1 Analyzing the scrapping of the premier press conference and State Council Organization Law revisions
Premier press conference scrapped
March 4
During a press conference, National People’s Congress spokesman Lou Qinjian announced that the PRC premier will no longer be holding a news conference after the end of the Two Sessions, ending a three-decade-long practice. Lou also said that there will be no premier press conference in the future barring exceptional circumstances.
Lou explained that the premier press conference was canceled because it overlapped with similar interviews during the Two Sessions and the work reports. Premier Li Qiang would deliver the government work report, a report from the National Development and Reform Commission, and a report by the Ministry of Finance. Lou said that “society’s major concerns have been specifically addressed in the reports” and the reports will be “publicized so that the media and the public can learn about their content easily.”
Lou also claimed that “more interview opportunities for both domestic and foreign journalists” would be provided during the Two Sessions, including an increased number of ministerial press conferences. Lou added that there would be “open group” delegation activities and the organization of “delegation channels.”
The CCP authorities’ scrapping of the premier press conference received widespread attention and attracted much discussion at home and abroad. Commentators believe that the development was another sign of Xi Jinping and the Party apparatus establishing that they are above the state government, that Xi and the CCP are becoming less open and transparent, and another sign of Xi’s growing authoritarianism.
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The tradition of the PRC premier holding a press conference after the closing of the Two Sessions began in 1988. The press conference was suspended in 1989 and 1990 due to the Tiananmen Square Massacre, as well as in 1992 due to Deng Xiaoping’s “Southern Tour,” but has been held consistently annually since 1993.
Some notable developments at the premier press conference include:
- After Zhu Rongji became premier in 1998, the press conference became a focal point of the Two Sessions and saw its duration extended to about two to two-and-a-half hours.
- In his final premier press conference in March 2012, Wen Jiabao spent a considerable amount of time candidly discussing political reform and appeared to have extended the Q&A session with journalists to receive questions regarding the Wang Lijun incident.
- During the May 2020 premier press conference, Li Keqiang made the shocking observation that China has around 600 million people earning a monthly income of around 1,000 yuan. Xi Jinping’s comprehensive poverty alleviation campaign also concluded in 2020.
The developments above and others leave external observers with the belief that the premier press conference provides a rare opportunity to understand the thinking of CCP leaders outside the confines of official propaganda.
Organic law update
March 5
The NPC deliberated a draft revision to the State Council Organic Law (國務院組織法) at the Two Sessions during its second session. Li Hongzhong, vice chairman of the NPC Standing Committee, explained the draft revision.
Li said that the “necessity and significance” of the revision include:
- The State Council adhering to the “inevitable requirements of the Party’s comprehensive leadership.”
- The State Council maintaining the important measure of “upholding the ‘quan wei’ of the Party Central with Comrade Xi Jinping at the core and its centralized and unified leadership.”
- The State Council adhering to strategic deployment guided by “Xi Jinping Thought on the Rule of Law.”
- The State Council ensuring proper alignment with institutional norms such as the “Regulations on the Organization of the CCP” (中國共產黨機構編制工作條例).
The draft revision makes the following requirements and principles:
- The State Council will take “Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era” as fundamental guidance.
- The State Council will deeply understand the decisive significance of the “Two Established,” enhance [carrying out of the] “four consciousnesses,” firm up the “four self-confidences,” and achieve the “Two Safeguards.”
- The State Council’s political direction will be guided by “Xi Jinping Thought,” and in particular, “Xi Jinping Thought on the Rule of Law.”
- The State Council’s ideological approach and working methods should embody the worldview and methodology of “Xi Jinping Thought.”
- The State Council should produce legislation in accordance with the PRC Constitution.
The draft revisions contain 20 articles and cover four aspects:
- Clarify the nature and status of the State Council and the guiding ideology for its work.
- The State Council is to be guided by the political thinking and theories of the five generations of CCP leaders, including “Xi Jinping Thought,” as well as “firmly uphold the ‘quan wei’ of Party Central and its centralized and unified leadership.”
