Event ReportsPublished on Mar 30, 2009
The 2nd session of the 11th National People's Congress (NPC) was held in Beijing from Mar 5-13, 2009, the first session after the onset of the global economic crisis
Brief assessment of China's National People's Congress

The 2nd session of the 11th National People’s Congress (NPC) was held in Beijing from Mar 5-13, 2009, the first session after the onset of the global economic crisis. It was a 9-day session this year, shortened because of the ongoing economic crisis. The highlight of the NPC session was the speech by Premier Wen Jiabao. The 11th Chinese People’s Political Consultative Conference (CPPCC) also opened, as per tradition, on March 5 and was presided over by Politburo Standing Committee member Wu Bangguo. A notable absentee was Justin Yifu Lin, Chief Economist of the World Bank, who was elected as Deputy to the NPC by the Beijing Municipality. Lin had earlier informed the authorities that he would not be able to attend.

Chinese Premier Wen Jiabao presented the ‘Report on the Work of the Government’ on Mar 5, ‘09. It was approved on Mar 13 with 17 amendments.  Of the 2,898 NPC Deputies present at the session, 2,824 voted in favour of the Report. The Report was balanced and reflected confidence that the economic measures being taken by the leadership would steer China safely through this period of crisis, although Wen Jiabao did acknowledge that the crisis was impacting adversely on China. He forecast that the country’s economy would grow at an adequate and healthy pace of 8 percent. This rate of growth is necessary for keeping unemployment at the current acceptable level. He estimated too that CPI would be controlled at 4 percent.  The emphasis of the Report, in its plans for the coming year, were infrastructure expansion, tax breaks for the population, increased subsidies to retirees and low income persons, rural sector health reform and agricultural subsidies. Budgetary allocations for these represented substantial increases over the previous year. Chinese Premier Wen Jiabao assured that if considered necessary another stimulus package would be prepared.

In his Government Work Report, the Chinese Premier acknowledged the severity of the economic crisis while underlining the Government’s ability to tackle it. He stated that ‘the country’s economic and social development had withstood severe challenges and tests rarely seen before. It had surmounted all difficulties and made new achievements in reform and opening in the socialist model’. He highlighted that GDP had risen by 9 percent over last year to 30 trillion Yuan and, overall, prices had been held in check. It was pointed out that grain output, a serious issue with the Chinese leadership which values food security, had risen for the fifth successive year and totaled 528.5 million tons. Imports and Exports had similarly increased by 17.8 percent to touch US$ 2.56 trillion while paid up FDI totaled US$ 92.4 billion. Per capita incomes, he stressed, had increased with urban per capita income at 15,781 Yuan (an 8.4 percent increase over the previous year) and rural per capita income at 4761 Yuan (an increase of 8.00 percent). Wen Jiabao observed that the international economic crisis had worsened since September 2008 and had begun to be felt in China. It had affected growth of the coastal provinces. Among the measures used for tackling the adverse impact of the crisis, listed by him, were: raising export rebates on three occasions; suspending individual income tax on interest earnings from savings; reducing securities transaction stamp tax rates; cutting taxes and fees on housing; and increasing credit to small and medium enterprises.

Noticeable in the figures cited by the Chinese Premier for work done the previous year, was the focus on the agriculture and rural sector. This was in line with the policy to build a ‘new socialist countryside’, announced by Chinese President Hu Jintao and Chinese Premier Wen Jiabao in 2005. A few examples are the 37.9 percent increase in spending on agriculture, rural areas and farmers at 595.5 billion Yuan. An increase of 163.7 billion Yuan. Of this 103 billion Yuan was as direct subsidy to grain producers and general subsidies to farmers. The minimum grain purchase price was also raised three times, each time exceeding 20 per cent. Pensions of enterprise retirees was increased by 110 Yuan per month and low income allowances and for students was increased. He emphasized that 814 million people, or 96.5 per cent of the country’s population had benefited from the new type of rural cooperative health care.

Describing the coming year as ‘crucial’ for the 11th Five Year Plan and most difficult for China’s economic development since the beginning of the 21st Century, Chinese Premier Wen Jiabao echoed Chinese President Hu Jintao’s sentiments when he said: ‘China is still in an important period of strategic opportunities’. ‘Challenges and opportunities co-exist, as do hardships and hopes’.

