The meetings last week of China’s National People’s Congress, or NPC, and the Committee of the Chinese People’s Political Consultative Conference, or CPPCC, ended with commitments to maintain economic growth at around 5 percent, keep unemployment at 5.5 percent and increase the fiscal deficit target to 4 percent, the highest in 30 years. However, the annual session of China’s two-chambered rubber-stamp legislature, known as the “Two Meetings,” did not include any detail, let alone surprises, for how the government might reach these ambitious targets.
On Sunday, however, the Central Committee of the Chinese Communist Party and the State Council, the main governing body of the government, jointly issued a 30-point Special Action Plan to boost consumption. Coming so soon after the Two Meetings, the announcement generated some enthusiasm that the focus on consumer spending demonstrates a renewed dedication to move away from Beijing’s focus on export-oriented manufacturing, which has exacerbated tensions with trading partners from the U.S. to Brazil, while fueling excess capacity, price wars and unhealthy competition in China.
As an action plan, the document itself is disappointing, because while it contains laudable goals—such as better enforcement of labor rights and increased payouts for the basic pension system—it does not specify how these can be achieved. For instance, who will enforce China’s strict but often ignored labor laws now that President Xi Jinping has dismantled labor rights organizations and weakened the trade union? Who will pay for the increased pensions when local governments already struggle to pay the salaries of civil servants? More fundamentally, will the central government finally reform the central-local fiscal relationship so that the local governments tasked with implementation of the plan have the resources to do so?