- Improve relevant regulations concerning the institutions and powers of the State Council.
- Strengthen the State Council’s meeting system.
- The governor of the People’s Bank of China will join the group of top leaders that compose the State Council.
- Add institutional measures to allow the State Council to fully and correctly perform its functions in accordance with the law.
The State Council Organic Law was enacted in 1982.
Big picture
1. The Xi leadership has constantly emphasized the Party’s leadership over China’s economic and financial work since the 19th Party Congress in 2017.
2. China’s economic slowdown became more noticeable after the Sino-U.S. trade war kicked off in 2018, and saw sharp deterioration after the COVID-19 pandemic broke out and the “zero-COVID” policy was imposed during the three pandemic years. China’s property sector debt crisis has also steadily worsened, with the top 100 developers seeing a significant drop in sales in February 2024 and two leading developers (Country Garden and Shimao Group) facing liquidation. Meanwhile, China’s stock markets saw steep declines and only stabilized after intervention from the “national team.”
Our take
1. The scrapping of the annual PRC premier press conference after the Two Sessions and the updating of the State Council Organic Law appear to be Xi Jinping’s latest efforts to marginalize the “collective leadership” system and more firmly entrench Party domination over the state government (and by extension, Xi’s personal dictatorship) in the regime.
We previously analyzed how the “collective leadership” system is a product of factional struggle within the CCP elite. In brief, Deng Xiaoping advocated the “collective leadership” system and rehabilitated many veteran cadres to differentiate himself from Mao Zedong and his loyalists (including former Party Chairman Hua Guofeng) and grow his support in the Party. Over time, the “collective leadership” system allowed Deng to vanquish his factional enemies and rule as paramount leader without holding the Party Chairman or General Secretary titles. Factional struggle and domestic political purposes aside, the promotion of the “collective leadership” system also allowed the CCP to brand itself as becoming more “democratic” and “reform-minded” to the West, as well as sell the idea that China is undergoing a “peaceful evolution” instead of remaining a communist dictatorship in form and function.
When Jiang Zemin was Party boss and during the Jiang faction’s era of dominance (1997 to 2012), the “collective leadership” system created favorable conditions for Jiang and his faction to “rule the country through corruption” (以貪治國), as well as dominate key official positions and organs. Hu Jintao and Wen Jiabao were largely marginalized by the “collective leadership” of the Jiang faction, and were unable to do much to address the many regime-weakening problems created or perpetuated (corruption, not ending the “one-child” policy, property sector crisis, etc.) by the Jiang faction.
Xi Jinping gradually moved to weaken the “collective leadership” system after he took office and found that he needed to centralize power to deal with the Jiang faction and ram through his policies. Xi started by establishing various small groups and committees to work around the “collective leadership,” taking the mantle of “core” leader in 2016, and ultimately securing paramount status (定於一尊) within the CCP at the 20th Party Congress.
2. Gaining greater dominance in the CCP factional struggle is unlikely the sole purpose of Xi emphasizing the Party’s leadership over the state government via the cancellation of the premier press conference. The Xi leadership could also be looking to limit opportunities for journalists, and especially the foreign press, to question Li Qiang about the state of the economy, the fluctuating stock markets, the property sector crisis, and other sensitive topics. If so, then the Chinese economy and the regime’s various problems are likely much worse than what publicly available information reveals.
Scrapping the premier press conference will likely invite even more trouble to the PRC. Foreign investors and governments will believe that China is closing instead of opening up, and will account for growing political and geopolitical risks in their China plans. The U.S. and its allies could also become more paranoid about the Xi leadership and be more inclined to trust Beijing less given the increasing lack of transparency demonstrated by the Xi leadership; premier press conferences used to offer insights into the dynamics of CCP elite politics when premiers respond more candidly to questions from journalists.