Expressing confidence that China will overcome difficulties, Wen Jiabao asserted that GDP will grow by 8 per cent this year, that unemployment shall be held below 4.6 percent and that per capita incomes will rise by 4 percent. At the same time, he continued to maintain the focus of development on the rural countryside. He called for raising grain production by 50 million tons, allocated a large sum for irrigation works and promised that poverty relief will be increased to 1,196 Yuan per head and extended to include an additional 40.07 million people. Government spending on agriculture is set to total 716.1 billion Yuan, an increase of 120.6 billion Yuan. Central subsidies will increase by 20 billion Yuan to total 123 billion Yuan. He announced an allocation of 293 billion Yuan for a social security safety net and assured that priority will be accorded to providing employment for university graduates. Wen Jiabao declared that in addition to the 4 trillion Yuan stimulus package already announced, China will cut taxes by 600 billion Yuan, raise old age pension for retirees, hike salaries of 12 million teachers, grant more subsidies to farmers and spend 850 billion Yuan on rural health care within 3 years. A difference among economists in estimates of unemployment was voiced by Zhou Tianyang, of the Central Party School and an NPC Deputy, when he separately told journalists that he apprehended that  unemployment could even reach 14 percent.

Some of the important budgetary allocations are: 208 billion Yuan for infrastructure; 231.7 billion Yuan for transport infrastructure (including rail, road, airports and ports); 71.3 billion Yuan for rural education, health care; 49.3 billion Yuan for low cost housing; 116.131 billion Yuan for public security (an increase of 32.6 per cent); and 472.867 billion Yuan for national defence (an increase of 15.3 per cent).

The focus of Chinese Premier Wen Jiabao’s Report was on the economy and it barely touched on international relations. There were three direct references: to Hong Kong and Macao, the Tibet issue and Taiwan. There was an indirect reference to relations with USA when Deputies, representing the People’s Liberation Army Navy and who were senior General Staff rank officers, alluded to the recent incident involving the US Navy survey vessel ‘USNS Impeccable’. They declared that China must defend its territory including its Exclusive Economic Zone (EEZ). Some of them observed that aircraft carriers were necessary to add to the PLA Navy’s capability, amid reports circulating that two mid-sized aircraft carriers would be inducted into the South Sea Fleet by 2015.

He commented that stronger efforts would be made to make the RMB the common currency for Hong Kong and Macao. On the Tibet issue, a more assertive stance was discernible. China criticized the US House of Representatives and European Parliament for the Resolutions passed by them around March 10 and France was asked to clarify its stand on Tibet. The Chinese Communist Party authorities in Tibet announced that two insignia would be released on the occasion of Serf Emancipation Day on March 28. The official ‘Tibet Daily’ slammed the Dalai Lama’s speech of March 10, including with the comment that the freedoms he was calling for were those enjoyed formerly only by a miniscule percentage of Tibet’s population. It pointed out that the freedoms enjoyed by Macau were indicative of how accommodating Beijing could be! Chinese Premier Wen Jiabao meanwhile stated at the NPC that China is willing to talk to the Dalai Lama provided he gives up separatism and that while the Dalai Lama can change course, he cannot undo what he has said in the past. The Chinese Premier avoided any criticism of Taiwan, reiterating instead China’s commitment to effecting the peaceful reunification of Taiwan with China. A noticeable omission was the absence of any reference to a ‘hotline’ between the Chinese and Taiwanese military establishments or military cooperation. Both aspects had been briefly referred to in the past by Chinese President Hu Jintao and Taiwanese President Ma Ying-jeou. Wen Jiabao did offer an olive branch, though, by expressing support for fiscal measures that are under negotiation presently including an economic cooperation agreement that could lead up to a Free Trade Agreement.

Chinese Premier Wen Jiabao’s speech at the NPC session reflected a mixture of confidence and optimism for the future. He was confident that he would be able to ensure the desired rate of growth, contain unemployment within acceptable limits and maintain prices at levels that avoid hardship to the common man. His report confirmed that the Hu-Wen leadership duo remain intent on tackling problems related to rural and agrarian China, alleviating poverty and reducing income disparities. At the same time, the measures and plans announced are clearly designed to ensure enduring development over the long-term while simultaneously generating employment and stimulating the domestic economy and consumption at this time of crisis. The large budget for the public security apparatus, which increased by over 30 per cent indicates clearly that the leadership is prepared to handle social disorder. The confidence of the leadership is equally visible in China’s actions at this time in the international arena. Examples are the tough line on the Tibet issue which points to an assessment in Beijing that the West will not back the Dalai Lama beyond a point at this difficult juncture, and the observation by NPC Deputies emphasizing Beijing’s duty to safeguard its territories including the EEZ. The double-digit hike in the national defence budget for the second successive decade, bringing it to US$ 70 billion, confirms that Beijing is serious not only about modernization of its armed forces but also in enhancing their power projection capability.

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