Xi Jinping faces growing concerns about economy as legislature meets

Beijing

CHINA'S rubber-stamp Parliament opens its annual session on Tuesday as President Xi Jinping faces growing concerns about the slowing economy, a major challenge to the country's pre-eminent leader.

One year after the legislature abolished presidential term limits and etched Mr Xi's name on the constitution, his "new era" vision of a resurgent China at the centre of world affairs has hit unforeseen road bumps. Economic growth is slowing, a festering trade war with the United States has eroded confidence and Mr Xi's signature Belt and Road global trade infrastructure initiative has faced setbacks in some countries.

Bubbles of discontent have appeared as the state has pushed deeper into the economy and people's lives. "This will be a much more difficult situation for Xi Jinping than last year. Last year he was riding high," said Hong Kong-based political analyst Willy Lam.

Premier Li Keqiang is expected to open the National People's Congress (NPC) by announcing a lower GDP growth forecast for 2019, setting the tone for a session heavy on economic legislation and expected to last two weeks.

Nearly 3,000 delegates will ratify a raft of bills in a session expected to last two weeks, including a foreign investment law that could address some US demands and possible tax cuts.

"Xi Jinping has been criticised by party members for not handling the economy well, and failing to tackle the challenges posed by Donald Trump," added Mr Lam.

Mr Lam believes Mr Xi avoided holding a fourth plenum of the party's Central Committee last autumn because of his weakened position. But he convened a meeting with hundreds of provincial and ministerial leaders in Beijing in January to warn them on the need to prevent "major risks" in politics and the economy. "We must increase our readiness for unexpected developments, take precautions, and properly prepare for major risks that may arise in the economic field," Mr Xi said.

China reported 6.6 per cent growth in 2018, the slowest in nearly three decades. Independent analysts estimate it was worse. Three-quarters of provinces have lowered annual growth targets for 2019. Delegates from around the country will convene for the NPC session and the Chinese People's Political Consultative Conference (CPPCC), an advisory body that runs simultaneously and which began discussions on Sunday.

"Behind closed doors NPC members from the provinces will demand Xi Jinping do something about reviving the economy," Mr Lam said, adding he will face "angry voices".

Still, Mr Xi presides from a position of strength with no potential challengers on the horizon. "For him it's not only the backbone of the economy that makes him a strong leader, but also political ideology."

"An ongoing campaign places Xi centre stage," said Matthias Stepan of Germany's Mercator Institute for China Studies, noting it made it hard for any competitor to emerge. Most recently the party released a "Study to Make China strong" propaganda app that grades people's knowledge of all things Mr Xi.

In 2017 Mr Xi expanded his portfolio into economics - once seen as the purview of the premier - stamping it with a new wordy banner: "Xi Jinping Thought on Socialist Economy with Chinese Characteristics for a New Era". His push to increase the state and party's role in the economy has coincided with a downturn. Video game, film and TV makers have struggled to navigate the vagaries of changing censorship guidelines while Internet companies have been forced to retrench in some areas and step up monitoring. Some entrepreneurs have privately bristled at a push to expand party cells in all companies while others bat about the phrase guojinmintui or "state firms advance, private companies retreat".

"On the one hand the government wants to develop the market but on the other hand they want to control the freedoms that come with a market economy," said Sheng Hong of the Unirule Institute of Economics. "They are afraid of an economy without government control."

US trade negotiators, meanwhile, are pushing for further economic reforms. The investment law seeks to eliminate a major bone of contention - the requirement for foreign companies to transfer proprietary technology to Chinese joint-venture partners.

Mr Xi and his lieutenants have their work cut out for them. "They have to reinstate confidence, especially that the party has the right tools and the right team around Xi to deal with the challenges," said Mr Stepan of Mercator. AFP