Capt.(Dr.) S G Naravane’s Post

China Crunch time for Xi Jinping at China’s annual political meeting New growth targets will be set as thousands of delegates gather in Beijing How do you reset the world’s conversation about a country that is in trouble? That is the task facing China’s embattled leadership this week, during what will be the most important public-facing political event of the year. China’s legislature, the National People’s Congress (npc), is a rubber-stamp affair, but its annual session provides a rare window onto what the Communist Party is thinking. This year’s gathering will begin on March 5th with a state-of-the-nation speech from Li Qiang, the prime minister, and will end one week later. In between there is the closest you get to a public examination of the Chinese government’s performance and plans. The three things to watch for are its efforts to halt the economic panic, evidence of the long-term economic agenda of Xi Jinping, China’s supreme leader, and signs of the power balance within the misfiring leadership group itself.

What happened at China's Two Sessions in 2024? What were the key outcomes for Chinese politics, the economy, and foreign policy? Happy to contribute to this collection of quick takes by Asia Society experts: "Xi [Jinping] embraced an economic agenda focused on using technological innovation to enhance productivity and on investing in manufacturing to strengthen self-reliance." —Myself "Outsiders characterized the cancellation of the premier’s traditional press conference and the changes to the State Council’s Organic Law as fundamental departures in transparency and governance, respectively. But Li Qiang foreshadowed both as he took office last year." —Christopher Johnson "Beijing appears to have shunned a bazooka-style stimulus this year. This makes sense for two reasons. First, Beijing ought to use its limited policy space wisely. Second, the Chinese economy has been holding up reasonably well in recent months. Nevertheless, this still represents a strange mix of an ambitious growth target and underwhelming stimulus." —Ma Guonan "Absent a solid framework to invigorate internal demand, China may inadvertently intensify global trade imbalances, producing more than its domestic market can absorb. This situation has implications for China's economic equilibrium, but it could also incite protectionist responses globally, as trading partners become wary of Chinese exports undermining local industries and employment." —Lizzi C. Lee "Environmental and climate topics have been placed on the backburner in light of China's economic challenges. Although the 2024 GWR referred to environmental and climate topics, compared with previous years, there was a notable lack of quantitative references to both targets for the year ahead and progress made over the past year." —Shuo Li "Xi has clearly identified technology as the key to successful military reform. But with U.S. sanctions limiting transfers of high technology to China in recent years, Xi’s call to “adapt” to a new scientific revolution in military affairs may also suggest urgency within China to offset trade and technological barriers imposed by the United States." —Lyle Morris On Taiwan policy "'no surprises' is probably the best outcome that could be hoped for at a time of political transition in Taiwan and an upcoming election in the United States. With so many other issues to resolve internally, and facing international concern with peace and stability in the Taiwan Strait, Beijing is not seeking a cross-Strait crisis." —Rorry Daniels https://lnkd.in/ePUVxRnv

On the side of restrained global growth, we can also add Xi’s lack of enthusiasm about stimulating the Chinese economy, and continuing interest in industrial policy. https://lnkd.in/gVT4R9Dj

I was quoted in Channel News Asia on prospects for reform in China and in particular on the phrase “better leverage the role of the market.” This is weaker language than “decisive role of market” of 10 years ago. (1) To be “decisive” suggests the market as an autonomous actor, whereas to “better leverage” suggests that some OTHER actor wants to make full use of the market among other means for some end. (2) This language is not a “step back” as it acknowledges the concerns of Chinese businesses today that the party must do a better job of unleashing the potential of the private sector and increase economic growth. (3) Rather, it’s an acknowledgement of the experience of the past 10 years, that the market cannot and SHOULD NOT play a decisive role, in what has turned out to be a world threatening to China’s economic and technological autonomy. (4) Achievement of a “high-standard socialist market economy” is putting old wine in new bottles. The core idea of Deng’s reforms was that the market was a necessary step in the achievement of socialism, his innovation being that no socialist society could be built without a middle-class society and the unleashing of the productive, material base to make socialism possible. (5) We should always keep in mind that in China “reform” does NOT mean “reform toward a more Western, hands-off relation between state and market” as has been misunderstood for decades. To the CCP, reform is a process of perfection and attitude of self-improvement to achieve its ultimate goals for China. Also quoted by Bong Xin Ying: Bert Hofman（郝福满）and Neil Thomas. #china | #chinaeconomy | #chinapoltiics