3. The revision to the State Council Organic Law is another step in Xi Jinping’s effort to firmly establish the Party’s supremacy in the regime and downgrade the position of the state government. Similar to the case when the State Council work rules were revised in the first Two Sessions after the 20th Party Congress, we believe that “Li Qiang is serving as Xi’s ‘secretary’ or ‘office manager’ instead of a powerful premier who has greater leeway to pursue his agenda for the economy,” and the State Council has been “reduced to being an administrative office (習辦) of Party Central and the Xi leadership.”
We believe that the revision to the State Council Organic Law will reflect the reforms to government institutions and organizations that the Xi leadership carried out between 2018 to 2023 as part of Party and state institutional reforms. A key focus of the revision could be the incorporation of various slogans supporting Xi Jinping’s political ideology into the law and designate “Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era” as the guiding ideology for the State Council and its institutions.
2 Li Qiang’s gov’t work report offers lackluster economic policies and targets
On March 5, premier Li Qiang delivered the PRC government work report at the second session of the National People’s Congress at the Two Sessions.
2023 work recap
Li Qiang’s government work report said that in 2023, the PRC successfully withstood external pressures and overcame internal difficulties, as well as “successfully completed” the main goals and tasks of economic and social development for the year under the leadership of Party Central with Comrade Xi Jinping at the core.
The report said that in 2023, “multiple difficult challenges intertwined and overlapped,” China’s economy “developed in waves” and “faced twists and turns,” and “achievements were hard-won.”
- Internationally, world economic recovery was weak, geopolitical conflicts intensified, protectionism and unilateralism rose, and the adverse impact of the external environment on China’s development continued to increase.
- Domestically, economic recovery was difficult, deep-seated contradictions accumulated over the long term accelerated, and many new situations and problems emerged one after another after the impact of three years of COVID-19. Also, external demand declined, domestic demand was insufficient, cyclical and structural problems coexisted, risks and hidden dangers in areas such as real estate, local government debt, and small- and medium-sized financial institutions became more prominent, and some regions suffered natural disasters such as floods, typhoons, and earthquakes.
The report said that given the aforementioned situation, the “Catch-22” and multiple difficulties faced by the PRC authorities in policy choices and the advancement of work had significantly increased.
In reviewing the “decisions and deployments of Party Central” over the past year, the report attributed achievements to Xi Jinping being the “leader at the helm” (領航掌舵) and the guidance of “Xi Jinping Thought.”
The report also reviewed the challenges and existing problems the regime is currently facing, including:
- World economic growth is seeing “insufficient momentum,” regional hotspot issues are becoming frequent, and the increasing complexity, severity, and uncertainty of the external environment.
- China’s economy is seeing insufficient domestic demand, overcapacity in some industries, blockages in domestic circulation, and interference in international circulation.
- Some small- and medium-sized enterprises are facing operational difficulties.
- Unemployment issues.
- The financial resources at the grassroots in certain regions are relatively tight.
- China’s technological innovation capability is still not strong.
- There are still many tough nuts to crack in key areas of reform.
- The phenomenon of formalism and bureaucratism in government work is still prominent, and some reform and development measures are not effectively implemented.
- Some cadres lack a sense of responsibility and doing actual work, are passive and evasive, and only focus on superficial achievements.
- Corruption problems are still prevalent in some areas.
2024 economic goals and policies
Li Qiang’s work report proposed the following overall requirements and policy orientation for economic and social development in 2024:
1. The main expected economic targets for 2024 include GDP growth of around 5 percent and a consumer price index of around 3 percent.
The report said that the authorities came up with the proposed targets after “comprehensively considering” the domestic and international situations and various factors, as well as “balancing needs and possibilities.”
2. The report made the following policy orientations:
Fiscal policy
- The deficit ratio should be kept at around 3 percent, with a deficit scale of 4.06 trillion yuan, or an increase of 180 billion yuan over the budget at the start of 2023.
- The scale of general public budget expenditures is 28.5 trillion yuan, an increase of 1.1 trillion yuan over the previous year.
- The special bond issuance quota for local governments was set at 3.9 trillion yuan, an increase of 100 billion yuan over the previous year.
