In China, there is an Era of Total Control

China is moving in the opposite direction from liberalization, as declared by Xi in his opening speech at the 20th Party congress on Sunday

Mr. Xi’s speech at the opening of the 20th party congress on Sunday made it clearer than ever that China is moving in the opposite direction from liberalization. Obsessed with national security, he is more focused on quashing all ideological and geopolitical challenges than on reform and opening up, the policies that brought China out of poverty.

They included a professor at the party’s top academy who helped train thousands of high-ranking cadres. An economist who would win China’s top economics prize for 2012. A historian is going to teach a class about Chinese history during sensitive periods in the past.

The government in China said it was indefinitely postponing the release of economic data that had been expected to show continued lackluster performance.

The National Bureau of Statistics had a new schedule on Monday with delayed dates for several economic indicators. Retail sales, industrial production and monthly unemployment rates are some of the indicators to be released on Tuesday.

The delay suggests that the government thinks the 20th Party Congress is most important right now, and would rather avoid other information flows that could create mixed messages, says a research note on Tuesday.

On a quarterly basis, I forecast a further decline in China’s GDP of 1.2%. This would mean China had joined the US in a technical recession,” said Clifford Bennett, Chief Economist at ACY Securities.

The delay would make sense “from an image management perspective,” he said. Some economists call two consecutive quarters of contraction a technical recession.

Most analysts think growth in the third quarter will remain weak, as strict Covid curbs and slowing global demand continues to affect the economy.

China’s outgoing premier said the country wants economic growth of 5% this year, and will use steps to restart growth after stalling under strict COVID controls last year.

Xi’s economic reopening as a boost to the world’s two largest economies in the first few months of 2023

“Whenever the release occurs, we should all be prepared for some global financial market reaction if the world’s two largest economies are both in recession this year, ” he said.

The target might be difficult to meet as the economy faces several structural issues, including a property downturn, an aging population, and rising US-China tensions.

Poised to secure a groundbreaking third term when the Communist Party congress concludes this week, Xi defended his hard-line reign in a sweeping speech and insisted that the party must remain united under his rule against an increasingly hostile West.

As China moves ever closer to reemerging from Covid isolation and reestablishing itself with the world, economic expectations are high.

Beijing’s recent pivot from its stringent zero-Covid strategy — which had long choked businesses — is expected to inject vitality into the world’s second-largest economy next year.

The impact of border curbs has left China out of sync with the rest of the world and disrupted supply chains.

The global economy is facing a lot of challenges, including energy shortages, slowing growth and high inflation, and China reopening could provide a boost to the economy.

But the process of reopening is likely to be erratic and painful, according to economists, with the country’s economy in for a bumpy ride in the first few months of 2023.

In December, after the Communist Party abruptly ended its zero-Covid policy, a massive wave of infections swept across the country, throwing supply chains and factories into chaos. But the disruptions started to fade away in January, and the economic recovery picked up pace last month.

The sudden and unexpected easing of restrictions has left the public unprepared, and left them to fend for themselves.

Zhuang said that the reopening may cause a wave of Covid cases that could overwhelm the health care system.

Many shops and restaurants were emptied as a result of the rapid spread of infection. More workers getting sick has forced factories and companies to stop production.

China’s trade sector, housing market and defense budget revisited after a record-breaking first year of economic recovery in the post-Corona virus crisis

Other experts also expect the economy to recover after March. HSBC economists predicted that the first quarter would be contraction with a 5% growth for the rest of the year.

Construction of the pre-sold homes across the country has been put on hold due to the crisis in the industry. That triggered a rare protest by homebuyers this year, who refused to pay mortgages on unfinished homes.

Statistics paint a gloomy picture despite Beijing’s attempts to rescue the sector.

At a key policy meeting earlier this month, top leaders vowed to focus on boosting the economy next year, suggesting they would roll out new measures that improve the financial condition of the property sector and boost market confidence.

“The measures announced so far are not sufficient to drive a turnaround, but policymakers have signaled that more support is on its way,” said Capital Economics analysts.

China’s trade sector supplies 180 million jobs and makes up a fifth of the country’s GDP.

China’s outbound shipments fell much worse than in October, contracting 8.7% last month. That marked the worst performance since February 2020, when the Chinese economy came to a near standstill amid the initial coronavirus outbreak.

The figures for the coming year were released at the start of the gathering of the National People’s Congress (NPC), the country’s rubber stamp legislature, which draws nearly 3,000 delegates to Beijing for the next eight days.

“China’s economy is staging a steady recovery and demonstrating vast potential and momentum for further growth,” outgoing Premier Li Keqiang told delegates while delivering a government work report at the opening of the congress on Sunday.

