Sieren: National People's Congress and pandemic

With a delay of almost two months, the National People's Congress will kick off in a spruced-up Beijing on Friday. For a while, it seemed as if this annual convening of the legislature, with a total of about 3,000 delegates from all of the country's provinces, in Beijing's Great Hall of the People, would only take place online. Though the 2020 event will be different from those of previous years and many sessions will be online, the fact that it is taking place in person at all is intended to send a clear message that the crisis of the coronavirus pandemic is past in China — even as many other countries are still struggling to contain it.

It is hardly business as usual. Because of strict quarantine regulations, no foreign journalists are being allowed to enter China. The government, which these days is writing the narrative more than ever, will surely not miss them.

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Despite the government's show of bravura to the rest of the world, there is likely to be tension. Regional politicians will want to know how the government intends to prevent a second wave of infections. They resent the fact that it is they who paid the price after the national authorities' initial efforts to conceal the outbreak.

The other big issue will be how to get the economy back on track. The Communist Party had hoped to be able to announce that all Chinese citizens had become "moderately prosperous" by 2020. Instead, unemployment is high and domestic consumption has not risen as much as predicted.

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Authorities are aware that there is the potential for social unrest. Even though delegates do not have a free vote, heated debate has become common in recent years and will surely be the norm this year. Each region in China has its own concerns and needs, with delegates doing their best to garner advantages for their provinces. This time, they are acutely aware that they cannot deal with the situation on their own and will need unity.

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No global stimulus

Unity is hard to come by these days — even within China's government. Officials differ on whether to pump more money into the economy or allow it to regenerate on its own. According to the Swiss bank UBS, the government's stimulus program is worth 4% of gross domestic product, which is astonishingly low compared to the 10% of GDP injected into the economy during the global financial crisis of 2008-09. Japan has invested over 20% of its GDP, the US 13% and Germany about 10% into programs to get through the pandemic.

China still has room to maneuver, and it would be surprising if, after announcing the government's targets for growth, Premier Li Keqiang were to announce various large-scale infrastructure projects. After all, state construction companies have complained of a fall in demand.

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It is unlikely that an all-encompassing stimulus package that can rescue the global economy will be announced. The government intends to keep its debt, which is already extremely high, at about 250% of GDP, under control. Officials intend to ensure that China continues not to owe much to other countries.

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A slow return?

GDP contracted by 6.7% in the first quarter of 2020 — the biggest drop since the death of Chairman Mao Zedong in 1976, but the surprising rebound of exports by 3.5% in April was a positive indicator, as is China's global trade surplus of $45 billion (€41 billion). Industrial output was up 3.9% year on year in April. Some analysts have even predicted that China could close 2020 with growth of 1-2%.

This would also be good for Germany's economy. So far, Germany and the European Union generally have exported to the US more than to China, but this could change. And, even if the European Union is having to think about how to decrease its dependence on China in the wake of the coronavirus pandemic, the immediate consequence might be greater dependence simply because there are few alternatives.

All of this is speculation. The outlook could be very different should China prove unable to prevent or contain a second wave of infections. Right now, the northwestern city of Jilin is under lockdown after a fresh outbreak of the novel coronavirus. There are currently 125 cases — not much compared with many cities in Europe or the United States — but the authorities are not taking any chances. A handful of new infections in Wuhan has led to authorities stipulating that all 11 million inhabitants must be tested by May 24.

This is also about symbolism. Ahead of the National People's Congress, the government wants to show that it is determined to fight COVID-19 and that China has the means to do this. Not like the United States! Boosted by US President Donald Trump's anti-China rhetoric, nationalism is a uniting force this year.

At this rate, it is unlikely that the agreement the United States and China signed to ease their trade dispute in January will last through the summer.

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