What Happened at China's Two Sessions in 2024?
Introduction
The Center for China Analysis (CCA) is pleased to publish short perspectives on key outcomes of the Two Sessions by Asia Society experts Neil Thomas (Xi Jinping's Activities), Christopher K. Johnson (Elite Politics), Guonan Ma (Economic and Financial Policy), Lizzi C. Lee (Technology Policy), Li Shuo (Climate and Environmental Policy), Lyle Morris (Foreign Policy and National Security), and Rorry Daniels (Taiwan Policy).
Policy outcomes broadly aligned with the forecasts made by Neil Thomas and Jing Qian in a CCA preview article published on February 29, although any personnel movements were delayed and the cancellation of the premier’s press conference was unexpected. Readers can view the recording of a CCA event held on March 6, “What Does the Two Sessions Mean for the Economy, Politics, and Foreign Policy?”
Xi Jinping's Activities
By Neil Thomas
This year’s Two Sessions underwhelmed on strategies to revitalize China’s economy but overwhelmed on power moves by the Chinese Communist Party (CCP) and General Secretary Xi Jinping. The concurrent meetings of China’s top political advisory body, the Chinese People’s Political Consultative Conference (CPPCC), from March 4 to 10, and the country’s legislature, the National People’s Congress (NPC), from March 5 to 11, delivered few policy surprises. Premier Li Qiang’s set-piece government work report (GWR) mostly elaborated on the December 2023 Central Economic Work Conference (CEWC).
Less reported on but perhaps more insightful were three appearances that Xi made to expound on his vision for how “new productive forces” can drive China’s development. Xi visited the NPC delegation from Jiangsu Province on March 5; CPPCC members representing the Revolutionary Committee of the Chinese Kuomintang (RCCK), the environmental and resources sector, and the science and technology sector on March 6; and the NPC delegation from the People’s Liberation Army (PLA) and People’s Armed Police on March 7. Details beyond the official readouts are recorded in several “sidenote” stories.
Xi embraced an economic agenda focused on using technological innovation to enhance productivity and on investing in manufacturing to strengthen self-reliance. He said that China must “seize the opportunity to increase innovation efforts” and outlined a three-pronged industrial policy centered on “upgrading traditional industries, expanding emerging industries, and cultivating future industries.” Beijing will therefore support businesses to become “more high-end, more intelligent, and greener” and direct more resources toward disruptive innovation rather than just trying to catch up with the West. But Xi cautioned against “rushes and bubbles,” which often develop when the Party signals preferred sectors, implying greater central focus on avoiding waste, supervising local finances, and prioritizing quality over quantity in China's economic growth.
Still, Beijing’s plan to boost manufacturing without turbocharging consumption will create overcapacity, flooding global markets, squeezing overseas competitors, and risking trade wars with Western countries. Xi seems unfazed, waxing lyrical about domestic production: “After the founding of New China, we were penniless, we had to start from scratch. We imported, digested, absorbed, and then developed. We struggled arduously for self-reliance, and we developed an independent and autonomous manufacturing base. Just thinking about this truly brings incomparable pride. [Our efforts to build automobiles, new energy vehicles, high-speed rail, urban subways, ships, and airplanes] all move forward step by step, with production continuously being localized, before moving in front internationally and making constant breakthroughs.” Xi elucidated a continuing strategy to use foreign technology to establish local industries that become internationally dominant.
Many other signals emerged from Xi’s visits at the Two Sessions. He telegraphed steady social welfare improvements but said that the Party must “motivate the broad masses to rely on their own two hands to create a happy life,” suggesting that direct consumer stimulus remains unlikely. The once-prominent slogan of “common prosperity” now seems confined to rural revitalization policies, as Xi touted the benefits of village enterprises redistributing profits to members of local collectives. He appeared defensive about China’s slow progress on environmental goals, saying “don't just criticize and point fingers, but genuinely take actions, as every little solution counts,” and joking that the pollution level of the sandstorms in Beijing when he was young “was not PM2.5, it was PM250.”
Beyond the mainland, Xi told the RCCK, a satellite party, to promote “peaceful unification” with Taiwan through exchanges, cooperation, and development — relatively soft language hinting that Xi may not want to escalate cross-Strait tensions this year unless he feels provoked. Integrating “preparation for maritime military struggles, safeguarding of maritime rights, and development of the maritime economy” was a key theme of Xi’s PLA remarks, highlighting the gray zone missions of the navy, which has been relatively untouched by recent PLA corruption scandals. He also advocated deeper military-civil fusion through the “two-way stimulation of new productive forces and new fighting forces.”
