‘Two Sessions’ Later, How China's Contradictory Policies Will Impact India

China’s recent diplomatic assertion indicates that there may be no thaw or rapprochement in India-China relations.

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China’s ‘two sessions’ – the congregation of its two topmost deliberative bodies namely, the National People’s Congress (NPC), the country’s top legislature, and the Chinese People’s Political Consultative Conference (CPPCC), the top advisory body, recently concluded in Beijing.

The purpose of the two sessions is as much to deliberate the key issues as it is to endorse the decisions of the Communist Party that have either been already approved or are under implementation. The NPC session unanimously elected the Communist Party of China's (CPC) General Secretary Xi Jinping as the president of the People’s Republic of China (PRC) and the chairman of the Central Military Commission (CMC) for the third term, a decision that was under no doubt following the 20th Party Congress held in October 2022.

The agenda of the two sessions concerned the appointments of key officials, party and state institutional reforms, key policy priorities such as food security, high-quality development, and self-reliance in critical and core technology, among others. However, apart from many micro developments, three broad policy ‘contradictions’ become apparent that are worth mentioning and discussing.


What Comprises Beijing’s Financial Priorities?

The first contradiction emerges on the economic front. The appointment of Li Qiang as the Chinese premier, a long-time ‘Xi loyalist’, has stoked a great deal of optimism about an improved business environment among the observers. Some argue that Li’s appointment, given his reputation as a pro-business politician, is an attempt by Xi to boost business confidence that has taken a hit in the last few years on account of tightening regulation, crackdowns on the finance and tech sector, the stringent zero-COVID policy, and strategic competition with the US.

There is also a sense that Li Qiang could exercise greater autonomy over economic policy as he enjoys Xi’s confidence. However, an assessment of the ground reality paints a different picture.

While the Party has committed to shore up private business confidence across the board, Xi has also emphasised the need to ‘guide’ the development of the non-public sector. Thus, one is unlikely to return to the yesterdays.

The business sentiment has not improved significantly despite the Party’s assurances. Private businesses will also continue to be subject to the party line and regulation. Besides, some sectors will likely see greater support than others as Xi seeks to redirect capital to the sectors he regards as national priorities.

Secondly, Li has not returned to head the Central Financial and Economic Affairs Commission, erstwhile the Party Leading Small Group of Economy and Finance, a position that since the party-state distinction reforms has traditionally been held by the premier until Xi decided to head it himself in 2013.

Third, the current set of Party and State institutional reforms further weakens the premier-led State Council as the party gains increasing oversight over State Council affairs, especially related to policymaking. In light of the weakened State Council that is supposed to only act as an implementing agency, it seems that Xi will most likely continue to gear the policies, leaving little room for Li to exercise autonomy.


Chinese Foreign Policy Adjustments

The second contradiction emerges with respect to China’s outward engagement. After the 20th Party Congress in December 2022, Xi promoted Qin Gang, the Chinese Ambassador to the US to lead the Foreign Ministry.

Given Qin’s reputation as a calm diplomat still holding the party line even while leading the most difficult mission in the US, was viewed as a course correction by Xi to dial down on China’s wolf-warrior style diplomacy, and thereby, create a suitable environment for diplomatic outreach to major countries.

This development when viewed in consonance with the perceived demotion of Zhou Lijian, the aggressive Chinese Foreign Ministry spokesperson, seems to signal to the world the diplomatic adjustment China is seemingly making.

Soon after assuming the role of foreign minister, Qin Gang led outreach efforts to the US, Australia, and Japan. His elevation as the state councillor at the NPC session further cemented his authority. However, this concession was contradicted by an assertion when Xi named a US-sanctioned General Li Shangfu as his defence minister.

Li Shangfu remains under US sanctions since 2018 for purchasing Russian arms. Thus, appointing a sanctioned individual to lead China’s military diplomacy in testing times when US-China relations are under stress, especially after the balloon-gate incident, is certainly a pushback.

There are already concerns that Li Shangfu’s appointment will further impede the already stalled Pentagon-PLA talks. Provided that the two offices in question are key diplomatic positions, these appointments seem contradictory and appear to give mixed signals.

Qin Gang too, appeared quite direct, if not hostile during his press conference at the NPC, effectively crushing all the optimism relating to his appointment. It is seemingly clear that eventually, Xi’s aggressive style of diplomacy will prevail despite the perceived overtures made towards softening his diplomatic stance.


On Strategy for Tech Self-Reliance

Finally, the last set of contradictions emerges with respect to China’s approach to innovation and the tech sector. Critical and core tech has become a key area of geopolitical competition witnessing attempts to achieve self-reliance and reduce dependency by the two major global powers.

Accordingly, in the face of US-led efforts to exclude China from its innovation and tech ecosystem, China is increasingly pushing for attaining self-reliance in core technologies. Consequently, the 14th NPC session saw participation from experts and researchers from various hardware sectors deemed ‘core technologies’.

However, their appearance came at the expense of big tech and internet giants such as the founders of Tencent, Alibaba, and NetEase that had been regular attendees in the NPC sessions for the last few years.

Consumer tech plays an important role in driving innovation through the commercialisation of core technologies. They also contribute to innovation through industrial process learning and competition-induced efficiency. However, as the experts from critical and core tech have witnessed a rise in their importance for the Party, consumer tech has fallen out of favour.

A policy that supports the entire tech ecosystem is necessary to drive and sustain innovation and compete with the US for dominance in core technologies. Instead, what one sees is a discriminatory policy against consumer tech where they remain subject to stringent regulation.

Economy, diplomacy, and driving innovation are perhaps the most pressing issues snaring at the Chinese decision-makers at present. While one would expect a policy that is stable and uniform on each of these fronts, what one instead notices, is policymaking that is marred with contradictions. But perhaps, Chinese progress is incomplete without contradictions that are central to the idea of the Marxist theory of the movement of history.

These contradictions, especially on the economic and diplomatic front, also have implications for India. If the Chinese economy fails to revive investor sentiment, the ‘China+1’ pathway may appear more plausible for newer investments, and India, along with Vietnam, might emerge as major beneficiaries. Secondly, China’s recent diplomatic assertion that contradicts its earlier overtures and outreach efforts as discussed, further indicates that there may not be a thaw or rapprochement in India-China relations yet.

(Amit Kumar is a Research Analyst with the Indo-Pacific Studies Programme at the Takshashila Institution. This is an opinion piece and the views expressed above are the author’s own. The Quint neither endorses nor is responsible for the same.)

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Topics:  finance   Xi Jinping   India-China 

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