The men and policies determining China’s future

China’s biggest annual political gathering wrapped up last month with some notable policy changes and restructuring.

The event, called the “Two Sessions” (两会 líang huì) because it comprises two major meetings — the National People’s Congress (NPC), sometimes glossed as “China’s parliament,” and the National Committee of the Chinese People’s Political Consultative Conference (CPPCC), a toothless advisory body — is often described as a “rubberstamp” affair. Indeed, the real decisions are taken at much more secretive gatherings of the Communist Party, rather than the somewhat more transparent meetings of the government that it runs.

Nonetheless, the Two Sessions is where the Party announces policies and appointments to its members and to the outside world, and it is the closest that external observers get to seeing the inner workings of the organization that rules China.

This is what you need to know about the Two Sessions of 2023.

Who is who in the new ruling elite?

Xí Jìnpíng 习近平

• General Secretary of the Chinese Communist Party
• Chairman of the CCP Central Military Commission
• President of the People’s Republic of China
• Chairman of the PRC Central Military Commission

The least surprising thing to come out of the Two Sessions was the announcement that Xi Jinping, 69, would serve a norm-breaking third term as president.

His unanimous reelection, with 2,952 votes in favor and none against, indicates that even the controversies of 2022 failed to shake his firm grip on power.

Last year saw a string of protests across the country over unbuilt homes, banking scandals, and the country’s handling of COVID-19. These social issues were further exasperated by an economic slowdown, with GDP growing only by 3% in 2022. That was the second-lowest annual rate since 1976 (in 2020, the first year of the pandemic, growth fell to 2.4%).

Xi came out on top after last year’s uncertainty, but for him, the grass might not be greener on the other side. There are serious economic and geopolitical roadblocks ahead for China, and Xi Jinping’s third term, which will last five years, will be challenging.

Aside from economic and demographic worries, and growing hostility to China abroad, Xi is working with an aging cadre of officials. Xi seems to be slowing the rise of younger leaders; members of the Party’s ruling Politburo are now significantly older than they were 10 years ago. (Although Politburo members with military-industrial background (nearly 40% of the new members) have an average age of 59, five years younger than the rest of the Politburo members.)

Lǐ Qiáng 李强, Premier of the State Council

• Premier of the State Council
• Party Secretary of the State Council

Li Qiang, 63, replaced Lǐ Kèqiáng 李克强 as Premier of the State Council, which is China’s “government,” as opposed to the ruling Communist Party. He previously served as the Party Secretary of Shanghai from 2017 to 2022 and is a complicated figure, having worked under Xi since Xi was Party Secretary of Li’s native Zhejiang province.

Some think that Li could serve as a balance to Xi’s hard-line tendencies, especially as a promoter of the private sector. During his time in Shanghai, Li kept a close relationship with tech giants like Alibaba, and was closely involved in Tesla’s construction of its first overseas factory in the megacity. But he’s also proven to be obedient, and willing to crush the economic interests to impose top down rule: He oversaw one of China’s harshest COVID lockdowns In Shanghai.

His top priority so far seems to be restoring business confidence in the world’s second-largest economy.

Zhào Lèjì 赵乐际

• Party Secretary of the Standing Committee of the National People’s Congress
• Chairman of the Standing Committee of the National People’s Congress

Following an effective tenure as the Secretary of the Central Commission for Discipline Inspection, whose main purpose is combating corruption within the party, Zhao Leji, 66, was named Chairman of the Standing Committee of the National People’s Congress.

In 2017, Zhao took over the enforcement of Xi Jinping’s anti-corruption campaign from Party elder Wáng Qíshān 王岐山, and now he will see to it that Xi’s policy priorities are addressed, which will probably include anti-corruption probes into China’s leading financial institutions, state-owned enterprises, and high-profile dealmakers, as Xi seeks to rein in financial risks.

Wáng Hùníng 王沪宁

• Party Secretary of the Chinese People’s Political Consultative Conference
• Chairman of the Chinese People’s Political Consultative Conference

Wang Huning, 67, has been a consistent behind-the-scenes player since the 1990s, handling the official political ideology of three Chinese leaders, including Xi Jinping, and serving in their CCP Central Committees. Viewed as China’s most powerful intellectual, originally some analysts theorized that he would become chairman of the NPC, a role that was filled by Zhao Leji.

He has instead been named the head of the Chinese People’s Political Consultative Conference (CPPCC). Wang’s influence over Party ideology is what originally led people to believe he was headed for the NPC chair: Jiāng Zémín’s 江泽民 “Theory of Three Represents,” Hú Jǐntāo’s 胡锦涛 “Scientific Outlook on Development,” and Xi Jinping’s “China Dream” are all associated with him, each having been formally established into China’s constitution, which he would have control over as head of the NPC. As the head of the CPPCC, however, Wang would work in coordination with the United Front Department, \which is responsible for shaping China’s image and influence overseas.

