China lawmakers wrap up Parliament session focused on managing risks

The NPC gathering showcased President Xi Jinping's confidence after China emerged from the pandemic as the only major economy to expand in 2020. PHOTO: EPA-EFE

BEIJING (BLOOMBERG) - China will bring its biggest annual political gathering to a close, with Premier Li Keqiang's once-a-year news briefing in focus, along with a series of votes on Hong Kong that could stoke tensions with the West.

The National People's Congress (NPC) will approve measures to overhaul Hong Kong's election system and a policy blueprint designed to reduce China's technological dependence on the United States in a closing session set for 3pm local time on Thursday (March 11) in Beijing.

Shortly thereafter, Mr Li will discuss everything from economic growth to financial markets in one of the rare occasions when a top leader of the world's second-largest economy takes questions from the media.

The NPC gathering - condensed into half its usual two-week length due to coronavirus restrictions - showcased President Xi Jinping's confidence after China emerged from the pandemic as the only major economy to expand in 2020.

Over the past week, the government has laid out ambitious plans to overtake the US in research-and-development investment and shift its capital-intensive growth model towards services and consumer spending.

"At the forefront of China's economic plans presented at the National People's Congress is increased technological self-sufficiency," Mr Xiao Chunxu, assistant director and economist at Moody's Analytics, said in a note on Wednesday.

"China also wants to solidify its position as the world's manufacturing powerhouse and seeks to be more integrated with the world, including trade in services," he said.

The decision to curb the influence of Hong Kong's pro-democracy opposition in future elections demonstrated Mr Xi's willingness to disregard Western pressure in order to address perceived domestic threats.

Although details of the legislation remained unknown hours before the vote, it would require candidates for elected office to be patriots, which one senior diplomat in Hong Kong said included respect for the ruling Communist Party.

The election measure was one of several signs during the NPC that Mr Xi was focused on managing risks at home before a key party meeting next year that could decide whether he stays on for a third five-year term as leader.

Plans expected to be approved by lawmakers on Thursday call for stronger national security legislation and expanded measures to counter US sanctions.

The government's modest growth target of above 6 per cent for the year was also well below the 8.4 per cent expansion that economists predict. The conservative figure was seen as a way to give officials more space to focus on longer-term ambitions, such as developing high-tech industries and supporting consumer spending.

At the same time, Beijing plans to bring down the budget deficit to 3.2 per cent of gross domestic product. Officials are worried about the build-up of debt and asset bubbles, and want to rein in the fiscal and monetary stimulus unleashed last year when the country became the first in the world to go into lockdown.

"China's sober and flexible 2021 GDP target is a game-changer," Mr Shaun Roache, chief economist for Asia-Pacific at S&P Global Ratings, wrote in a note. "As China rebalances and resets, the rest of the world will have to adjust."

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