The economy added more than 12 million urban jobs last year, with the urban unemployment rate falling to 5.5%, according to the work report, which emphasized China’s focus on ensuring stable growth, employment and prices amid global inflation and set the GDP target.

The military budget increased by 7.1% in the year after. The last year China’s annual defense spending grew by double digits was 2015. The size of this year’s budget is more than double that of ten years ago.

The spending increase marks the second year in a row that the annual hike in military spending has exceeded 7% and tops last year’s 7.1% growth, amid rising geopolitical tensions and a regional arms race. As with other recent years, the figure stays well below the symbolically significant double-digit expansion.

“The armed forces should intensify military training and preparedness across the board, develop new military strategic guidance, devote greater energy to training under combat conditions and make well-coordinated efforts to strengthen military work in all directions and domains,” Li’s work report said.

The GDP target figure is one of the most closely watched in the opening day proceedings, with China’s economic draining zero- Covid policy coming to an end this year. It appears that the new figure is somewhat smaller than what some analysts had predicted.

The yearly political event that takes place alongside a gathering of China’s top political advisory body is called the NPC meeting.

The last Two Session was in October of this year and it was the third term for China’s Communist Party leader. The congress is whereXi is set to be entered his third term as President.

China had its best month in 11 years in February, according to data released by the Chinese government on Wednesday. The construction industry had their best performance in two years.

Analysts had predicted a difficult track to recovery for China amid global headwinds, which may have also been reflected in the conservative 2023 target of “around 5%” announced Sunday.

The global economy will weaken this year as rising interest rates and Russia’s war in Ukraine weigh on activity according to the International Monetary Fund. Global growth will likely slow from 3.4% in 2022 to 2.9% in 2023.

The Chinese Economy During the First Two Months of the New Year: Implications for China’s Security, Trade, and Economic Development

China is set to release its import and export data for the first two months of this year on Tuesday, which will provide a glimpse into demand for global trade.

During the congress, the ruling Communist Party’s new economic team, including various ministers and financial chiefs, will be unveiled with other key appointments – already selected by the Communist Party leadership – also approved. Premier Li’s replacement will be formally appointed during the meeting, which runs until March 13.

The new economic team will face the tough task of reviving the Chinese economy as it navigates a growing array of challenges, including sluggish consumption, rising unemployment, a historic downturn in real estate, and increasing tension with the United States over technology sanctions.

Chinese officials have repeatedly sought to portray their military spending as reasonable relative to other countries like the United States – part of China’s bid to present itself as a peaceful power, despite its aggression in the region including its militarization of the South China Sea and heavy patrolling around Taiwan.

The goal is slightly lower than the one last year, which was set before the Omicron variant of COVID-19 began to challenge the government’s “zero COVID” policy.

It is essential that economic stability is the top priority this year. Policies should be kept consistent and targeted, and they should be carried out in a more coordinated way to create synergy for high quality development,” Li said at the opening ceremony of an annual series of meetings of the country’s parliament, the National People’s Congress.

The meetings are a chance to review the year’s achievements and preview upcoming legislative proposals, but delegates rarely vote against each other.

This year’s budget increase in China was quote “relatively moderate and reasonable” according to Wang Chao, who spoke to reporters on Saturday.

An Address on China’s State of the Union During a “Taiwan Re-Unified” Decree of the National People’s Congress

Li also re-hashed old language on Taiwan, suggesting that China’s attitude towards the self-governed island has not changed, with Beijing preferring to “re-unify” with the island peacefully rather than by use of force.

He said that they have to continue implementing the Party’s strategy for resolving the Taiwan issue. “It is necessary to promote economic and cultural exchanges and cooperation between the two sides of the strait.”

For the most part, Li’s speech — a kind of “state of the union” delivered to the National People’s Congress — focused heavily on the economy, an area of policy that he has nominally been in charge of since 2013.

He said the government should deepen reform and opening and boost market confidence, something that has been hurt by harsh “zero COVID” policies, as well as crackdowns in recent years that have hurt tech, education, real estate and other sectors of the economy.

Analysts say Li’s authority has been curtailed by Chinese leader Xi Jinping, who played more direct role in the economy than his recent predecessors. Parliament will pick a new premier about a week from now.

Xi ally Li Qiang, a former Communist Party boss in Shanghai and neighboring coastal provinces, is widely expected to get the job, in an appointment that many see as part of Xi’s efforts to consolidate his grip on power as he embarks on a rare third term as state president. The two brothers are not related.

In his speech on Sunday, Li Keqiang called for the government to prioritize the expansion of domestic demand, something that is important to push China’s economy beyond it’s reliance on investment.