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Two Sessions set the tone for China’s future

The final 10-day session of China’s 11th National People’s Congress opened in Beijing on March 5 amidst high security and the backdrop of infighting among senior cadres.

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The final 10-day session of China’s 11th National People’s Congress — China’s version of a parliament — opened in Beijing on March 5 amidst high security and the backdrop of infighting among senior cadres for positions in the Chinese Communist Party’s two top bodies, the Politburo and Politburo Standing Committee.

Restiveness in Tibet and Xinjiang came to the forefront with the NPC’s inaugural coinciding with the immolation of the third Tibetan in three days in Sichuan province’s Aba region and the outbreak of trouble in Kashgar, where 12 Uyghurs were killed. China’s official media omitted reporting these events, but they figured during panel discussions of NPC deputies in subsequent days. Interestingly, Xinjiang governor, Nur Bekri, reiterated on March 7 that ‘Islamic separatists’ with ties to militants in Pakistan were responsible for recent unrest in southern Xinjiang.

Chinese Premier Wen Jiabao, 69, presented his report to 2,987 NPC deputies followed by the National Development and Reform Commission Draft Plan for National Economic and Social Development and the Ministry of Finance ‘Budget’. These will be approved with minor amendments. Wen Jiabao’s report seemed sensitive to factional infighting and eschewed bold assertions or initiatives. His and NDRC’s report, however, favoured reform. The association with the Work Report of PBSC member and vice-premier Li Keqiang and vice-premier Wang Qishan, an upward mobile princeling and tough no-nonsense economist, indicates the successor leadership’s agreement with the contents of the report.

Salient features of the premier’s report include decisions to: reduce GDP growth to 7.5% (for the first time since 2005); annually create 9 million new jobs in towns and cities; keep registered unemployment below 4.6%; revise the poverty line at 2,300 yuan; ease registration requirements for rural workers; restrict increase in consumer price index below 4%; and, increase the total volume of imports and exports by 10%. The RMB floating rate would be allowed more flexibility and use of RMB for cross-border trade and investment would be expanded. Allocations for agriculture, social security, medical and health insurance as also old-age pensions for rural and non-working urban residents have been enhanced as have expenditure on education and S&T.

Important recommendations in the budget were the revision of Individual Income Tax, raising of VAT, relieving small and medium businesses of the tax and fee burden, and halving the tax on small businesses.

NDRC’s report described global economic outlook as ‘grim’ and the number of ‘new international and regional hot-spots’ as increasing. Retaining focus on S&T and IT, it said spending on R&D as a percentage of GDP will increase. Significant proposals were to: effect economic restructuring of the heavy and chemical industry to reduce their share in the national economy; boost domestic consumption; accelerate development of the central and eastern routes of the South-North Water Diversion Project (there was no mention of the Western Route, possibly because of its sensitivity); and reform coal, natural gas and domestic fuel prices this year.

Spending on security increased to 701.8 billion yuan ($111.4 bn). Defence expenditure rose to 670 billion yuan ($106.4 bn), exceeding $100 billion for the first time ever. Premier Wen Jiabao justified this as necessary to ‘win local wars under information age conditions,’ but for the first time declared ‘we will run the armed forces with strict discipline.’

Prominent was the very unusual disclosure, unmistakably linked to the infighting for positions in the PBSC at the forthcoming Party Congress, of the Chongqing Mayor. In remarks to Hong Kong’s Phoenix Television he confirmed that Wang Lijun, public security chief of Chongqing, had attempted to defect to the US Consulate in Chengdu. President Hu Jintao separately told Communist Party members among the CPPCC delegates in an internal briefing on March 3 that Wang Lijun was a ‘traitor.’ These appeared to deflect responsibility from Chongqing Party Secretary and Politburo member Bo Xilai, a ‘princeling’ supported by Xi Jinping and viewed as likely to be promoted to the PBSC this October.

The Work Report indirectly addressed the issue of profligate spending by party and government cadres. The premier announced that 98 central government departments, provincial and municipal governments had publicly declared expenditure on official overseas travel, official vehicles and official hospitality last year. Reports circulating inside China claim that the government annually spends $15 billion on the purchase of luxury automobiles.

China’s economic prosperity was manifest during the NPC. The wealth of its 70 richest NPC deputies increased by $11 billion since last year and media focus was on the sartorial fashions of the deputies. The CCP’s propaganda department was compelled to issue a directive warning China’s media not to ‘hype the ‘Two Sessions’, gourmet food and the clothing and accessories of representatives!’

The author is a former additional secretary, Cabinet Secretariat, Govt of India

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