World Economy

China’s NPC Takes Flexible Economic Approach

China’s NPC Takes Flexible Economic ApproachChina’s NPC Takes Flexible Economic Approach

Nearly 3,000 delegates of the National People’s Congress, or legislature, are holding an annual meeting in Beijing to discuss China’s growth plan for the next five years.

While the Chinese parliament is viewed as a “rubber stamp,” the NPC, a carefully choreographed event, is not without behind-the-scene political tensions as question are raised on how the leaders are going to tackle the challenges facing a slowing economy, ATimes reported.

One major focus of the 10-day conclave, which began on March 5 and ends on March 15, is fixing the growth target. This time, the leaders have given some wiggle-room by announcing a target range of 6.5% to 7% instead of being specific on GDP growth.

According to analysts, this is a clear departure from the past and it conveys a significant message to Chinese legislators: fasten your seat belt and prepare for contingency.

Last year, China said the economic growth would hover around 7%. Such a flexible view was necessary because the country ended up with 6.9% growth—a 25-year-low.

 Trouble at Grassroots

It is essential for leaders to achieve the promised economic growth. By ensuring economic and social stability, the Chinese Communist Party earns people’s legitimacy.

President Xi Jinping is the leader of the ruling party’s central economic working group, effectively the final decision-making body for China’s economic policy. Therefore, he is supposed to be held accountable for any setbacks in the economy.

Stock markets too were agog with rumors that Xi was thinking of replacing Premier Li Keqiang, making him “responsible for what happened.” Although the rumors were baseless, they were floated ahead of an anticipated high-level reshuffle next year.

The concern of top leaders about such rumors was reflected in an internal circular leaked during the parliamentary meeting. The circular asked stakeholders in the stock market to “behave themselves.” All listing companies and securities brokers were told to “take care of the stability of the capital market”.

Amid skepticism, the Chinese government says the GDP and urban population income will double from 2010 to 2020 and the economy mass will reach $120 trillion. To reach that goal, China must achieve an annual growth rate of over 8% taking the inflation factor into account. But the gloomy global prospects have made this goal hard to achieve, if not impossible.

Tong Xiduo, a Beijing-based economist with the Chinese Academy of Social Science, a prominent central government think-tank, told Chinese media that the bottom line of 6.5% growth is associated with concerns over unemployment.