Zhongnanhai Facing Near-Term Crisis as China’s Two Sessions Approach
As the National People’s Congress of the Communist Party of China and the Chinese People’s Political Consultative Conference approach, Zhongnanhai is facing a crisis as major stimulus measures or ambitious reform plans are yet to be introduced. The lack of confidence among investors and businesses in China’s economy is causing concern, with the root cause being identified as low consumer confidence.
Deutsche Welle Chinese website reported on February 25 that as the CCP’s rubber-stamp parliament approaches in March, there is no indication of significant policy changes on the horizon, leading to growing stress among policymakers. The National People’s Congress typically does not serve as a venue for announcing major policy shifts, as that responsibility often falls to the CCP’s “plenum” held every five years.
Investors had expected a plenary session in late 2023 to address economic concerns, but its postponement has heightened worries about policy inaction. At the upcoming National People’s Congress meeting, Chinese Premier Li Qiang is expected to outline this year’s economic goals, including stabilizing growth around 5% in 2024 with a budget deficit of 3% of GDP.
China’s stock market hit a five-year low at the beginning of the year, sparking fears of economic slowdown and deflation reminiscent of the 2015 crisis. Experts warn that the challenges facing China’s economy in 2024 are more complex than in previous years.
Analysts point out that the constraints on the Chinese government in stimulating the economy through traditional channels are significant, and major policy announcements at the National People’s Congress are unlikely. Xi Jinping’s aversion to cash injections or increased social security measures further limits options for boosting consumer confidence and economic growth.
The reluctance to implement significant reforms is seen as a prioritization of social stability and national security over sustainable growth, with concerns that empowering consumers and private companies could disrupt the status quo. Experts note that making a major shift at this point would require admitting long-standing mistakes, a move seen as unlikely under current leadership.
Xi Jinping’s adherence to the chosen path has left China facing economic challenges without clear solutions in sight. As the country navigates these uncertainties, maintaining transparency and hope through platforms like Voice of Hope becomes crucial in shaping the future of China’s economy.
Source: Voice of Hope, Edited by Lin Li.