GDP growth, ‘frontier’ tech, and more 5G: China’s 2021 agenda is already looking beyond a pandemic recovery

March 5, 2021, 11:07 AM UTC

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On Thursday, China opened its most important political meeting of the year, a weeklong affair collectively referred to as the Two Sessions.

While the meetings are largely preordained and choreographed by Beijing, this year observers are paying increased attention to the proceedings since they will chart China’s course for the next year—and the next decade.

The two bodies involved in the meetings—the National People’s Congress, a rubber-stamp legislature, and the Chinese People’s Political Consultative Conference, a political advisory body—are releasing China’s 14th five-year economic development plan, while Chinese President Xi Jinping is expected to release details of a longer-term strategic blueprint called Vision 2035.

The Two Sessions meeting is set to run until March 11, but here are the four takeaways from the first two days of the congress.

GDP growth goal

China’s largest political meeting of the year kicked off with a surprise.

In a speech delivering China’s annual work report, Premier Li Keqiang said China would target 6% GDP growth in 2021, putting to rest speculation that China would not announce an economic target at all. Notably, the 6% target is conservative given analysts’ 8% growth projection for China’s 2021 economy.

“A target of over 6% will enable all of us to devote full energy to promoting reform, innovation, and high-quality development,” Li said on Friday.

In 2020, China did not set a GDP target for the first time in nearly 30 years after months of economic lockdowns owing to COVID-19. But its economy still grew by 2.3% last year, marking China’s lowest growth rate in 44 years. Yet it proved to be the only major economy to report any growth at all in 2020.

The modest growth target is also a sign that China may be looking beyond the immediate bump it will see in its pandemic recovery and charting a more stable economic path forward, according to analysts.

Beijing was more ambitious in drafting its employment goals. It pledged Friday to add 11 million new urban jobs this year, up from the 9 million it had pledged to gain last year.

Increased defense spending

While China seeks to stabilize its economy this year, Premier Li also pledged to bolster the country’s defense, saying that China would increase military spending by 6.8% in comparison to 2020, a tick up from the 6.6% increase last year.

“We will improve the layout of the defense-related science, technology, and industry, and enhance the defense mobilization system,” he said.

To analysts, the bump in defense spending signals that China is looking to modernize its military and prepare for increasing threats in places like the South China Sea and on its border with India.

Remaking Hong Kong’s elections

The big news from last year’s Two Sessions was the National Security Law Beijing imposed on Hong Kong without input from the city’s legislature. This year, too, there are new developments related to the special administrative region.

Beijing pledged that it would improve the implementation of national security mechanisms in Hong Kong, which analysts say indicates that Beijing is preparing to further rein in democratic freedoms and opposition movements in the city.

China’s National People’s Congress Vice Chairman Wang Chen also announced Friday that Beijing will allow only “patriots” to govern the city, which may bar candidates who oppose Beijing’s influence from running for seats in Hong Kong’s legislature. Wang’s proposal may essentially formalize the quelling of dissent in an already compromised political system: Pro-democracy legislators resigned en masse in late 2020 in opposition to Beijing’s political power, and many of them were recently charged with subversion under the new National Security Law.

A.I. and 5G investment

China on Friday also laid out its 14th five-year plan, a blueprint that will shape its economy from 2021 to 2025.

Among a wide array of new initiatives, China pledged to boost research and development spending by at least 7% to advance “frontier” technologies like artificial intelligence, quantum computing, and semiconductors. It also wants to cover 56% of the country in 5G networks, and make new jet airplane engines.

The five-year plan comes as China is engaged in an effort to reduce its reliance on countries like the U.S. for critical technologies and aims to become a technological superpower in its own right.

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