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THIS WEEK:

1. Two Sessions: Short-Term Fixes but No Big-Picture Reforms

What’s Happening: The concurrent annual meetings of the National People’s Congress (NPC) and the Chinese People’s Political Consultative Conference (CPPCC) begin next week.

What to Watch: On March 5, Premier Li Qiang’s first government work report will reveal Beijing’s key economic targets for the year ahead. Li will likely announce a GDP growth target around 5%, signaling a modest tilt toward pro-growth measures to revive confidence. A higher figure would mean more aggressive stimulus, while a lower one would signal more belt tightening.

• Xi Jinping may send important policy signals when he visits NPC and CPPCC delegations and shares his thoughts on China’s direction.Between the Lines: China watchers will pay special attention because Xi has yet to convene a Third Plenum, a meeting that in the past has approved major economic reforms. Big changes in economic policy are more conceivable at a Third Plenum chaired by Xi than in Li’s report at the Two Sessions.

Why it Matters: Recent leadership statements suggest that the changes announced at the Two Sessions will primarily involve fine-tuning existing policy mechanisms, rather than pathbreaking new approaches that shift China’s economic strategy away from the current focus on investment, technology, and debt management.

By: Neil Thomas, Fellow on Chinese Politics, and Jing Qian, Co-Founder and Managing Director, Center for China Analysis.

Learn More: Read the report on What to Watch at China’s Two Sessions in 2024 by CCA Fellow on Chinese Politics Neil Thomas and Co-Founder Managing Director Jing Qian.

2. Leak Spotlights Hackers for Hire

What Happened: Leaked documents from I-Soon, a cyber security company, shed new light on how China’s military and intelligence services attempt large-scale cyber intrusions against foreign governments, companies, and infrastructure.

The Details: The documents, which were first posted on GitHub and reviewed in an exclusive Washington Post report, reveal how I-Soon was contracted to extract sensitive data by exploiting vulnerabilities in software from Microsoft, Apple, and Google. Targets included South Korea, the United Kingdom, India, Thailand, Malaysia, Hong Kong, and Taiwan.

What China Said: Asked about the report, a Ministry of Foreign Affairs spokesperson said: “I don't have the specific information on what you mentioned,” adding, “as a principle, China firmly opposes and combats all forms of cyberattacks in accordance with the law.”

Why it Matters: The leak provides some of the most concrete detail ever disclosed about the role of private security contractors in carrying out cyber espionage on behalf of the Chinese government, and may accelerate efforts by the United States and other governments to pressure Beijing to rein in “hackers-for-hire.” 

By: Lyle Morris, Senior Fellow on Foreign Policy and National Security, Center for China Analysis

Learn More: Read the Center for China Analysis’ recent article, Implications of China’s AI Strategy: State Engineering, Domestic Challenges, and Global Competition by Lizzi C. Lee, Affiliated Researcher, Center for China Analysis.

3. Shenzhen Promotes EV Exports

What Happened: Shenzhen unveiled 24 measures to bolster electric vehicle exports and said it is committed to becoming “a new generation world-class auto city.”

The Details: The measures include new sea routes, support for factory construction, and allowing more companies to export second-hand cars. Officials also want to improve export insurance and encourage Chinese banks to provide consumer financing for overseas car buyers. 

Home of an Emerging EV Giant: Shenzhen is the headquarters of BYD, the world’s largest manufacturer of electric vehicles. In January, BYD completed its first shipment of 7000 vehicles from Shenzhen to Germany. It has commissioned its own ships and aims to have a fleet of eight in the next two years.

Why it Matters: Domestic overcapacity is a major driver of China’s electric vehicle exports. The industry will welcome Shenzhen’s policy support but identifying the right markets will be key as the United States and EU turn to protectionist measures that could frustrate China’s export plans. 

By: Taylah Bland, Affiliated Fellow on Climate and the Environment, Center for China Analysis

Learn More: Sign up for a webinar on What's Driving Chinese Investment into the Mexican Automotive Sector? on March 13.

4. China Pledges Greater Market Access to Lure Foreign Investment

What Happened: Premier Li Qiang chaired a State Council executive meeting on February 23 that called for new measures to attract global capital. 

The Background: The State Council said stabilizing and attracting foreign investment should be a critical focus of this year’s economic work.

• Chinese policymakers recently announced initiatives to attract more foreign investment, including a 24-point guideline that promised a fair environment and support for foreign companies and Xi’s pledge at the BRI conference in October to “remove all restrictions on foreign investment in the manufacturing sector.”

FDI Falters as Capital Exits: Foreign direct investment fell 82% from 2022 to 2023, reaching the lowest level in thirty years. China also recorded its longest-ever streak of monthly capital outflows. 

Why it Matters: China has pledged to expand market access, foster an environment conducive to fair competition and innovation, and make the financial system more accessible to global investors, but foreign investors’ confidence in China’s business environment remains weak as economists downgrade long-term growth prospects and geopolitical tensions persist.

By: Yifan Zhang, Affiliated Researcher, Center for China Analysis

Learn More: Read It’s Grim out There: China’s Economy in the Year of the Dragon, a ChinaFile Conversation featuring Centre for China Analysis experts Diana Choyleva and Lizzi C. Lee.  

5. Panda Diplomacy Returns

What Happened: China announced an agreement that will send pandas back to the San Diego Zoo and said it is also in negotiations with Washington’s National Zoo.

A Fading Tradition: The first pandas arrived in Washington soon after President Nixon’s visit to China in early 1972, but the last time China sent a panda to the United States was in 2003. San Diego’s pandas returned to China in 2019, and the only pandas now in the United States, in Atlanta, are due to return in late 2024.

What China Said: In a speech to business leaders in San Francisco last November, Xi Jinping said “we are ready to continue our cooperation with the United States on panda conservation, and do our best to meet the wishes of the Californians so as to deepen the friendly ties between our two peoples.”

• Some Chinese netizens lamented the announcement, expressing concerns that echo an online campaign about the alleged mistreatment of the pandas at the Memphis Zoo, which were returned to China in 2023.

Why it Matters: Pandas are a huge draw at zoos around the world and their absence is a glaring sign of the poor state of bilateral relations. Renewing these arrangements is essential to prevent further harm to China’s image.

By: G.A. Donovan, Fellow for Chinese Political Economy and Society, Center for China Analysis

Learn More: See the Center for China Analysis’ report on The New Domestic Politics of U.S.-China Relations by CCA Senior Fellow on Foreign Policy Evan Medeiros for more on the complex dynamics affecting bilateral ties.