population, developing medium and small businesses, supporting the labor market and stimulating domestic consumption. According to estimates, against the background of the epidemic, the country’s economy showed negative growth for the first time in 44 years. Li Keqiang noted in his report that the drop in China’s GDP by 6.8% was the big price that had to be paid for containing COVID-19.
The Chinese government plans to conduct a more balanced, flexible and moderate monetary policy. Until the end of March 2021, the deferral period for repayment of loans and interest payments has been extended, the amount of unsecured, first and extended loans for small and micro enterprises has been increased. In order to stimulate business development, it was decided to reduce electricity supply tariffs for industry and trade by 5%.
In 2020, it is planned to issue special government bonds in the amount of $ 141 billion to finance the fight against the epidemic, taking into account the estimated total budget deficit in 2020. In order to support business, the State Council of the People’s Republic of China decided to further reduce the tax burden on enterprises by more than $ 352.6 billion, including reducing VAT rates, the amount of deductions of enterprises to pension funds.
FOURTH, the Chinese leadership has identified a set of the country’s most important development priorities for 2020.
According to forecasts, China’s GDP may grow by 5.4% in 2020 against 6.1% in 2019 (the budget deficit is likely to have a negative impact on the growth dynamics, which may reach 3.6%). The Chinese government understands that global uncertainty continues, and changes in the global economy are still unpredictable. In this regard, for the first time in several decades, the State Council of the People’s Republic of China has not announced specific parameters of GDP growth for the next year (in conditions of uncertainty, this approach will allow the planning system not to make a mistake in quantitative parameters).
Under the influence of the new situation in the world, the system of state planning in China has also changed somewhat. This year, China’s economic growth will be measured not by digital indicators, but by the results of work on stabilizing six areas of development (innovation, consumption, investment, lending, poverty eradication, openness). The general vector of macroeconomic policy will be the implementation of measures to activate market participants and strengthen new growth drivers.
The stake in the economic policy of the People’s Republic of China is now, apparently, not on maintaining high growth rates, but in changing the economic model itself. Today, China is betting on the activation of domestic demand, thereby the huge domestic market should become a source of new growth. By stimulating consumption, investment inflows and infrastructure development, the Chinese authorities will try to restart the country’s economy.
FIFTH, taking into account the new economic realities, the central and local budget of the People’s Republic of China for 2020 has been approved.
The central government’s revenues in 2020 are planned to amount to $ 1.16 trillion (-7.3%). At the same time, the revenues of local governments will amount to $ 1.37 trillion (-3.5%). Thus, the budget revenues of the People’s Republic of China in 2020 will amount to $ 2.53 trillion (-5.3%), while expenditures will be increased by 3.8%. In January-April 2020, the rate of decline in state budget revenues of the People’s Republic of China amounted to 14.5%.
At the same time, the state budget deficit of the People’s Republic of China in 2020 may amount to $ 141.6 billion (+0.8% compared to 2019), which is about 3.6% of China’s GDP. The reduction in revenues will be offset by the expansion of the budget deficit (to $ 514.2 billion) and the use of state funds (about $ 428.5 billion). The decline in income is associated with a drop in consumption, demand and the suspension of international supply chains in global markets, as a result of which China’s foreign trade has lost billions of dollars.
The military budget of the People’s Republic of China in 2020 will grow by 6.6% to $ 178.8 billion, which is the lowest figure since 1991. China’s military budget in 2019 amounted to $ 177.6 billion (+7.5%), in 2018 – $ 175 billion (+8.1%), in 2017 – $ 151.9 billion (+7%). Today, the Chinese military budget is the second largest in the world after the United States, whose military expenditures amount to $ 738 billion for 2020 (an increase of +20% by 2019).
SIXTH, China continued to strengthen the legal framework of its statehood and further develop the foundations of building a legal society.
The Chairman of the Standing Committee of the National People’s Congress, Li Zhanshu, focused on the continuous improvement of the socialist legal system with Chinese specifics. In 2020, the National People’s Congress plans to develop draft Laws of the People’s Republic of China “On the Protection of Personal Information”, “On Export Control”, as well as to amend the Laws of the People’s Republic of China “On Combating Money Laundering”, “On the People’s Bank of China”, “On Commercial Banks” and “On Insurance”.
The sessions of the NPC of the 13th convocation will be remembered in the history of the country by the fact that the draft of the first Chinese Civil Code was approved as a result of its results. The country has lived for more than 50 years without a code of civil legislation, although attempts to adopt such a code were made in 1954, 1962,1979 and in 2001, but they were not implemented. The new law will come into force in 2021 and will synchronize civil law relations with the pace of economic development of the People’s Republic of China. It is interesting that in the part about the rights of the individual, the new law will contain provisions on the research of human genes and embryos, issues of personal information protection in the era of Big Data.
As a result of this session, the NPC adopted a resolution on the development of a draft law on the creation and improvement of the legal system and the enforcement mechanism for ensuring national security in the Hong Kong SAR. The key principles of the law will be ensuring security, improving the “one country – two systems” policy, insisting on “managing Hong Kong by Hong Kong people themselves” in accordance with the law, resolutely resisting foreign interference, protecting the legitimate rights and interests of Hong Kong residents. The course in working with Taiwan, countering and suppressing any forms of separatist actions related to the so-called “independence of Taiwan”was continued.
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In general, the red thread of the NPC’s work was the ideology that in a short period of time the PRC managed to contain the large-scale spread of COVID-19 infection and preserve the basic living conditions for more than 1.4 billion people. The Government of the country considers this an important achievement of its work. Against the background of COVID-19, special attention is paid to the prevention and further control of the epidemic. In particular, it is indicated the complete prevention of its re-spread, “firm and resolute protection” of the health of citizens. One of the threats to Beijing’s short – and medium-term plans is the likely second wave of the coronavirus epidemic, despite the fact that new cases of the disease are reported in the north-east of the country.
It is obvious that the Chinese government sees the current crisis as an opportunity to solve very important problems in the economy and create conditions for its transition to a new state. Now the PRC faces the task of internally rebuilding itself and adapting very quickly to the realities of the post-pandemic. This is also important from the perspective of China’s political development strategy.
As you know, in 2021, the People’s Republic of China will celebrate the centenary of its main political force – the Communist Party. This date, together with another important centenary of the creation of the PRC itself (1949-2049), is scheduled as an important milestone in the national revival. Thus, by 2021, the CPC has promised to completely eradicate poverty and ensure average prosperity (xiaokan) for all Chinese citizens. Therefore, it is extremely important for the leadership of this country that the post-pandemic period does not violate these epoch-making plans.
Why is it advisable to know and analyze the results of the NPC in Kazakhstan?
It is necessary to start with the fact that the sessions of the National People’s Congress are a key domestic political event, within the framework of which the results of the country’s development are discussed and the most important issues of state administration of the People’s Republic of China are resolved. Modern China continues to change rapidly and all the contours of the ongoing changes are discussed in detail during the sessions of the National People’s Congress. Accordingly, it is advisable for Kazakhstan, as a neighbor and strategic partner of China, to know and understand what is happening in this large country and in which direction its development is moving.
Taking into account the fact that many major economic projects in Kazakhstan are connected with China and its economy (agricultural exports, transport and logistics sector, transit along the Silk Road, industrial production, etc.), understanding the plans of the People’s Republic of China for the near future will allow Nur-Sultan to navigate the Chinese state agenda and develop pragmatic mutually beneficial relations with this country.
China Studies Centre,
Nur-Sultan, 2020
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