US President Donald Trump may not be attending the annual gatherings of China’s political elite but uncertainty over his policies is casting a long shadow over the events in Beijing.
About 5,000 government officials, party bigwigs and company executives are gathering in the Chinese capital to discuss government policy for the year ahead.
Though the meetings are strictly stage managed and most of the discussions and decisions take place behind closed doors, the annual meetings, better known as the “two sessions” in China, give a glimpse into Beijing’s political priorities and economic expectations.
They will be in special focus this year as Beijing adjusts to rising uncertainty from the Trump administration and its policies.
On the sidelines of the first day of the Chinese People’s Political Consultative Conference on Friday, delegates said China was putting some decisions on hold because of the question marks over Trump’s direction.
One area of concern is currency reform.
Yu Yongding, a former member of the central bank’s monetary policy committee and a senior researcher of the Chinese Academy of Social Sciences, said various US issues, including Sino-US ties and Trump were having a big impact on plans to overhaul the China’s foreign exchange rate system. “We must not give Trump an excuse to accuse China of currency manipulation,” Yu said.
“If the Trump administration did decide to do so, we would fight back forcefully. If not, it would shift the bilateral friction to trade, tariffs and investment and make things more complicated. There are still many uncertainties. I believe the central bank will take a wait-and-see approach until the situation becomes clear.”
Wang Hongguang, former deputy commander of Nanjing military area command, also expressed concerns about Trump’s potential impact on relations with China, and is watching closely whether the reasonably smooth talks between the US president and State Councillor Yang Jiechi would signal any turnaround.
This year’s two sessions come at a time of heightened tension between China and United States; ties between the two countries have been bumpy since Trump’s victory in the presidential election in November.
In an unprecedented move, Trump, while president-elect, broke decades-long protocol in December by accepting a phone call from Taiwanese President Tsai Ing-wen.
The call was the first such contact with Taipei by a US president-elect or president since Jimmy Carter severed formal diplomatic ties with Taipei and adopted a one-China policy in 1979.
Trump then publicly questioned US support for the one-China policy, alongside constant criticism of China’s currency tactics, threats to slap punitive tariffs on Chinese goods, and bluster over China’s military build-up in the South China Sea – all of which are believed to have reinforced the concerns of the nation’s top leaders who prize stability and predictability as top priorities.
Though most policies of the new US administration have yet to be announced, Trump, who has advocated protectionism, claimed that by slapping tariffs on Chinese goods, he would create more manufacturing jobs in the United States. This unnerved policymakers and businesspeople in China, which has a larger trade surplus with the US than with any other nation.
Heightened trade tension with Washington would be the last thing Beijing wanted as the ruling Communist Party prepares for a leadership transition later this year amid increasingly downward economic pressure.
On Tuesday, Commerce Minister Gao Hucheng urged Washington to negotiate any disputes with Beijing and warned that trade war “should not be an option”.
Deng Yuwen, a public commentator in Beijing and a researcher at the Charhar Institute think tank, said such concerns would be reflected in this year’s government work report, which is considered an indirect yet authoritative guide for the coming year’s policy priorities.
“For example, when it comes to setting a fiscal budget or making economic development plans, a greater emphasis could be placed on how to increase domestic demand [so as to deal with the uncertainty under Trump],” he said.
Deng said the possibility of protectionist policies under Trump would also be on the agenda during panel discussions among executives of private- and state-owned companies attending the meetings.
“I think those working in trade businesses and executives looking to invest in the US will bring up the topics.”
Wei Jianguo, vice-director of the China Centre for International Economic Exchanges and a former vice-minister of commerce, said the two sessions this year would be a “timely and proper opportunity” for Beijing to dispel fears among those who worry about Trump’s possible protectionist policies, which Wei believed would be unlikely to happen.
“Trump’s goal is to put America first, and as the world’s second-largest economy with the largest domestic market, China is the only one that can help Trump achieve this goal,” Wei said.
“I am optimistic about the trade future between China and the US, though disputes and conflicts could hardly be avoided, so Beijing can take this chance to appease those who have such concerns.”
China is also facing increasing challenges in its neighbouring regions, including the South China Sea, Taiwan and the Korean peninsula, many of which are related to China’s rivalry with the US.
“Although the two sessions will be mostly focused on domestic issues rather than foreign policies, this year is special because China is now embroiled in a restive environment and Trump is seen a major factor in this instability,” Deng said.
Additional reporting by Frank Tang and Choi Chi-yuk