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Trade war casts pall as China's leaders meet
Trade war casts pall as China's leaders meet
By Isabel Kua and Peter Catterall
Beijing (AFP) Mar 4, 2025

China's leadership is gathering at the largest political event of the year on Tuesday, seeking a response to US President Donald Trump's latest salvo of tariffs targeting an already sluggish Chinese economy.

The closed-door meetings, known as the "Two Sessions", are concurrent gatherings of China's rubber-stamp parliament and a separate political advisory body.

Voting is tightly controlled and legislation is pre-approved by the Communist Party.

But the political gathering will offer a rare glimpse into how Beijing plans to meet its economic growth target -- which analysts say would likely be five percent, while it faces down an unpredictable United States.

With the opening of the proceedings coinciding with the implementation of additional US tariffs, the meetings will be closely watched for retaliatory measures, which Beijing has vowed to impose.

All eyes will also be on possible stimulus to boost domestic demand, sorely needed to counter a potential drop in tariff-sensitive exports.

- Economy in focus -

Proceedings kick off Tuesday at 3:00 pm (0700 GMT) with the opening ceremony of China's People's Political Consultative Conference (CPPCC) -- likely attended by President Xi Jinping and other party top brass.

Tuesday's CPPCC is low-stakes compared to the near-simultaneous gathering of the country's legislature, the National People's Congress (NPC), which starts Wednesday.

During the NPC's opening session, Premier Li Qiang will deliver a speech expected to unveil economic targets.

Analysts polled by AFP broadly agreed that Beijing will set a goal of around five percent growth -- the same as 2024.

But observers say this is ambitious given the economic headwinds China is facing.

Analysts expect policymakers to widen the scope of a consumer goods trade-in programme initiated last year that allows shoppers to exchange older home appliances and other items.

China is also grappling with a prolonged property sector crisis and high youth unemployment, issues that have dampened confidence in the economy -- which long enjoyed double-digit growth but has struggled to make a full recovery since the pandemic.

Investors will also be watching for signs of further support for the private sector, following Xi's rare talks with Chinese tech tycoons last month.

Officials will try to send a positive message that the country is "still in good shape", said Alfred Wu, an associate professor at the Lee Kuan Yew School of Public Policy in Singapore.

However, specific policies may not be announced during the meetings, with impact to the markets likely "limited", he said.

"In the past, the NPC meeting was more about agenda-setting. Now, it's more about sending a message and propaganda," Wu added.

"Now, it's one-man politics."

- Trump's back -

The talks will be closely watched for signals for how China plans to deal with an increasingly unpredictable United States, its largest trading partner and strategic rival.

Donald Trump, in just over a month back in the White House, has overturned the international order and proven even more mercurial than in his first term.

"People will be watching (for) how Xi might be responding to the uncertainties and unpredictability set before him by the challenge that is the current Trump administration," said Chong Ja Ian, an associate professor of political science at the National University of Singapore.

China has so far been "quite careful" and calibrated in their reaction to the US' latest tariffs, Chong said.

"I expect then that any response will be intended to show PRC resolve, but to avoid escalation, because once there's escalation, it is unclear how it might be able to be controlled."

Pressure from Trump could motivate Beijing to strengthen the kinds of support for the economy seen last year -- interest rate cuts, easing local government debt pressure and expanding subsidy programmes for household goods,

"We expect China to increase policy support in response to greater external shock from the US," Wang Tao, chief China economist at UBS, told AFP.

- Military moves -

China is also set to announce its annual military budget this week.

Analysts expect an increase as Beijing navigates deepening tensions in the South China Sea and the Taiwan Strait.

"I expect further investment in capability, especially in terms of missiles, aircraft, artificial intelligence that boost the military," said Chong.

For years, China's defence budget has expanded at a faster rate than its economic growth target.

And on the political side, focus would be on the military's role within the legislature, given Xi's wide-ranging campaign against official corruption since coming to power just over a decade ago.

"There will probably be some attention to who might be moving up the ranks within the CCP, given the fact that its current leadership is ageing," Chong said.

What are China's annual 'Two Sessions' meetings?
Beijing (AFP) Mar 3, 2025 - Thousands of delegates from across China gather in Beijing from Tuesday as the country kicks off its annual legislative sessions, one of the most important political events of the year.

The meetings, known as the "Two Sessions", are concurrent gatherings of China's rubber-stamp parliament and a separate political advisory body.

Voting is tightly controlled and legislation is pre-approved by the Communist Party.

But the closely watched political gathering will still offer a window into the priorities of top leaders in the face of new geopolitical headwinds and efforts to reignite a struggling economy.

Here's what you need to know:

- What are the 'Two Sessions'? -

The first session, beginning Tuesday, is a gathering of China's political advisory committee, the Chinese People's Political Consultative Conference (CPPCC).

The group has in the past included celebrities such as action star Jackie Chan and NBA legend Yao Ming and its discussions are relatively low-stakes.

Representatives -- including from Macau, Hong Kong and Taiwan -- provide lawmakers with policy suggestions that, more often than not, have little impact on national policy.

All eyes, however, will be on the meeting of the National People's Congress (NPC), the country's top legislature, starting Wednesday.

Around two-thirds of the legislature's members come from the Communist Party.

No bill put forward by the party has ever been rejected by the parliament, which is why it is often described as a "rubber-stamp" body.

- How significant is it? -

The week-long meetings will mostly be held at Beijing's Great Hall of the People -- a cavernous building located at the western edge of Tiananmen Square.

China takes extensive measures to prevent any disruptive incidents from happening during the highly choreographed parliamentary sessions.

The meetings are tightly controlled and managed, with meticulous planning to ensure an image of political unity is portrayed.

State media promotes the gatherings as proof of the party's responsiveness to the people, despite its monopoly on power.

Police have been deployed and security tightened ahead of the event in the capital.

During the NPC's opening session, Premier Li Qiang will deliver a government work report, a speech expected to unveil key economic targets and outline plans to achieve them.

Foreign Minister Wang Yi will also hold a news conference during the event.

This year is expected to be the second consecutive one without a news conference with the premier -- once a highlight of the closing session.

- What are the top issues? -

Observers will be keeping an eye out for clues on the measures China will take to bolster its economy, which has struggled to make a full recovery since the pandemic.

The world's second-largest economy is grappling with sluggish domestic demand, a prolonged property sector crisis and high youth unemployment.

It is also facing the imposition of steep tariffs from the United States, which could hit hundreds of billions of dollars in trade between the two countries.

The conference will see Beijing set official growth targets for 2025, following a reported national GDP expansion of five percent last year -- the lowest rate since 1990, excluding the pandemic years.

China is also expected to announce its annual military budget, as Beijing eyes deepening tensions in the South China Sea and the Taiwan Strait.

Investors will also be watching for signs of further support for the private sector, following President Xi Jinping's recent rare talks with Chinese tech tycoons.

Investors were optimistic the meeting signalled a shift from Xi, who has strengthened the role of state enterprises and waged crackdowns on areas of the private sector undergoing "disorderly" expansion.

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