- The PRC authorities will issue special ultra-long term treasury bonds starting this year over several years to finance the implementation of major national strategies and the construction of security capabilities in key areas. The authorities will issue 1 trillion yuan in special ultra-long term treasury bonds in 2024.
- General expenditure will be strictly controlled.
- Fiscal discipline will be strictly enforced.
- Governments at all levels must get used to belt tightening.
Monetary policy
- Maintain reasonable and adequate liquidity, with the scale of social financing and money supply matching the expected targets for economic growth and price levels.
- Avoid the idle circulation of funds.
- Strengthen the stability of capital markets.
- Keep the renminbi exchange rate basically stable.
- Vigorously develop technology financing, green financing, inclusive financing, pension financing, and digital financing.
- Meet the financing needs of small- and medium-sized enterprises.
Macroeconomic policy
- Focus on overall development, strengthen the coordination of various policies, and prevent conflicts and constraints.
- Accurately carry out policy propaganda and interpretation to create a stable, transparent, and predictable policy environment.
The report emphasized the need to thoroughly implement “Xi Jinping Economic Thought” and concentrate efforts on promoting high-quality development to achieve the 2024 development goals and targets. The report also called for finding more ways to support development and assist enterprises while adhering to the bottom line of security.
3. The work report put forward 10 tasks for government work in 2024, including:
- Promote the construction of a modern industrial system.
- Implement the strategy of rejuvenating the country through science and education.
- Expand domestic demand.
- Deepen reforms and enhance the internal driving force for development.
- Accelerate the construction of a unified national market.
- Advance reforms in finance, taxation, and other fields.
- Expand high-level opening up to other countries.
- Promote the improvement of quality and quantity of foreign trade.
- Coordinate development and security, and effectively prevent and defuse risks in key areas.
- Optimize real estate policies.
- Coordinate the resolution and stable development of local government debt risks, properly defuse existing debt risks, and strictly prevent the accumulation of new debt risks.
- Prudently advance the risk disposal of small- and medium-sized financial institutions in some regions.
- Crack down severely on illegal financial activities.
- Promote comprehensive rural revitalization.
- Promote urban-rural integration and regional coordinated development.
- Advance green and low-carbon development.
- Safeguard and improve people’s livelihoods, and strengthen and innovate social governance.
- Increase the per capita fiscal subsidy standard for basic medical insurance for residents by 30 yuan.
- Increase the minimum monthly standard for basic old-age pensions for urban and rural residents by 20 yuan.
- Safeguard national security and social stability.
- Adhere to and develop the “Fengqiao Experience” in the new era.
Other work report items
National defense
- Thoroughly implement “Xi Jinping Thought on Strengthening the Military.”
- Adhere to the Party’s absolute leadership over the People’s Liberation Army.
- Fully implement the “Central Military Commission chairman responsibility system.”
Taiwan
- Adhere to the “one-China” principle and the “1992 Consensus.”
- Resolutely oppose “Taiwan independence” separatist activities and foreign interference.
- Promote the peaceful development of cross-strait relations.
- Steadfastly advance the cause of national reunification.
Diplomacy
- Advocate for a world of equal and orderly multipolarity and an economic globalization that is universal, inclusive, and beneficial to all.
- Promote the building of a new type of international relations.
- Oppose hegemonic, domineering, and bullying behaviors.
Religion
- Deepen the promotion of sinicization of religion.
- Guide religions to adapt to socialist society.
Our take
1. A review of the frequency of key words mentioned in Li Qiang’s government work report offers a glimpse at the priorities and concerns of the Xi leadership and the CCP regime.
Li Qiang mentioned Xi Jinping’s name 16 times in the report, compared with 13 times of “Party Central.” Li also mentioned Xi’s name more times than his predecessor (Li Keqiang mentioned Xi’s name 14 times at the most). This underscores Xi’s paramount status in the regime while simultaneously highlighting the fact that Xi is relying heavily on propaganda to sustain his “quan wei” (authority and prestige).
