As of 5 March, around 3,000 delegates from all over China will attend the annual plenary meeting of the National People’s Congress (NPC), the country’s legislative body. The meeting is taking place in a difficult year for China not just economically or regarding foreign policy, but in terms of domestic affairs as well: A new head of government is to be elected in Hong Kong in March, and some major changes in key positions are to be expected in the fall at the Chinese Communist Party’s Congress that takes place every five years. At that event, party- and state-leader Xi Jinping will try to consolidate his power even further.

Matthias Stepan, head of the research programme on Public Policy at MERICS, answered some key questions for us:

Each year, the Chinese government’s work report is one of the central points on the NPC’s agenda. What issues is Premier Li Keqiang likely to emphasize this time, just a few months before the important party conference this fall?

Well, with the 19th Party Congress being imminent, the Chinese leadership will no doubt use the report to emphasize all its positive achievements so far – even more so than in previous years. Those are certainly going to include the significant increase in social security benefits and the creation of millions of affordable housing units. The money invested in these projects well exceeded the amounts allocated in the 2016 budget.

As for the economic reform agenda, we can expect to hear some warnings because the restructuring of unprofitable state-owned enterprises is still only proceeding at a snail’s pace. Li may also make the reduction of surplus capacity in the coal-mining and steel-making sectors one of his key points: Recently, there were reports that local governments had announced they had taken specific measures to cut surplus capacity, but in reality, production has largely continued as normal.

Is China’s relationship with the United States likely to play a role in the report? It has gotten worse since Donald Trump took office, after all ...

The Chinese premier’s work reports usually focus on domestic issues. The leadership wants to show how successful it has been. Foreign policy generally plays a much smaller role, but if foreign policy does get more coverage in Premier Li’s speech, it would be a clear sign that the government regards President Trump’s politics as one of the biggest challenges it’s likely to face this year.

The changing foreign-policy situation could have an effect on the nation’s military budget, for example – some reports say it’s set to rise again. What can we expect to happen?

The Chinese leadership has set itself the goal of making the country a central player in the international security arena. Donald Trump’s inauguration as president of the United States will no doubt have strengthened the leaders’ commitment to push ahead with this course of action. Budget increases for China’s armed forces won’t be the only sign to look out for. In fact, we have to keep monitoring where extra money for arms projects is possibly being invested over the course of this year.

In absolute terms, the scale of the PRC’s military expenditure still puts China in second place on the ranking list, well behind the U.S. But we must also look at the budgetary plans for other ministries, as a lot of expenditure that gets assigned to a state’s military budget in Western countries gets hidden in other budgets in China. Take the national coastguard, for example, which isn’t part of the People’s Liberation Army, but shoulders the cost of most of the operations in the South China Sea. The cost of these activities is officially shown in the budget plans of the Ministry of Land and Resources.

Five of the seven members on the Politburo Standing Committee are expected to retire at the CCP’s party congress this fall. Can we expect the NPC plenary session to give us some pointers who could take their place?

The leadership of the CCP won’t announce any details about personnel decisions affecting the Politburo’s power centre before the party congress concludes. As far as the extended group around the leadership is concerned, it has already become obvious that Xi Jinping is systematically strengthening his power base within the state and party hierarchy. This is evident from three personnel decisions taken shortly before the NPC’s annual meeting. Politicians close to Xi’s camp were chosen to fill each post – the position of chairman of the influential National Development and Reform Commission (NDRC), and the posts of minister of commerce and minister of justice.

Last year, the NPC passed a number of bills that created new possibilities for the Xi administration to exercise control in different areas. What kind of new legislation is now in the pipeline?

The Overseas NGO Law and the Cybersecurity Law have deliberately reduced the space for civil society and non-governmental organizations in China. We have to wait and see how rigorously the new legislation is implemented. There are already signs that the Chinese government intends to strike hard against offenders, particularly if they are from overseas.

There aren’t any other controversial legislative proposals due to be passed in the short term. In fact, the top priority at this year’s plenary session will be to avoid controversial subjects or postpone them if possible. There are a number of issues the country needs to address though: In view of the rapid demographic changes in China, for example, the pensions law needs to be reviewed and amended, and the statutory retirement age is likely to be raised at some point. The issue of land-use rights and the legal status of home ownership also need to be dealt with urgently. But the Chinese leadership won’t want to make any decisions in these sensitive policy areas prior to the Party Congress in the fall – the risk of upsetting the public is much too high.

For many years, the party leadership has emphasized that the ‘rule of law’ is key for the country. Has this had any impact on the political clout of the NPC and its influence on political decisions?

Well, the party leadership still regards the National People’s Congress as an instrument to pursue its own objectives. The NPC has recently been more active, making some specific proposals regarding national environmental laws, for example, but topics such as home ownership and retirement age are unlikely to result in any public announcements this year, even though they cause heated discussion among the general public. That’s because the NPC’s prime aim will be to demonstrate unity.

All in all, the delegates, who are members of the Communist Party of China as a rule, are subject to stringent ideological and organisational controls. The party leadership in Beijing won’t allow the NPC to become overly independent. And nothing is going to change that situation in the foreseeable future.

Learn more about the changing role of China’s National People’s Congress in the lawmaking process in the latest MERICS China Monitor by Matthias Stepan and George G. Chen.


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