Against expectations, China has today set a target for its growth this year. So an update is in order. Premier Li Keqiang on Friday set an extremely conservative growth goal of "over 6%" for 2021, as the National People's Congress, China's legislature, kicks off.
As expected, however, the party is proposing rule changes for elections in Hong Kong that eliminate the prospect of anyone other than Communist Party loyalists getting elected. President Xi Jinping has again moved to strengthen the Communist Party's stranglehold on the country, having previously eliminated term limits for himself that some mainlanders joke make Xi "emperor for life."
First point of business: the forecast. Premier Li's "estimate," which sets the yardstick for regional officials to hit, is likely to be way low. Last year's lockdown-lowered base effect means growth this year will in fact come in at 8.5%, according to a Société Générale estimate. But Beijing is keen to maintain an even rate, so it may massage the official figure to fit Li's forecast, or flag that China's real-time growth is only so strong because the economy eked out unexpected but record-low growth of 2.3% last year.
Second point: Hong Kong's freedom. Today, I'm also helping my son with a history project on Hong Kong. Yes, China agreed to introduce universal suffrage in Hong Kong, my memory does not deceive me. By 2007 at the latest, we were supposed to be able to elect the city's leader, the Chief Executive, and its legislature with one-person-one-vote.
No, China has not done that. The Beijing authorities have reneged on the Sino-British Joint Declaration of 1984, which set in motion the creation of the Hong Kong Special Administrative region in 1997. The "HKSAR" was supposed to function for 50 years, allowing Hong Kong a "high degree of autonomy."
That's laughable. It has not happened. There is now no autonomy whatsoever in Hong Kong, and Beijing's harshest critics - not me, you'd understand, because it's illegal to say so - would say it should be punished for breaking its promises, with utmost bare-faced cheek.
The Beijing bigwigs will tell you this is all part of the "One Country, Two Systems" program. But that is a sham, a piece of public relations designed to make it seem like Hong Kong still has any semblance of control over how the city is run. Hong Kongers do not. There is no opposition in the Hong Kong government whatsoever anymore, and that's how Beijing wants it to stay.
It's the same one-party system as you find in China. So it's "One Country, One Party, One System, But We Tell You It's Two." It's a lie. There's no two ways about it.
China would rather rewrite the inconvenient history that my son is now studying. It wants to make sure the curriculum in Hong Kong schools is suitably "patriotic," which means that it should praise the virtues and successes of Communist China, while playing down its colonial British past, and those international obligations that China ratified with the British before the United Nations.
We're hearing all this because the "two sessions" of Beijing's parliament are kicking off their meetings, the grandest of pomp-filled Communist ceremonies. It's all propaganda and pageantry, bundled up in a pretense of proposing policy and laws that have in reality already been determined to go into effect.
The first of the "two sessions," the advisory Chinese People's Political Consultative Conference, began yesterday. China's rubber-stamp legislature, the National People's Congress, began today, and is for the second year tackling the Hong Kong issue.
Last year saw the proposal of the draconian, hated National Security Law, foisted on Hong Kong in July 2020 after being written in Beijing. This year, it is a "critical and urgent task" for Beijing to write new rules that make sure only "patriots" administer Hong Kong, Wang Chen, a vice chairman of the NPC's standing committee, said by way of introductory remarks.
This is the start of China's newest five-year program of Communist-directed economic policy. Premier Li states that today's target is designed to fit within that scheme.
"In setting this target, we have taken into account the recovery of economic activity," Li said in the Great Hall of the People. "A target of over 6% will be well-aligned with the annual goals of subsequent years in the 14th Five-Year Plan period, and they will help sustain healthy economic growth."
Li said China will also look to create 11 million jobs in urban areas, and maintain an urban unemployment rate of around 5.5%. Inflation, in the form of the consumer price index, will be maintained at around 3%, suggesting the central People's Bank of China will withdraw stimulus as necessary to prevent asset and price bubbles. Li said China will not issue any special bonds for Covid-19 response, a step it took last year.
Any bubbles would not be the Communist's fault, no siree. We heard this week from China's top banking regulator, who blames foreigners for anything that gets of hand.
"I'm worried the bubble problem in foreign financial markets will one day pop," Guo Shuqing, the chairman of the China Banking and Insurance Regulatory Commission, told a media briefing in Beijing. Ultra-loose monetary policy in the United States and Europe have caused markets that have "seriously diverged" from the real economy, he stated.
He is, of course, right. But asset bubbles inside China can also build, and pop with terrible effect. He wants to let himself and his fellow officials off the hook if that does occur. "China's market is now highly linked to foreign markets and foreign capital continues to flow in," he said, making this another problem foisted on China. China can handle the scale and speed of inflows, he said optimistically, but "we must prevent volatility in the domestic financial market from becoming too great."
Translation: If China keeps prices under control, all praise be to the Communist Party's wisdom. If things get out of hand, well, that's the fault of foreign fast funds. Never mind that he and his colleagues set the rules for how those flow.
China was the only major economy to sustain growth last year, recovering from mid-year. Despite the epicenter of the Covid-19 outbreak occurring in central, industrial Wuhan, hub of the auto-parts industry, it had quickly brought the virus under control by late March thanks to an aggressive and total lockdown.
This year is a particularly important one for the People's Republic of China. The Chinese Communist Party is preparing a major party - politics and pleasure combined - in honor of the centenary of its founding. It traces its roots to July 23, 1921, when the founding National Congress of the CCP took place in a house in the French Concession in Shanghai. The meeting brought together leaders of the small Russian-backed Communist cells that had formed around China.
The Communist Party seized power by revolution in 1949, as my son's history project will say, and the People's Republic of China came into being. To Beijing, the PRC, the Communist Party and China, with its 3,000 years of written history, are one and the same. It's with this in mind that China will change the election rules in Hong Kong.
The 2019 demonstrations in Hong Kong were in support of democracy, and against the current Beijing-picked administration, which Hong Kongers didn't pick. But in the draft submitted today, Wang twists this to say they were "instigated by anti-China forces and secessionists in Hong Kong," who advocate independence of Hong Kong.
Hong Kongers, the vast majority deeply in love with their city, want to be able to elect their officials and govern themselves. They should even be able to propose greater autonomy, even independence, in a free political system. That's one of Beijing's famous imaginary "red lines" you cannot, for some reason, cross.
In the draft proposed on Friday, Beijing says it must "rectify and improve" the electoral system in Hong Kong. Not to make it more democratic, but instead to make sure a Beijing-loyal election committee vets every applicant for office in Hong Kong's Congress, the Legislative Council. The LegCo will be expanded, ostensibly to "build a democratic electoral system with Hong Kong characteristics," but only to include more Beijing loyalists. The official Global Times newspaper says the NPC standing committee "will handle the matter in the next one or two months."
China also issued a draft report at the NPC today showing that its military budget will grow 6.8% in 2021. That's a little faster than the 6.6% growth in 2020. The 2021 budget will amount to C¥1.35 trillion (US$190 billion).
Chinese stocks ended slightly lower on Friday, in line with declines across Asia, with the CSI 300 of the largest companies listed in Shanghai and Shenzhen off 0.3%. The market has been sliding since a mid-February peak, leaving it at essentially the same level as it started 2021. It's still 49.1% above its Covid-induced lows last March, but looks to have peaked on February 10, since then it has set back 9.4%.