Attention now turns to the Third Plenum. This meeting of the Party’s Central Committee, which has historically approved economic reforms, should be held by the end of the year, according to the Party charter. Its policy decisions will be more consequential than those announced at the Two Sessions. Xi told the Jiangsu delegation that Beijing must “plan major initiatives to further comprehensively deepen reforms,” repeating a phrase that emerged at the CEWC and that echoes the language of Xi’s relatively liberal program at the Third Plenum in 2013. This link raises the possibility that this year’s plenum will unveil significant economic reforms. If so, however, the signs currently point to “reform with Xi Jinping characteristics,” as he told Two Sessions audiences that reforms are needed to promote his current economic strategy of “high-quality development.”
Elite Politics
At the apex of CCP politics, the Two Sessions meetings simply underscored what we already knew: Xi Jinping is China’s undisputed ruler, period. Yet Xi’s brand of Leninism dictates that his power must be either ebbing or flowing. Consequently, set pieces like the Two Sessions offer a stage on which his supremacy is magnified in power, people, and policy.
Taking that view properly contextualizes the Two Sessions’ most headline-grabbing moments. Outsiders characterized the cancellation of the premier’s traditional press conference and the changes to the State Council’s Organic Law as fundamental departures in transparency and governance, respectively. But Li Qiang foreshadowed both as he took office last year. He telegraphed then that he would stay firmly in Xi’s shadow and said that his cabinet is “a political organ and must ‘speak politics,’” an elegant summation of the revised Organic Law’s formal subordination of the State Council to the CCP. Xi’s insistence on the centrality of the Party — and that he and the Party are indistinguishable — left no more room for Deng Xiaoping’s call to “separate Party and government functions.”
On personnel, Xi likewise “surprised” by being thoroughly unsurprising. Rumors swirled ahead of the conclave that he might pick a new foreign minister or invest new defense minister Dong Jun with the extra titles traditionally conferred on that office. Those prognostications, however, rested on suppositions about normalizing those ministries after the unexpected firings of their chiefs last year. Xi decides what is “normal,” and the absence of a formal accounting of those deposed ministers’ transgressions, along with a persistent trickle of ousted flag officers in the military, suggests that Xi still sees the situations there as anything but. In that sense, Xi may be exacting a form of provisional punishment on those institutions through inertia and a titular downgrade, with the leverage inherent in the right to magnanimously restore their standing at a time of his choosing as the icing on the cake.
Additionally, Xi may simply be satisfied with the way things are for now. He frequently admonishes officials to work hard, serve the people, and not be desirous of promotion. Xi retained top diplomat Wang Yi beyond the typical age limit for Politburo members for a reason — most likely Wang’s obsequiousness. He did not plan for Qin Gang to implode as foreign minister, but if that means Wang wears two hats instead of one for a time to account for that regrettable episode, then so be it. (Wang took back his old job as foreign minister when Qin was removed last year, in addition to his primary role as Director of the CCP Central Foreign Affairs Office.) A parallel dynamic may apply to Liu Jianchao, the chief of the CCP organ for liaising with foreigners. Liu’s whirlwind tour of the United States in January was touted as his coming-out party as foreign minister, but he may just have been faithfully executing Xi’s directive to increase the Party’s influence in all consequential matters of state. Whatever comes next, the point remains the same: Xi does what he wants, when he wants, regardless of precedent.
Economic and Financial Policy
By Guonan Ma
This year’s GWR unveiled a host of economic targets for 2024. The most important indicator is the GDP growth target of “around 5%,” unchanged from last year. The GWR also announced a new target for cutting energy intensity by 2.5% this year. Here are my four economic policy takeaways from the GWR.
While the 2024 GDP growth target is the same as last year, it looks ambitious for two reasons. First, it will be more difficult to achieve because of the higher basis of comparison. Second, this year’s market environment could be less favorable since the initial euphoria of market opening might have vanished. So, the GDP target remains the same, but it will be harder to deliver this time.
Moreover, Beijing appears to have shunned a bazooka-style stimulus this year. This makes sense for two reasons. First, Beijing ought to use its limited policy space wisely. Second, the Chinese economy has been holding up reasonably well in recent months. Nevertheless, this still represents a strange mix of an ambitious growth target and underwhelming stimulus.
