When Chinese leader Xi Jinping speaks, observers around the world listen for clues about what to expect from the Chinese Communist Party (CCP) in the coming months and years. Sifting through the Xi-speak associated with the “Two Sessions” requires ignoring all the fluff and clichés that are routinely echoed by the state-run Chinese media to get to the core concerns and issues that matter most to the communists.
The NPC impersonates a Western-style legislature. In reality, it rubber-stamps so-called work reports and policies developed by CCP apparatchiks and committees that were blessed by Xi and his totally controlled Politburo Standing Committee before the session. Nothing is presented that hasn’t been vetted and approved by the CCP leadership; everything is accepted without debate. More “democracy with Chinese characteristics.”
Massive Structural Debt
Forbes reported that China’s public and private debt now exceeds $51.9 trillion, “almost three times the size of China’s economy,” and continues to grow. As reported by Zero Hedge, China has more than $7 trillion in so-called hidden debt that could lead to massive defaulting of public bonds: “Local government financing vehicles, or LGFVs, are mostly tasked with building infrastructure projects. They allow local authorities to raise money without having the debt appear on the government’s balance sheet.” A defaulting of LGFV bonds exacerbated by extremely high levels of household debt would adversely affect the rest of China’s credit market, which has already been stressed by Xi’s failed zero-COVID policy. And debt servicing itself will also put a damper on China’s future economic growth.Systemic Corruption
Corruption permeates Chinese life, driven by “the unfairness of incomes and a lack of opportunity“ and a state system ”that was designed to keep people in their place.” The household registration, or “hukou,” system restricts movements and access to employment opportunities, benefits, and services. Greasing palms is one of the few ways to get around the system and improve one’s condition in life. That communist bureaucrats are underpaid makes corruption inevitable, too, as permits and other authorizations are sold under the table.Demographic Implosion
CNN reported in January that—for the first time since 1961—China’s population “fell in 2022 to 1.411 billion, down some 850,000 people from the previous year” as announced by China’s National Bureau of Statistics. The Chinese “economic miracle” will go up in smoke if this trend isn’t reversed, and frantic efforts to incentivize larger families by reversing the long-standing one-child policy reflect the communists’ fretting. That’s because the combination of declining birth and fertility rates and a decreasing number of Chinese marriages is creating an old-age dependency ratio problem. Social welfare costs paid to the elderly will be increasingly borne by a shrinking workforce, resulting in “old versus young” societal tensions surrounding benefits paid and the taxes required to pay for them—who receives how much and who pays.Food Insecurity
China can’t feed its 1.4 billion people and, in attempting to do so, has become the second largest importer of foodstuffs in the world. The Chinese agricultural problem harks back to the inability of Soviet agriculture to feed the Russian people, from Vladimir Lenin’s days through the demise of the USSR.Protests
The protests against the zero-COVID policy that erupted in numerous Chinese cities in the last quarter of 2022, dubbed the “white paper revolution,” surely frightened the communists. Some protestors even demanded that Xi “step down”—an unprecedented public expression of discontent with the CCP’s mandated lockdowns that have paralyzed China since March 2020. Xi himself appeared to blink and abruptly reversed course, with “zero COVID” consigned to the dustbin of other CCP failures such as the Cultural Revolution and the Great Leap Forward.Illegitimacy
Not the familial kind, but rather that of the communist regime itself. The communists assumed political power in China “through the barrel of the gun,” as Mao Zedong opined. And the power of that gun—the People’s Liberation Army (PLA)—is what has guaranteed the continuity of the CCP’s rule to this very day. Not the Chinese people! The communists and the people know this, and the CCP’s greatest insecurity is their very illegitimacy in controlling China. The CCP fears its own long-suppressed people more than it fears “foreign devils.”Pronouncements From the Two Sessions
Retaining political power in China is the only issue that matters to Xi and the communists. Nothing else comes close. To do so, Xi is returning to Maoist methods by reemphasizing the importance of Marxist heterodoxy and controls in delivering “shared prosperity, “common security,” “high-quality development,” “putting people first,” and other vague nonsense.- A blunt rebuke of U.S. policy (signifying a return to Lenin’s policy of “antagonistic contradiction”)
- A 7.2 percent growth in military spending (including a push toward nuclear parity with the United States and the willingness to use those new PLA capabilities to project power and intimidate neighbors)
- Institutional reforms that centralize CCP control of all sectors of the economy, including technology innovation, securities and banking regulation and reform, and other major financial reforms under the oversight of the State Council (centralized control is a standard Marxist tenet)
- Reunification with Taiwan (a top CCP objective since 1949)
- A focus on stability and self-reliance (stability is prized by the CCP above all things, and self-reliance signals an inward concentration on self-sufficiency)
- Upholding the leadership of the CCP (he refers to “tackling the special challenges,” which implies hardened measures to implement unanimity of action and control—spoken like the Marxist that he is, with no dissent allowed)