Xi Jinping wants to make China strong – “Great Wall of Steel”

In his almost 15-minute closing speech, Xi called for more efforts to achieve technological sovereignty and strengthen the country’s defense capabilities. He expects a pioneering spirit and innovative strength from his people in order to ensure high-quality growth. A “Great Wall of Steel” should be formed through the modernization of the military, Xi said. He stressed the importance of peaceful union with Taiwan. He avoided the addition that this would be enforced with military force if necessary.

Xi is the first head of state since the founding of the People’s Republic to serve a third term. The decision to do so was unanimous. As expected, his confidante Li Qiang, number two in the party hierarchy, takes over as prime minister, despite three votes against and eight abstentions. Even so, the distance to the undisputed number one can be subtly documented. The growth target of “around five percent” and the budget, which provides for an increase in the military budget, were also approved.

The People’s Congress also approved Xi’s plans to establish a new, powerful financial regulator and a far-reaching restructuring of the Ministry of Science and Technology. The reorganization is a clear indication of which priorities the party leadership wants to set in view of the growing economic and technological rivalry with the US and other Western countries.

On the last day of the meeting, a total of seven votes were on the agenda. MEPs were asked to cast their votes by pressing a button at their seat. Everyone can see how the person sitting next to them decides. The result will be displayed on two large blue screens a few seconds later.

The party leadership’s proposals are accepted with an overwhelming majority. There were hardly any dissenting votes or abstentions. “Tonguo!”, “Goodbye!” calls the chairperson Zhao Leiji after each vote. Applause follows.

The congress is a political staging

Beijing’s propaganda apparatus calls it a “holistic democratic process”. Journalists who are allowed to take part must be aware that they are part of this staging. While very few foreign media were admitted in the past few days, the first gallery is well filled on the final day.

All participants had to do the PCR test the night before and spend the night in a quarantine hotel. And that despite the fact that the state leadership had declared the “great and decisive victory” over the virus in mid-February.

China’s new Prime Minister Li Qiang repeated this statement at his first press conference shortly after the end of the People’s Congress. The former party leader of Shanghai was responsible for the strict two-month lockdown in the financial metropolis.

Li struck comparatively conciliatory tones towards the USA, unlike Xi and Foreign Minister Qin Gang a few days ago. He indirectly repeated the accusation by head of state and party leader Xi Jinping that the USA wanted to prevent China’s rise: “Encirclement and suppression is in nobody’s interest,” he said. But he emphasized that the two largest economies are closely linked, which has benefited both. Disconnection serves no one. “China and the US can and must work together,” he said.

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But the key findings of this year’s People’s Congress indicate that China is preparing for growing economic and technological competition with the United States, but also what challenges the state leadership sees domestically.

1. Technological sovereignty should be strengthened

Right at the beginning of his speech at the end of the People’s Congress, head of state and party leader Xi emphasizes the importance of technological sovereignty. On Friday, MPs decided on a comprehensive restructuring of the Ministry of Science and Technology. A new commission, controlled by the Central Committee of the Communist Party, is to guide the ministry in the future.

Technological breakthroughs and innovations from research should thus be implemented more quickly in practical applications in the future. In this way, Xi wants to stand up to the West in the tech field and expand the party’s influence in science and technology.

The development of an efficient semiconductor industry should have the highest priority. Because the US export restrictions on high-tech chips and machines for their production hit China hard. Technological independence in the field of semiconductors is therefore the last resort for Xi.

2. China continues to arm itself

To strengthen national security, Xi wants to modernize the military faster. The budget, which was approved on Monday, provides for a 7.2 percent increase in military spending to the equivalent of around $225 billion.

China must “make better use of its defense technology, industry and science to strengthen its army and win wars,” Xi Jinping stressed last week, according to a report by state broadcaster CCTV. Xi is also the supreme commander of the armed forces.

3. The financial industry must reckon with stricter regulation

While the country’s big tech companies have been brought to the party line by strict regulation over the past two years, there has been little progress in the financial industry. A new, powerful financial supervisory authority is now to put a stop to undesirable developments such as speculation and corruption. According to experts, the state leadership is paying particular attention to the tense financial situation of the provincial governments.

Michael Pettis, finance professor at Peking University, therefore considers the new financial supervision to be an indication of a “general conflict between Beijing and the local governments over the control of the economy and finance”. The central government authority could therefore also serve to further expand Beijing’s control in the regions.

4. The government loses importance compared to the party leadership

The new science and technology and finance agencies fit in with the centralization trend of the past decade under Xi Jinping. As a result, China’s government is increasingly losing importance and is being degraded to an administrative arm of the party, a kind of “engine room,” says Nis Grünberg of the China think tank Merics. The substantive work is taking place more and more in the party leadership.

In the 1980s, the CP introduced rules to avoid abuse of power as a lesson learned from the devastating autocracy of state founder Mao Zedong. But under Xi, Beijing is continuously making regressions, emphasizes Carl Minzner from the US think tank Center of Foreign Relations. He prioritizes “centralization and absolute control of the party over state and society”.

In addition, with the government reshuffle that has now taken place, important positions have been occupied by Xi’s confidants. But with Xi taking full control of the party and state, there are also targets for attack. “Xi will be praised for his successes and blamed for his failures,” says an analysis by the US think tank Brookings. But now that Xi has amassed followers whom he believes to be extremely trustworthy, their leeway could increase, the experts said.

5. China under Xi Jinping remains unpredictable

The abrupt departure from the zero-Covid policy in December, as well as the previous dogged adherence to it, have made China unpredictable in the eyes of many business leaders and politicians. This impression should have been confirmed once again at the People’s Congress. On Sunday, the finance and trade ministers and the head of the central bank were surprisingly confirmed in office, even though they have reached the unofficial retirement age.

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In view of the tense economic situation, the decision was apparently intended to signal continuity. For many observers, however, it had the opposite effect: China remains unpredictable because there are no longer any rules.

The old era of the technocrats around the previous Prime Minister Li Keqiang is a thing of the past with the government reshuffle that has now taken place. In a video widely shared on social media, Li said goodbye to employees with a saying: People act, heaven is watching. On Saturday, when Xi Jinping was unanimously confirmed in office, a sandstorm swept over Beijing, turning the city a dull yellow.

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