Furthermore, Beijing will issue 1 trillion renminbi in special central government bonds again this year. What is new is that these bonds will have “ultra-long” terms of 30 to 50 years and will be issued repeatedly in the coming years. Apparently, the aim is to leverage up the central government balance sheet to help cash-strapped local governments de-leverage. This is a practical step to meaningfully address local government debt challenges rather than simply kicking the can down the road.
Finally, the GWR highlighted some trade-in campaigns for replacing used consumer durables and upgrading used equipment. This broadly defined “cash for clunkers” type of program could lift 2024 GDP growth by 0.8%, and it may provide a more balanced stimulus to both consumption and investment. However, the stimulus effects could be transitory since such programs essentially front-load the normal replacement demand for consumer durables and business equipment.
Technology Policy
By Lizzi C. Lee
During the Two Sessions meetings, Xi Jinping further articulated his pivotal technology policy priority in dialogues with the Jiangsu delegation, underscoring the imperative to nurture “new productive forces.” He urged local governments to tailor their economic development strategies to their specific conditions and championed the transformation of traditional industries through innovative technologies to promote growth.
The new tech policy initiative, encapsulated by the catchphrase “new productive forces,” envisages a bold plan to catalyze domestic scientific advancements. The government earmarked 370.8 billion renminbi for technological research in the forthcoming fiscal year. This endeavor represents a nationwide resource mobilization toward the sectors that are expected to define the economy in the future: electric vehicles, artificial intelligence, renewable energy, sophisticated infrastructure, semiconductors, and quantum computing, among others. It embodies China's ambitious vision to ascend as a frontrunner in global innovation and technological prowess.
At the heart of this strategy lies a dual objective: to expedite China's economic resurgence by fostering new growth engines and, in the long term, to secure an international strategic advantage by countering external challenges, including sanctions and export controls on advanced technology. This approach is designed to surpass the limitations of traditional economic stimuli through forward-looking supply-side reforms.
The "new productive forces" initiative, championed by Xi, is more than a mere economic stimulus; it also serves as an ideological declaration. Through his staunch resistance against the so-called welfare dependency culture associated with Western-style stimulus, Xi promotes the virtue of resilience and collective endurance in the face of economic adversity. This initiative is positioned as a key contribution to Marxist-Leninist economic theory, intended to have a lasting impact on both the theoretical and the practical aspects of socialism, in alignment with the CCP's professed primary goal of fostering economic prosperity for the populace.
However, this perspective, while valorizing self-reliance, may gloss over the immediate needs and vulnerabilities of the population, suggesting an ideological rigidity that might not fully engage with the complex dynamics of economic recovery. Despite the initiative's significant investment in cutting-edge sectors and notable achievements, there is a disconnect in addressing the broader challenges of the labor market, which is bolstered predominantly by the service sector. Moreover, the focus on technological elevation sidelines the urgent need for structural reforms to unlock domestic consumption. Constraints in the property market and inadequate social services, like health care and pensions, make Chinese households inclined toward cautionary saving over expenditure. Absent a solid framework to invigorate internal demand, China may inadvertently intensify global trade imbalances, producing more than its domestic market can absorb. This situation has implications for China's economic equilibrium, but it could also incite protectionist responses globally, as trading partners become wary of Chinese exports undermining local industries and employment. The shifting global sentiment toward China, from initial embrace to increasing wariness, highlights the changing geopolitical context. The prospect of tariffs and other trade barriers signals escalating concerns about China's export-driven, state-steered economic model.
In conclusion, the "new productive forces" initiative symbolizes China's aspiration to lead in global technological innovation. However, the prioritization of ideological tenets over practical approaches to economic and societal challenges raises concerns about the initiative's ability to tackle the complex issues facing contemporary economic development and global integration. Striking a balance between ambitious technological progress, extensive structural reforms, and a detailed understanding of both domestic and international economic conditions is crucial for China's quest for sustainable growth and technological advancement.
Climate and Environmental Policy
By Li Shuo
Environmental and climate topics have been placed on the backburner in light of China's economic challenges. Although the 2024 GWR referred to environmental and climate topics, compared with previous years, there was a notable lack of quantitative references to both targets for the year ahead and progress made over the past year.
This underlines the difficulty of fulfilling previously made promises and the uncertainties around future action. The lack of quantifiable goals for air pollution and forestry coverage in the GWR, for example, could hinder progress.
The only notable environmental goal that the GWR provided was an energy intensity reduction target of 2.5%. China is off track to deliver the 13.5% energy intensity reduction set out in the 14th Five-Year Plan (2021–2025). Getting back on track would require a far greater effort than the proposed target of 2.5%.
