On October 16, the leaders of China will meet in Beijing for a significant political summit that is anticipated to solidify President Xi Jinping’s position of power and announce future economic strategy.
The meeting this year assumes further significance as it has become into a much observed indicator for when China may start to relax its strict zero-Covid policy.
The 20th National Congress of the Communist Party of China is scheduled to take place on October 16 in Beijing, according to state media on Tuesday.
It’s “the most important political event of the decade in China,” earlier this week, Citi analysts published a note.
“The Congress is set to launch a new political economy cycle,” the Citi report stated. “In the near term, it may help reduce policy uncertainty and allow Beijing to refocus on economic development.”
The main purpose of the national congress, which is held every five years, is to elect the next set of leaders for the ruling party.
The majority of Xi’s political allies holding seats on the Politburo will expand to 80% from 60%, while the majority of his allies holding seats in the Politburo Standing Committee will increase to 57% from 43%, according to Eurasia Group, which anticipated that Xi will likely raise his share of political allies at the top two levels of the Chinese leadership.
“Larger majorities of Xi associates on these bodies would support Eurasia Group’s view that mounting economic difficulties and rising cross-strait tensions have not weakened his power, which flows mainly from command of core institutions of authoritarian rule such as the military, security services, law enforcement, propaganda outlets, and personnel selection,” based on the report from August 18.
“Reduced representation of Xi associates would suggest rising internal resistance to his rule,” they mentioned.
Xi ascension through China’s political structure led to his inauguration as president in 2013. In 2018, he eliminated term restrictions, and it’s widely anticipated that the most recent political reorganization will give him a historic third term.
The second-in-command, Premier Li Keqiang, announced that his term as premier would finish in 2022. Leaders in foreign policy are another change that is anticipated.
“The congress will thoroughly examine the current international and domestic situation,” a statement in an official English-language publication.
The assembly will “formulate action plans and fundamental policies,” the release stated.
Details on decisions reached during the party congress, however, probably won’t be confirmed until the annual legislative gathering, known as the “two sessions,” which generally happens in early March.
Is zero-Covid nearing the end?
The anticipated congress in the middle of October provides a possible deadline for China to relax its infamous dynamic zero-Covid policy.
“We expect the zero Covid policy to be revised after the meeting in Oct, which will help the economy to normalize,” Pinpoint Asset Management’s president and chief economist, Zhiwei Zhang, stated in a note.
While most Covid restrictions have been loosened around the world, Beijing has restricted domestic commercial activity and kept national borders mostly closed for more than two years in an effort to uphold a policy of few to no Covid infections.
According to Citi analysts, the ruling party may even “push China’s reconnect[ion] with the world hard as soon as it decides to exit from [dynamic zero-Covid] to earn back the lost political capital.”
However, development is anticipated to be slow in the interim.
“We expect the path to China’s economic recovery to be a slog as local governments are likely [to] be cautious about relaxing business restrictions ahead of the 20th Party Congress due to fears of COVID resurgence,” in a note dated August 15, Wei Li, a senior China economist at Standard Chartered, and a group were quoted.
The company decreased its full-year GDP prediction for China from 4.1% to 3.3%. Other banks have consistently decreased their projections to levels that are substantially below the official 5.5% target set for the nation.
Growth is further hindered by a downturn in China’s enormous real estate market and a weakening global demand, which hurts exports.
On October 18, China’s third-quarter GDP is scheduled to be announced.
