Economy Dominates China's Major Political Meeting of the Year

A paramilitary police officer stands guard, on the day of the opening session of the Chinese People's Political Consultative Conference (CPPCC), in front of the Great Hall of the People, in Beijing, China March 4, 2024. REUTERS/Tingshu Wang
A paramilitary police officer stands guard, on the day of the opening session of the Chinese People's Political Consultative Conference (CPPCC), in front of the Great Hall of the People, in Beijing, China March 4, 2024. REUTERS/Tingshu Wang
TT

Economy Dominates China's Major Political Meeting of the Year

A paramilitary police officer stands guard, on the day of the opening session of the Chinese People's Political Consultative Conference (CPPCC), in front of the Great Hall of the People, in Beijing, China March 4, 2024. REUTERS/Tingshu Wang
A paramilitary police officer stands guard, on the day of the opening session of the Chinese People's Political Consultative Conference (CPPCC), in front of the Great Hall of the People, in Beijing, China March 4, 2024. REUTERS/Tingshu Wang

One burning issue dominates as the 2024 session of China's legislature gets underway this week: the economy.
The National People's Congress annual meeting, which opens Tuesday, is being closely watched for any signals on what the ruling Communist Party might do to reenergize an economy that is sagging under the weight of expanded government controls and the bursting of a real-estate bubble, The Associated Press reported.
That is not to say that other issues won't come up. Proposals to raise the retirement age are expected to be a hot topic, the state-owned Global Times newspaper said last week. And China watchers will parse the annual defense budget and the possible introduction of a new foreign minister.
But the economy is what is on most people's minds in a country that may be at a major turning point after four decades of growth that propelled China into a position of economic and geopolitical power. For many Chinese, the failure of the post-COVID economy to rally strongly last year is shaking a long-held confidence in the future.
A CEREMONIAL ROLE

The National People's Congress is largely ceremonial in that it doesn't have any real power to decide on legislation. The deputies do vote, but it's become a unanimous or near-unanimous formalizing of decisions that have been made by Communist Party leaders behind closed doors.
The congress can be a forum to propose and discuss ideas. The nearly 3,000 deputies are chosen to represent various groups, from government officials and party members to farmers and migrant workers. But Alfred Wu, an expert on governance in China, believes that role has been eroded by the centralization of power under Chinese leader Xi Jinping.
“Everyone knows the signal is the top,” said Wu, an associate professor at the National University of Singapore and a former journalist in China. “Once the top says something, I say something. Once the top keeps silent, I also keep silent.”
Nonetheless, the reports and speeches during the congress can give indications of the future direction of government policy. And while they tend to be in line with previous announcements, major new initiatives have been revealed at the meeting, such as the 2020 decision to enact a national security law for Hong Kong following major anti-government protests in 2019.
A TARGET FOR GROWTH

The first thing the legislature will do on Tuesday is receive a lengthy “work report” from Premier Li Qiang that will review the past year and include the government's economic growth target for this year.
Many analysts expect something similar to last year's target of “around 5%,” which they say would affirm market expectations for a moderate step up in economic stimulus and measures to boost consumer and investor confidence.
Many current forecasts for China's GDP growth are below 5%, but setting a lower target would signal less support for the economy and could dampen confidence, said Jeremy Zook, the China lead analyst at Fitch Ratings, which is forecasting 4.6% growth this year.
Conversely, a higher target of about 5.5% would indicate more aggressive stimulus, said Neil Thomas, a Chinese politics fellow at the Asia Society Policy Institute.
There will be positive messages for private companies and foreign investors, Thomas said, but he doesn't expect a fundamental change to Xi's overall strategy of strengthening the party's control over the economy.
“Political signals ahead of the National People's Congress suggest that Xi is relatively unperturbed by China’s recent market troubles and is sticking to his guns on economic policy," he said.
A NEW FOREIGN MINISTER, MAYBE

China's government ministers typically hold their posts for five years, but Qin Gang was dismissed as foreign minister last year after only a few months on the job. To this day, the government has not said what happened to him and why.
His predecessor, Wang Yi, has been brought back as foreign minister while simultaneously holding the more senior position of the Communist Party's top official on foreign affairs.
The presumption has been that Wang's appointment was temporary until a permanent replacement could be named. Analysts say that could happen during the National People's Congress, but there's no guarantee it will.
“Wang Yi enjoys Xi’s trust and currently dominates diplomatic policymaking below the Xi level, so it would not be a shock if Wang remained foreign minister for a while longer,” Thomas said.
The person who has gotten the most attention as a possible successor is Liu Jianchao, a Communist Party official who is a former Foreign Ministry spokesperson and ambassador to the Philippines and Indonesia. He has made several overseas trips in recent months including to Africa, Europe, Australia and the US, increasing speculation that he is the leading candidate.
Other names that have been floated include Ma Zhaoxu, the executive vice foreign minister. Wu said it likely depends on whom Xi and Wang trust.
“I don’t know how Wang Yi thinks about it,” he said. “If Wang Yi likes somebody like Liu Jianchao or likes somebody like Ma Zhaoxu. And also Xi Jinping. So it's more about personal relations.”



Oil Prices Steady as Markets Weigh Demand against US Inventories

FILE - Pump jacks extract oil from beneath the ground in North Dakota, May 19, 2021. (AP Photo/Matthew Brown, File)
FILE - Pump jacks extract oil from beneath the ground in North Dakota, May 19, 2021. (AP Photo/Matthew Brown, File)
TT

Oil Prices Steady as Markets Weigh Demand against US Inventories

FILE - Pump jacks extract oil from beneath the ground in North Dakota, May 19, 2021. (AP Photo/Matthew Brown, File)
FILE - Pump jacks extract oil from beneath the ground in North Dakota, May 19, 2021. (AP Photo/Matthew Brown, File)

Oil prices were little changed on Thursday as investors weighed firm winter fuel demand expectations against large US fuel inventories and macroeconomic concerns.

Brent crude futures were down 3 cents at $76.13 a barrel by 1003 GMT. US West Texas Intermediate crude futures dipped 10 cents to $73.22.

Both benchmarks fell more than 1% on Wednesday as a stronger dollar and a bigger than expected rise in US fuel stockpiles pressured prices.

"The oil market is still grappling with opposite forces - seasonal demand to support the bulls and macro data that supports a stronger US dollar in the medium term ... that can put a ceiling to prevent the bulls from advancing further," said OANDA senior market analyst Kelvin Wong.

JPMorgan analysts expect oil demand for January to expand by 1.4 million barrels per day (bpd) year on year to 101.4 million bpd, primarily driven by increased use of heating fuels in the Northern Hemisphere.

"Global oil demand is expected to remain strong throughout January, fuelled by colder than normal winter conditions that are boosting heating fuel consumption, as well as an earlier onset of travel activities in China for the Lunar New Year holidays," the analysts said.

The market structure in Brent futures is also indicating that traders are becoming more concerned about supply tightening at the same time demand is increasing.

The premium of the front-month Brent contract over the six-month contract reached its widest since August on Wednesday. A widening of this backwardation, when futures for prompt delivery are higher than for later delivery, typically indicates that supply is declining or demand is increasing.

Nevertheless, official Energy Information Administration (EIA) data showed rising gasoline and distillates stockpiles in the United States last week.

The dollar strengthened further on Thursday, underpinned by rising Treasury yields ahead of US President-elect Donald Trump's entrance into the White House on Jan. 20.

Looking ahead, WTI crude oil is expected to oscillate within a range of $67.55 to $77.95 into February as the market awaits more clarity on Trump's administration policies and fresh fiscal stimulus measures out of China, OANDA's Wong said.