On the positive side, the GWR reinforced the recent official emphasis on China’s globally competitive “new three” (xin san yang) industries: solar photovoltaic technologies, lithium batteries, and electric vehicles. These sectors have contributed notably to an otherwise sluggish economy worsened by ongoing instability in the real estate sector. As a result, a new narrative has emerged since early 2023 that highlights the increasingly positive alignment between China’s economic and environmental interests. As the GWR confirmed, this narrative is garnering buy-in from Chinese political elites, a dynamic that could propel the country’s climate actions despite its economic difficulties.
Overall, the 2024 GWR captured the zeitgeist of China’s climate momentum. As documented in an earlier article, domestic challenges and contentious geopolitics will continue to put downward pressure on China’s climate action. New drivers of climate ambition are emerging, such as the growth of low-carbon industries and China’s vulnerability to climate impacts, but they will have to combat significant resistance from China’s coal and heavy industries.
Foreign Policy and National Security
By Lyle Morris
Chinese leaders signaled continuity in China’s foreign policy and national security priorities during the Two Sessions while emphasizing the need for China’s armed forces to adapt to new strategic domains and fields.
First, in foreign policy, Li Qiang’s work report featured continued adherence to Xi’s signature foreign policy goals. This included an emphasis on China’s “independent” foreign policy of “peaceful development,” “mutually beneficial win-win strategies,” and an “inclusive, multi-polar” world order free from “hegemony.” In this vein, Premier Li promoted Xi’s flagship foreign policy initiatives, such as the Global Development Initiative, Global Security Initiative, and Global Civilization Initiative, to promote what China calls the “construction of a community with a shared future for mankind.”
Second, on military modernization goals, Premier Li lauded the “new achievements and progress made” in national defense goals, and called on the military to continue to thoroughly implement Xi’s military strategic goals for the new era. During a plenary meeting with the NPC delegates from the PLA, Xi emphasized the need to build “strategic capabilities in emerging fields” and called on the military to focus on “transformation” (zhuanxing) to meet new challenges. These goals and themes are intimately tied to Xi’s overall theme during the Two Sessions to build “new productive forces.”
Given Xi’s call to build a modern, technologically competent joint fighting force, the emphasis on themes such as “innovation,” “cutting-edge technology,” and “new industrial forces” is notable. Xi has clearly identified technology as the key to successful military reform. But with U.S. sanctions limiting transfers of high technology to China in recent years, Xi’s call to “adapt” to a new scientific revolution in military affairs may also suggest urgency within China to offset trade and technological barriers imposed by the United States.
Finally, Premier Li announced a 7.2% increase in China’s defense budget from the previous year. Such a modest increase was expected, given the growing needs of China’s military and its centenary modernization goal of 2027.
Taiwan Policy
The Two Sessions work report section about Taiwan was short and stuck to standard policies, though a couple of nuances are worth noting. First, the GWR mentioned “peaceful development” as a policy pathway but not “peaceful reunification,” instead using the phrase “China’s reunification.” This distinction may highlight — as a political signal — Beijing’s concern that use of force to achieve reunification could be triggered by so-called independence activists in Taiwan but does not, in and of itself, constitute an intent to unify by force. Reassuringly, the phrase “peaceful reunification” reappeared in Wang Yi’s press conference. His position and background on the Taiwan issue lends authority to the continuity of peaceful reunification as Beijing’s ultimate goal.
However, Wang Yi did broaden the call to action, declaring that “all people of Chinese descent” should oppose Taiwan independence and support peaceful reunification, suggesting that the Taiwan issue will be further entangled in China’s drive to seek loyalty from all people of Chinese heritage.
The GWR stressed traditional Taiwan policy, such as adherence to the 1992 consensus (One China, different interpretations) and opposition to Taiwan independence. The former is dead on arrival in Taiwan public discourse after being equated with “one country, two systems,” which is seen to have enabled a brutal political crackdown in Hong Kong. The latter extends a freeze in dialogue between officials in Taipei and Beijing until the ruling Democratic Progressive Party removes the goal of Taiwan independence from its platform, a long-standing requirement for dialogue but not one that Beijing expects to be fulfilled. No major changes seem evident — rather, Beijing is doubling down on its tried-and-true narratives.
And yet, “no surprises” is probably the best outcome that could be hoped for at a time of political transition in Taiwan and an upcoming election in the United States. With so many other issues to resolve internally, and facing international concern with peace and stability in the Taiwan Strait, Beijing is not seeking a cross-Strait crisis.