This is not the airline captain telling passengers to “brace, brace, brace’’ but it is the overhead light going on to tell them to buckle up as turbulence is expected.
China’s premier has warned the world is entering a period of profound political and economic upheaval as the specter of the Trump presidency loomed over the opening day of the country’s annual National People’s Congress.
This is the two sessions season in Beijing. The advisory body, the Chinese People’s Political Consultative Conference, began its meeting on Friday and the congress started on Sunday.
Addressing deputies of the Congress, the premier told those gathered at the Great Hall of the People to prepare themselves for “more complicated and graver situations” ahead, as a result of developments “both in and outside China”.
With 3,000 delegates in the building just off Tiananmen Square, Li could not let the opportunity slip to compare China with Trump’s America First policies, warning that “both the deglobalisation trend and protectionism are growing”.
“In the face of profound changes in the international political and economic landscape, China will always stand on the side of peace and stability, will forever be committed to equity and justice, and will always work for world peace, contribute to global development, and uphold the international order,” Li said.
China may not be the most globalized economy, foreign workers a few, the banking system is archaic and the European Chamber of Commerce in Beijing said last year that it is becoming more difficult to conduct business in China. But China has benefited from globalization and will suffer if the concept runs out of steam.
Per capita income saw a 26-fold expansion since 1985, while as many as 600 million people, twice the population of the US, were lifted out of poverty.
There is a sense of real pride among the Chinese, even as they criticize their country’s shortcomings, that within two generations, it became the world’s leading trading nation and looks set to be the biggest economy. China realizes that this success story was built on many factors, not least globalization that the Trump administration wants to rein in, possibly because China has been so successful.
The challenges that Li refers too are obvious. The outlook for global growth is uncertain, with the eurozone facing critical elections in the Netherlands and France. The UK seems to be stumbling toward Brexit negotiations and interest rates in the US are almost certain to rise in the coming months. China is also trying to stop capital hemorrhaging as it seeks to rebalance its economy away from manufacturing and exports to a more innovative, service-driven model. A trade war with the US seems more likely than not. What is in dispute is just how big the weaponry employed by both sides will be. For the first time since bicycles dominated the roads of Beijing 30 years ago, it is facing the virus of protectionism and slower global growth without being properly vaccinated.
Li, and rumors are swirling in Beijing about his future ahead of a major party conference in October where he could be replaced as premier, seemed to be telling the deputies that China’s economic growth, officially predicted at 6.5 percent, is dependent on global factors.
Slower growth in China, and 6.5 percent is considered slow, will be accepted, even welcomed if the twin scourges of pollution and ever-increasing debt can be tackled. China’s debt to GDP ratio rose to 277 percent at the end of 2016, economists said, from 254 percent the previous year, with a rise in credit used to service debt.
The challenges China faces are difficult enough to overcome in benign economic conditions but the forecast suggests a storm is gathering.