It’s a position that could entail public appearances and speaking engagements, which will be an interesting change for a man who has long been known as the éminence grise of the CCP. But as China reemerges from COVID and continues to chase after Xi’s dream of a great rejuvenation, placing Wang in charge of the CPPCC puts him in a position to ensure the synchronicity of Party ideology on all fronts.

Cài Qí 蔡奇

• First Secretary of the Secretariat of the CCP
• Director of the General Office of the Chinese Communist Party

In a move some have described as possibly the most important personnel change in the CCP since the National Party Congress last October, Cai Qi, 67, was named Director of the General Office of the Chinese Communist Party. Now he will work as the Chinese equivalent of Xi’s chief of staff, operating the organization that supports the party’s Central Committee and Politburo by doing everything from conducting policy research to classifying Party information.

The move is unusual, as historically this position has been filled by people hailing from the broader 24-member Politburo, rather than the top seven positions in the party, which is where Cai currently sits. ( (seems repetitive?)

Cai is the most senior official to become director of the General Office of the Central Committee since Mao Zedong’s era, and in his new position, Cai controls who meets the top leader, handles his schedule, and oversees his bodyguards and doctors. This isn’t the first time Cai has broken tradition in a new position. In May 2017, he was appointed as the Party Secretary of Beijing, which came as a shock to many observers since he was neither a member nor alternate member of the Central Committee.”

It’s a testament to Cai’s loyalty to not only the party but also Xi himself. He is a long-time Xi protégé, dating back over 20 years when Xi was operating in Fujian; Cai’s political career has rapidly advanced since. He has already settled into his new position, which entails traveling alongside Xi in most international and domestic trips, heading with Xi to Moscow earlier in March to hold talks with Vladimir Putin.

Dīng Xuēxiáng 丁薛祥

• Deputy Party Secretary of the State Council of the People’s Republic of China
• First Vice Premier of the People’s Republic of China

Ding Xuexiang, 60, is the youngest member of the Standing Committee and is yet another example of Xi Jinping’s tendency to bring long-standing allies and close associates into top positions, even if they don’t have experience governing a provincial-level economy. Ding now holds the position of the executive vice premier, a job which involves managing the second-largest economy in the world. He served as Xi’s secretary during his time in Shanghai and followed when he became president.

Ding was also named Beijing’s top official for Hong Kong and Macau affairs. The decision is part of a larger restructuring of China’s top office overseeing Hong Kong, making the city answer to the Communist Party’s central leadership instead of the State Council. Over the next five years, his major project will involve monitoring the integration of Hong Kong and Macau with the mainland and developing the Greater Bay Area. This initiative aims to integrate Hong Kong and Macau with Guangzhou, Shenzhen, Zhuhai, Foshan, Zhongshan, Dongguan, Huizhou, Jiangmen, and Zhaoqing into a thriving economic and business hub.

Lǐ Xī 李希

• Secretary of the Central Commission for Discipline Inspection

Li Xi, 66, is the current secretary of the Central Commission for Discipline Inspection and recognized as a longtime friend of the Xi family. His relationship with Xi can be traced back to the mid-1980s, when Li served as a personal assistant to one of Xi’s father’s comrades-in-arms in Gansu province.

Li’s role as secretary of the Central Commission for Discipline Inspection places him in charge of the top anti-corruption body in China, serving as a watchdog over the behavior of CCP members.

New policies and restructuring

China lowers its economic expectations

At the Two Sessions last year, stability, above all else, was the guiding rhetoric. But this year, China’s economy received all of the attention, to a point where even decarbonization and environmental protection took a back seat to growth. China missed its growth target of 5.5% last year thanks to strict COVID controls, so this year China is keeping its expectations low, with a modest GDP growth target of around 5%, its lowest target since 1991.

On the first day of the Two Sessions, outgoing premier Li Keqiang delivered the annual Government Work Report, listing off a long series of challenges to China’s economic growth goals in the future, from slowing global growth and low business confidence to debt-riddled local governments.

This contributes to China’s cautious goal and reflects the country’s desire to shift towards high-quality growth. In the past, economic growth goals were prone to distortion, with a higher chance of declining quality due to China’s unwavering commitment to meeting targets. However, there is now more attention being given to sustainable development and economic stability, especially given China’s current state of recovery.

Li Keqiang set a goal to create around 12 million urban jobs and backed the need to push for more consumer spending. This falls in line with China’s goal of becoming more self-sustaining, a goal which can especially be seen in the tech sector.

Self-sufficiency in tech is a top priority

China has long emphasized the importance of building up its science and technology capabilities, which it views as necessary to the country’s continued success and longevity. This explains the creation of a Central Science and Technology Commission within the Ministry of Science and Technology, with the goal of speeding up innovation efforts.

One major challenge China has faced in its development of technology is coordination. The establishment of this commission would streamline the flow of information between the tech sector, state, and party, allowing for quicker access to political backing and state financial support when needed.

