March is an especially political time in China, with the annual meetings of two top-level national political bodies, the National People’s Congress and the Chinese People’s Political Consultative Conference. The meetings bring together about 5,000 delegates from around the country, including ones representing Taiwan and the autonomous territories of Hong Kong and Macau. They are all converging at the Great Hall of the People in Beijing for two weeks starting March 3. Here are seven things to watch this year:
1. Constitutional amendments
Delegates are likely to adopt a proposal by the top leadership to remove the two-term limit for presidents that is now in the constitution. The presidential post is largely ceremonial, with much of the government machinery running through the State Council led by Premier Li Keqiang. President Xi Jinping’s real power comes from his position as general secretary of the Communist Party and chairman of the Central Military Commission.
Neither the party nor the commission limits the top leader’s term of service. Removing the presidential limit of two 5-year terms from the constitution would allow the 64-year-old Xi to serve past 2022. It would also do away with a party norm that leaders step down by age 68, thus putting any leadership succession plans on hold.
2. The return of Wang Qishan
Wang Qishan, a key ally of Xi, is reported to be under consideration for a top government post, possibly the vice presidency. The 69-year-old Wang retired from the seven-seat Politburo, the party’s highest decision-making body, last October, after successfully leading the Xi administration’s anti-graft campaign.
Under Wang’s watch, high-ranking officials linked to Xi’s predecessors were removed, notably former Chongqing party secretary Bo Xilai, and more recently, Sun Zhencai, who had held the same post.
3. The inclusion of ‘Xi Jinping Thought’ in the constitution
Symbolism and ideology are key elements in Chinese politics. Delegates will likely add mention of “Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era” to the state constitution. The doctrine was added to the party constitution during a party congress in October, spelling out Xi’s vision for China to restore its national pride and succeed economically.
The president then laid out two long-term development goals to be pursued through the centennial of the government’s founding in 2049, envisioning China as a “great modern socialist country that is prosperous, strong, democratic, culturally advanced, harmonious and beautiful.”
These ambitions would be pursued alongside the modernization of the military, and the expansion of China’s international role.
4. Stronger teeth in the anti-corruption fight
Provisions for the establishment of a new anti-graft body called the National Supervisory Commission will be written into the constitution. The commission, which will come under the cabinet, will independently oversee lower-ranked units nationwide, bolstering Xi’s fight against corruption at all levels. Work will be coordinated with the judiciary and government prosecutors. The top leadership of the legislature will not hold positions on the commission to ensure its independence.
The party’s anti-graft body will be merged into the commission, giving it the power to investigate disciplinary matters involving both party cadres and government officials.
5. This year’s growth target
Premier Li will open the congress with the Government Work Report, unveiling the government budget and the economic growth target for 2018. The government is expected to introduce further reforms to mitigate financial risk and address environmental challenges.
The world’s second-largest economy grew 6.9% in 2017, above the target set last March, but it is expected to slow in line with the leadership’s guidance of prioritizing quality over a high pace of growth. Market players expect tighter monetary policy, which may impact the stock and property markets. To meet the Communist Party’s promise to double per capita income by 2020 from 2010 levels, the economy has to grow at least 6.5% yearly for the next three years.
6. Appointments to cabinet and senior regulatory positions
Apart from the appointment of a new vice president, there are four vice premier posts on the State Council to be filled. Possible appointees include Xi’s confidantes from the party’s powerful Politburo standing committee. One rank below the vice premiers, five state councilor positions are up for grabs too. These positions are more powerful than ministerial portfolios.
The top jobs at the central bank and the financial regulator are likely to be filled by people close to the top leadership. Among the names that have been circulated are Liu He, current chief economic adviser to the government, and Guo Shuqing, chairman of the China Banking Regulatory Commission. The head of a newly set up financial regulator known as the Financial Stability and Development Commission will also act as a vice premier.
7. SOE reforms
Beijing will resume shaking up its state-owned enterprises as well as the private sector to address mounting corporate debt. Financial instability arising from debt defaults is the last thing that the government wishes to see and it is expected to put in policies to ensure liquidity in the banking system. Among the deleveraging measures expected will be moves to allow greater foreign ownership of domestic corporations in certain sectors, liberalization of mergers and acquisitions and further promotion of debt-to-equity swaps.
The asset management industry will come under the gun, with implicit investment return guarantees disallowed and product issuers regulated under a single framework to mitigate risk in the capital market.