China/Hong Kong Market Pulse: The Words Resemble the 2013 Blueprint: The Deeds Will Determine the Outcomes Key points: § Resembling the 2013 Reform Blueprint § Reiterating the Market's Decisive Role in Resource Allocation § Providing Additional Space for the Private Sector § Focus on Advanced Manufacturing and Industrial Technology § Emphasis on Opening Up, No Mention of Dual Circulation § A 2029 Target to Add a Sense of Urgency https://lnkd.in/g7rFsEJc

📣 #China's most important policy meeting in 5 years is taking place this week, the #thirdplenum. The government has been sending out policy signals ahead of the big meeting. Here is Sinolytics' reading of them: ❎ Fiscal reforms: The Minister of Finance and Chinese media have strongly hinted possible developments at the Plenum. Redirecting consumption tax from central to local and increasing central debt to relief local burden are being discussed.  ❎ Advanced manufacturing: Advanced manufacturing is commonly interpreted by analysts as the primary sector connecting to President Xi’s new buzzword “New Quality Productive Force”. Given US technology restrictions, policy directions would also likely focus on strengthening tech self-sufficiency.  ❎ Foreign investment attraction: Vice premier held a high-level roundtable on foreign investment in July. A week before the Plenum, the State Council published a surprisingly sensitive list of areas where foreign capital would be “temporarily” allowed to invest and operate.  ❎ Financial markets: Measures restricting short options of institutional investors were published to boost confidence in individual investors, who dominate China’s stock market. Notably, supporting venture capital had also been mentioned in recent top government meetings.  ❎ Demand-side stimulus: While the Chinese government have been notably reluctant to push demand-side stimulus like cash transfers, voices advocating them have been published on official news outlets and entertained by Xi in roundtables leading to the Plenum. Whether this means a change of attitude remains to be seen.  ❎ Property market stimulus: The State Council meeting in June emphasized better implementing existing policies and stabilizing the market. Analysts are conservative on expectations about short-term stimulus for the property market. 

Good journalism, it presents diverse perspectives on China's direction.

China’s top leaders are set to convene from July 15 to 18 for The Third Plenum CNBC reports that China’s top leaders are set to convene from July 15 to 18 for a much-anticipated meeting, the Third Plenum, according to state media reports on Thursday. https://bit.ly/45H9OW1 Pang Ming from JLL emphasized that the key to bolstering confidence and growth momentum lies in the execution of pledged policies, rather than merely outlining a host of policy initiatives. He noted that his analysis of an annual government meeting in December revealed a significant increase in mentions of policy implementation compared to the previous year, underscoring its importance. In October 2022, the Communist Party of China ushered in a new leadership during its 20th National Party Congress. The third plenary session of this leadership is scheduled to take place from July 15 to July 18, state media reported. The third plenum holds historical significance as it has often been the catalyst for transformative phases in China’s economic policy. For instance, under Deng Xiaoping’s leadership in 1978, China announced its intention to initiate economic reforms and open its economy to private and foreign capital. Interestingly, this year’s meeting is occurring later than usual. It is typically held in the fall following the biennial selection of new party leaders the previous year. Michael Pettis, a finance professor at Peking University’s Guanghua School of Management, suggested in a June 17 report that the extended delay likely indicates a lack of consensus on how to tackle issues such as weak domestic demand, a rapidly shrinking property sector, escalating trade conflict, and mounting debt. Pettis speculated that the Third Plenum might propose measures to address the housing market, the restructuring or re-profiling of local government debt, and weak household consumption. In May, China’s retail sales exceeded forecasts with a 3.7% increase from the previous year, surpassing the expected 3% rise. https://bit.ly/4b5uaJF Despite this, other economic indicators like industrial output and fixed asset investment fell short of expectations. The Third Plenum might propose measures to address that EU is rethinking its trade strategy against China, shifting from defensive tariffs to encouraging Chinese electric vehicle (EV) makers to establish joint ventures in Europe. https://bit.ly/3XvhRmJ In May 2024, China unveiled a series of unprecedented measures aimed at revitalizing its beleaguered real estate market. https://bit.ly/3V1EmhE Picture credit: The Gulf Today #china #thethirdplenum #propertymarket #retailsales #electriccars #battery #tariffs #eu #usa #icustrialoutput #domesticdemand

