China to overhaul Hong Kong’s political system

Ahead of China’s annual political gala, Beijing’s top official in Hong Kong, Xia Baolong, told the Chinese Association of Hong Kong and Macao Studies last week that the Chinese government would “perfect” the city’s electoral system.

“Only in Hong Kong would some people show off their rebellion against their motherland,” he said.

“Important positions, under any circumstances, cannot be taken up by anti-China forces that disrupt Hong Kong.”

The two sessions will meet hours after 47 pro-democracy leaders faced a Hong Kong court on charges of subversion for hosting an unofficial primary vote last year. After four days of hearings running into the early hours of the morning, 15 were granted bail late on Thursday night, leaving dozens of pro-democracy leaders either behind bars or in exile.

The deterioration in the political and judicial environment for the pro-democracy movement in Hong Kong has sparked international condemnation and economic sanctions from the US. Hong Kong was handed over from Britain to China under a treaty that guaranteed a high degree of autonomy in 1997

Australia, along with the United States, has been a global driver of this paradigm shift. It weathered trade strikes from the world’s second largest economy on more than $10 billion worth of exports this year after calling for an inquiry into the coronavirus, criticising China’s human rights record and rejecting Chinese investment on national security grounds.

“The Europeans, the Japanese and other leaders are rethinking their relationship with China and Beijing knows it,” said Bates Gill, a professor at Macquarie University and Asia Society Australia Scholar-in-Residence.

Willy Lam, a political scientist at the Chinese University of Hong Kong, said international pressure could become counter-productive, by satisfying the nationalistic aspirations of the party and sections of the population.

“[Chinese President] Xi Jinping is a nationalist,” he said. “If he is facing pressure from the US, Australia and Canada it will prompt him to be more aggressive and assertive in trying to crackdown.”

Zhang said new dialogue between US President Joe Biden and Xi was an opportunity to enhance cooperation after a lengthy phone call between the two leaders on February 11. The comments follow years of trade, foreign policy and national security tension with the Trump administration.

“China and the US may have disagreements on certain issues but conflict and confrontation serve no one’s interests,” he said.

Zhang downplayed the significance of China’s rising military spending.

“In China we are committed to the path of peaceful development,” he said. “The efforts to strengthen our national defence does not threaten any country.”

Xi has spent months on the phone attempting to draw support among developing countries across Asia and Europe with the promise of economic investment, but his core focus is at home, where he rallied young officials at the National Academy of Governance on Monday “to brave hardships and move forward”.

“It is a message to the people of China that they need to brace themselves and go shoulder to the wheel in order to ride through what they rightly understand to be a turbulent situation for China in the next couple of years,” said Gill.

Xi, who now holds unchallenged authority at the top of the Chinese Communist Party, is attempting to lock in multi-generational support for his leadership.

He has bound “Xi Jinping Thought” to the constitution and is in the process of crushing the history of former leaders Hu Jintao, Jiang Zemin, and Deng Xiaoping into one pre-Xi era, while elevating his own-leadership to that of Mao Zedong’s, according to Carl Minzner, a professor of Chinese law and politics at Fordham Law School.

“And as that happens, you’ll see doors open within the Party apparatus that will permit a stronger and stronger focus on Xi personally – and facilitate efforts to fan a cult of personality around him,” he noted on Twitter on Wednesday.

Last Friday, Xi claimed China had eliminated “extreme poverty”. Now he will look to establish his legacy by shifting the country’s economy towards consumer driven spending by pushing his economic policy of dual-circulation – a partial rebranding of the Made in China 2025 policy – that will see China turn increasingly inwards for production and consumption.

“For China there is a lot of motivation here. It is not only a way to decouple but also to build resilience to turbulence in the international market place,” said Gill.

“It is also part of a shift from capital intensive growth to consumer growth. Which has been on the cards for a decade now.”

Zhang on Friday said that dual-circulation did not mean a “closed internal cycle”.

“It aims to tap domestic demand and leverage internal circulation to attract global resources,” he said.

“Under this new paradigm China will continue to open up and foster a business environment based on market principles.”

The success of that program will depend on the five-year economic agenda and a broader 15-year platform outlined throughout the week-long two sessions meetings in Beijing.

At its centre is a chapter on technology, which will see more than RMB2.4 trillion ($500 billion) spent on research and development next year alone to innovate China’s economy away from the middle-income trap that has come to define the economic growth rates of more developed economies.

“They need better productivity per worker and the only way they are going to get that is through innovation,” said Gill.

The focus will be on new green technologies to push China towards its net-zero emissions target by 2060 and on semiconductor self-sufficiency to guard against US trade threats to its booming IT industry.

“There will likely also be an emphasis on the development of the next generation of telecommunication technologies (6G),” said Qu Hongbin, chief China economist for HSBC.

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“Policy measures such as incentives to increase R&D spending through tax credits, direct funding support or favourable credit conditions for start-ups will likely help support increased investment in science and technology.”

But the work report, which effectively functions as China’s federal budget, is not likely to set an annual economic growth target for the second year in a row, as the coronavirus recovery hampers forecasts.

“Sustaining the growth recovery will be a top policy goal, but Beijing may avoid setting a numeric GDP growth target,” said Qu.

Instead, the party is expected to set a 5 per cent average annual target for the next five years when Premier Li Keqiang hands down the report on Friday afternoon.