While the report claimed that “Party Central with Comrade Xi Jinping at the core” had strengthened its absolute leadership over China’s economy, words such as “reform,” “opening up,” and “high-quality development” were also mentioned 35 times, 14 times, and 25 times respectively. This suggests that Beijing still wants to court foreign investment and is not prepared to entirely close off China to other countries.
The high frequency of mentions of words such as “stability” (21 times), “risk” (24 times), and “security” (29) reflects the CCP regime’s strong sense of crisis.
2. The government work report crediting the PRC’s economic and social development “achievements” in 2023 to the leadership of Xi Jinping and the guidance of “Xi Jinping Thought” is a double-edged sword for Xi. On the one hand, the propaganda is necessary to prop up Xi’s “quan wei” and strengthen the one-man dictatorship. On the other hand, Xi has shifted the blame for China’s economic deterioration squarely onto himself.
3. The economic policies and targets mentioned in Li Qiang’s government work report are unremarkable and will likely fall short for those who are expecting crucial reforms and stimulus. The main expected targets and monetary policy set forth in the work report are basically the same as those introduced at the 2023 Central Economic Work Conference, with the expected figure of the deficit ratio remaining unchanged and with increases in the issuance scale of treasury bonds and special government bonds. This foreshadows greater economic difficulties for China this year.
We see several possible reasons why Beijing is keeping its economic targets and policies very modest:
- The CCP authorities have no good options for economic rescue and are at a loss in general on how to turn things around for the economy. Concurrently, the authorities likely also recognize that China’s economic decline has not yet bottomed out and is not yet at its most severe stage.
- The CCP authorities cannot set expected targets that are lower than those in 2023 without tipping off observers to the increasingly noticeable fact that things are not as the official figures depict. Meanwhile, setting growth targets that are too lofty will make achieving them extremely unrealistic and expose even more to the world the CCP authorities’ manipulation of data.
- The CCP’s three pillars of growth — exports, real estate, and infrastructure — are weakening with no other growth points to replace them. The sluggishness of the real estate industry is also having a significant impact on local government fiscal revenue.
- The CCP authorities are expanding its debt scale to help both the central government and local governments “borrow new to repay old” (借新還舊) to address fiscal shortages and maintain basic government operations.
- The CCP authorities are preparing for the economy to perform even worse this year in keeping the deficit ratio unchanged at present. Should the economy indeed decline further, the CCP authorities still have space to increase the deficit ratio.
- Geopolitical uncertainty is preventing the CCP authorities from setting higher economic targets:
- Successful Russian offensives and advances in Ukraine will lead the U.S. and the West to increase their pressure and sanctions against the PRC, which in turn will affect the performance of the Chinese economy.
- Expectations of Federal Reserve interest rate cuts are diminishing with inflation remaining high. The strength of the U.S. dollar against the renminbi also limits the CCP authorities’ space for monetary easing. While the CCP authorities almost certainly hope to lower interest rates further to counter deflation, doing so in the current environment will inevitably put pressure on the RMB exchange rate and the stock market. As the work report noted, the difficulties faced by the PRC authorities in policy choices and the advancement of work have significantly increased.
- The CCP authorities could be concerned about the prospect of former president Donald Trump returning to the White House and how his policies will affect China. For instance, Trump could significantly hike tariffs on Chinese goods, raising manufacturing costs in China. Trump could also lower manufacturing costs in the U.S. and squeeze the new energy vehicle market by increasing oil production and slowing down environmental protection processes. Finally, Trump would likely continue and even step up the technology restriction policies that began during his term and were expanded during the Biden administration.
4. The government work report reflects the CCP authorities’ prioritization of regime security over the economy. Notably, the report called for “finding more ways to support development and assist enterprises while adhering to the bottom line of security.”
Beijing’s willingness to sacrifice some economic growth if it means shoring up regime security is consistent with Xi Jinping’s actions in recent years, including crackdowns in the financial sector, the suppression of fintech, and increasing intervention by the authorities in economic and financial affairs.