A successful visit by BDI Director General  Tanja Gönner to China and three days of talks are behind us. My main take-away from this visit is how high up our economic relations currently are on the Chinese government’s agenda. Here’s why: 👉There are no signs that the leadership has changed its mind on China’s fiscal stimulus to boost domestic consumption. The emphasis is on incremental measures and doing only as much as absolutely necessary in terms of fiscal policy. 👉Sentiment is the central lever the Chinese government is focused on to lift the economy. Controlling the narrative on the state of the economy is central to this approach, with all the consequences that entails. Economics is a highly political topic in China at the moment. 👉Under the guidance of the party and central government, investments will continue to be channeled away from real estate and into the “new productive forces”, so green tech, EV, robotics, AI. They are determined to ensure that China will be the number one producer for green tech globally, no matter what this means for GDP growth in the meantime. 👉Europe is the big bet for Chinese manufacturers. One expert told us: “The top manufacturers all have a Europe strategy.”In conclusion, expect overcapacities and the competitive pressure our companies are facing in and from the Chinese market to continue to dominate the economic agenda between the EU and China.

China’s top leaders are set to convene from July 15 to 18 for The Third Plenum CNBC reports that China’s top leaders are set to convene from July 15 to 18 for a much-anticipated meeting, the Third Plenum, according to state media reports on Thursday. https://bit.ly/45H9OW1 Pang Ming from JLL emphasized that the key to bolstering confidence and growth momentum lies in the execution of pledged policies, rather than merely outlining a host of policy initiatives. He noted that his analysis of an annual government meeting in December revealed a significant increase in mentions of policy implementation compared to the previous year, underscoring its importance. In October 2022, the Communist Party of China ushered in a new leadership during its 20th National Party Congress. The third plenary session of this leadership is scheduled to take place from July 15 to July 18, state media reported. The third plenum holds historical significance as it has often been the catalyst for transformative phases in China’s economic policy. For instance, under Deng Xiaoping’s leadership in 1978, China announced its intention to initiate economic reforms and open its economy to private and foreign capital. Interestingly, this year’s meeting is occurring later than usual. It is typically held in the fall following the biennial selection of new party leaders the previous year. Michael Pettis, a finance professor at Peking University’s Guanghua School of Management, suggested in a June 17 report that the extended delay likely indicates a lack of consensus on how to tackle issues such as weak domestic demand, a rapidly shrinking property sector, escalating trade conflict, and mounting debt. Pettis speculated that the Third Plenum might propose measures to address the housing market, the restructuring or re-profiling of local government debt, and weak household consumption. In May, China’s retail sales exceeded forecasts with a 3.7% increase from the previous year, surpassing the expected 3% rise. https://bit.ly/4b5uaJF Despite this, other economic indicators like industrial output and fixed asset investment fell short of expectations. The Third Plenum might propose measures to address that EU is rethinking its trade strategy against China, shifting from defensive tariffs to encouraging Chinese electric vehicle (EV) makers to establish joint ventures in Europe. https://bit.ly/3XvhRmJ In May 2024, China unveiled a series of unprecedented measures aimed at revitalizing its beleaguered real estate market. https://bit.ly/3V1EmhE Picture credit: The Gulf Today #china #thethirdplenum #propertymarket #retailsales #electriccars #battery #tariffs #eu #usa #icustrialoutput #domesticdemand