China also established a National Data Bureau to centrally manage data resources across the country. Like the creation of the Central Science and Technology Commission, it addresses the tech sector’s issue of coordination. Previously, 18 local data authorities managed local data resources, leading to poor communication between the local and national government regarding data sharing and disjointed policies.The National Data Bureau eases this struggle and allows for a better flow of information. This was also paired with a 2% budget boost for the fields of science and technology.

The new laws drafted at the National People’s Congress meeting also ensure that countermeasures can be taken if China’s sovereignty, security, and development interests are undermined by acts violating international laws and international relations norms. As China seeks to build up its self-reliance, these new laws would allow for the country to counter foreign sanctions and provide support to those entities affected by them. It is a part of an ongoing trend to emphasize international law; in February, China pledged to have a contingent of prominent home-grown international law scholars by 2035, with the goal of reforming the country’s legal education and research facilities.

Filling holes and avoiding risks in the financial sector

While changes are taking place, these decisions also point to a desire for stability after the uncertainty of the last three years. For China, stability and power consolidation go hand in hand, and the extension of the party’s reach can be seen not only in the tech sector but in the financial sector as well. Whether this extension constitutes an overreach is a matter of debate.

However, for investors, particularly foreign ones, this change indicates tighter government control, which could result in more interference in financial activities, particularly in the private sector. In recent years, China has cracked down on its private sector in areas ranging from private education to property development.

But these changes could also address regulatory gaps in China’s financial sector. The establishment of the National Financial Regulatory Administration (NFRA), which will replace the China Banking and Insurance Regulatory Commission, could help protect financial consumers and investors, and address urgent issues in the country’s financial system. Prior to this change it was up to local governments to act as watchdog while also working to meet economic development targets, which sometimes led to unsavory compromises. For example, local governments over-relied on land sales to generate revenue, which contributed to property market price bubbles. Much of China’s current economic struggles can be traced to this practice.

The NFRA could alleviate this problem by establishing local branches that separate regulatory and development responsibilities at a local level. China’s rapid economic development has led to holes in its regulatory structure that rising companies can take advantage of. One example is peer-to-peer lending, where lenders gather funds from small investors and loan them out to small businesses and individuals. This industry is risky and loosely regulated, and was initially favored by authorities, leading China to lead the world in it. However, China’s economy slowed in 2018, leading to many Chinese internet lenders shutting their doors. This move stranded investors and led to protests from people hoping to get their money back.

The lack of regulation led to increased risk, practically killing an otherwise promising industry. The NFRA could improve coordination and ease the process of developing operational and risk-management standards for financial institutions, especially international ones. This development is also paired with the elevation of China’s Securities Regulatory Commission (CSRC). The CSRC is now directly overseen by the State Council, with the authority to approve the issuance of enterprise bonds such as those raised by local government financing vehicles.

Addressing the challenging geopolitical environment

On March 7, China’s minister of foreign affairs Qín Gāng 秦刚 gave a much anticipated press conference. He rose to the position last December, taking over from Wáng Yì 王毅i following his promotion to the Politburo in October. For two years, Wang had served as the ambassador to the United States, but now that role remains empty (some think U.S. specialist and vice foreign minister Xiè Fēng 谢锋 might be filling in), reflective of fraught U.S.-China relations.

Qin Gang’s press conference was one of the clearest and widest-ranging articulations of China’s foreign policy positions yet, and he wasn’t shy about presenting his country as a voice for the underrepresented, stating that “China will firmly pursue an independent foreign policy of peace, a win-win strategy of opening up, and always be a builder of world peace, a contributor to global development, and a defender of the international order.”

He also didn’t hold back from criticizing the U.S., saying, “China’s diplomacy has enough generosity and goodwill, but when jackals and wolves are in power and attack, Chinese diplomats must dance with the wolves to protect their home and country.” This sentiment toward the U.S. was also expressed by Xi just one day prior in his speech to private sector delegates within the CPPCC.

Xi warned delegates to pay attention to geopolitical risks when expanding. He cautioned, “In particular, Western countries headed by the United States have contained, surrounded, and suppressed China in an all-around way, bringing unprecedentedly severe challenges to our country’s development.” These comments refer to the growing scrutiny toward Chinese companies in the U.S., and may increase the hesitancy in Chinese entrepreneurs with an eye on the West.

But the door is not completely closed. One day after Qin’s press conference, the Ministry of Commerce expressed that it was open to a visit by U.S. Secretary of Commerce Gina Raimondo, emphasizing that dialogue is the only way to prevent a total derailment in the bilateral relationship and that it is necessary to maintain communication over trade. Nonetheless, U.S.-China relations cast a shadow over the Two Sessions, finding its way to nearly every subject ranging from tech to the financial sector.

Xi’s new era

China is entering a new era, and the Two Sessions this year set the stage for the next five years. The ending of Xi Jinping’s second term has left a bad taste in the mouths of many, but this year’s Two Sessions concluded with an atmosphere of confidence, as Xi’s trusted officials were installed into power and goals supporting a self-reliant and innovative China were expressed. Despite the challenges posed by COVID, Xi has emerged stronger than before. It is expected that he will continue to lead China according to his vision, forging ahead over the next five years.