China prepares turnaround in economy and technology – 03/03/2023 – World

With attention focused on the 2023 growth target and the new economic team, the National People’s Congress, an annual legislative meeting that should last ten days, begins this Sunday (5) in Beijing.

The most significant decisions will be announced at the end. The event is also usually called the Two Sessions, because, parallel to the congress, the Chinese People’s Political Consultative Conference also meets, this time this Saturday (4). Chinese and western vehicles sought to advance the percentage of the growth target and cabinet members, listening to regime and market sources.

The goal serves to guide investments in the country, including foreign ones. Caixin and Bloomberg risk a percentage above 5%, with the first citing as a reference the average growth target of Chinese provinces, of 5.6%. Reuters speaks of up to 6%. The South China Morning Post at least 6%.

Expectations are more positive than at the end of last year, when advisors to the regime recommended a target of 4.5%. The main reason for the change was the end of Covid zero policy restrictions in early December.

This week, reinforcing the trend, the rapid recovery of Chinese industry in February was confirmed, both by the National Statistics Office and by the Caixin/S&P private index. With this, the need for post-pandemic government stimulus should decrease, easing public accounts.

As for the cabinet, the expectation for the congress is of even greater concentration of power over the economic area in the general secretary of the Communist Party, Xi Jinping. In the Two Sessions, he will formalize his third term at the helm of the country. The premier, as expected since the CP Congress in October, should be Li Qiang, former secretary general of the CP in Shanghai, one of China’s industrial and financial centers. There, he made Elon Musk’s Tesla gigafactory viable, and was close to Jack Ma, from Alibaba.

He is seen as liberal in economics and close to Xi, with whom he worked when they were both in other roles. The initial negative reaction to his name in the financial market was reversed with the assessment that he will take Shanghai’s actions to the central regime in favor of the private sector.

The link with Xi is now treated as a sign of greater influence, unlike the current prime minister, Li Keqiang, from another wing of the CP. There was also a review of his role in the two-month Shanghai lockdown that helped push the country’s growth to 3% last year.

The prevailing view – now at least the one that echoes in Western financial vehicles – is that he was following Xi’s orders and that later, based on the experience in Shanghai, convinced him to accelerate the end of Covid Zero. On the 16th, Xi declared “victory” over the virus.

Two other central names expected for the cabinet, with an impact on financial management, are He Lifeng as deputy prime minister, seen as less of a technocrat than the current one, and Zhu Hexin for the Central Bank, a bank executive. The changing of the guard in the economic team is closely followed, because in a speech earlier this week, Xi again spoke of financial sector reform and advanced greater control over the science and technology sector, under increasing pressure from the US government.

Significantly, some of the names of the Chinese Internet giants were left off the lists of participants for the congress and the consultative conference, including the CEOs of Tencent, Baidu and NetEase. In its place, others entered, linked to semiconductors and artificial intelligence.