Why is China Hostile to Foreign Companies?

China is planning "green restructuring" of the economy

Contrary to expectations, China's Prime Minister Li Keqiang took up the traditional practice of proclaiming an official growth target for the opening of the People's Congress. The aim is to achieve growth of "over six percent". China was able to get the pandemic under control relatively early and more sustainably than most other countries, so that its own economy recovered quickly. However, the consequences of the pandemic for the global economy and the further development of the trade conflict with the USA still harbor many imponderables.

The focus of the Chinese economic planners is accordingly on strengthening domestic demand. The government in Beijing has been dealing with this question for a long time, explains Caroline Meinhardt, research assistant at the Berlin China research institute Merics. "In the long term, the government faces the challenge that significantly strengthening demand-driven growth would require a significant redistribution of income to normal households." Her colleague at Merics, Nis Grünberg, adds: "The focus in the next few years will be on strengthening our own economy and industry, and on expanding social systems, especially in the areas of health and education."

China's advances in artificial intelligence (AI) are making US strategists nervous.

Technological independence

The focus is also on expanding domestic innovations and investing in future technologies. In the wake of the trade war with the US, China has painfully experienced its dependence on international suppliers for high-tech components such as semiconductors. "At the moment, China is still a long way from becoming technologically independent," explains Caroline Meinhardt. "Thanks to enormous government support and private investments, China is likely to achieve significant successes in some areas in the coming years. But how independent China can actually be depends, among other things, on whether and how American export controls are tightened and Chinese companies without access to foreign ones Technologies can close their existing gaps in know-how. "

Thanks to Xi: For new social housing for minorities in poor regions

"Historic victory over poverty"

The victory in the fight against poverty, which was announced at the end of 2020, is likely to be celebrated again at the NPC meeting. Officially, all municipalities were able to lift their population out of absolute poverty. According to the Chinese definition, the limit is 4000 yuan per year or eleven yuan (US $ 1.70) a day, which is slightly lower than the official limit of the World Bank (US $ 1.90). The victory over poverty falls as planned in the 100th year of the founding of the CCP in 1921. "Now, however, it is a matter of raising the hundreds of millions of Chinese who live in precarious economic regions and jobs to a middle class standard, and of increasing inequality fight, "says Nis Grünberg from Merics. "More investments in education and the promotion of jobs, also outside of urban centers, will be necessary in order to maintain the standard that has been achieved."

Political scientist Wu Qiang, who works in Beijing, argues similarly. With a view to the five-year plan, it will also be a matter of "regulating the balance of power between the central government and the provinces, regulating the distribution of resources and balancing out the regional discrepancies in economic development."

The world's largest solar power plant in China's Qinghai Province

China's green rebuilding

This aspect is also relevant for another goal that is at the top of the priority list of the Chinese leadership: the conversion of the economy to climate-neutral production and energy generation. Because the wide-ranging goals of the Communist Party leadership sometimes contradict the priorities of the provinces, where new coal-fired power plants are still being connected to the grid.

According to a circular from the State Council dated February 22, the targeted "green restructuring" of China in the areas of manufacturing, transport and consumption should have "taken shape" by 2025. And by 2035 the scope of the "green industry" should have reached a whole new level, all energy-intensive and environmentally harmful industrial sectors from steel to paper production must convert to "green" production methods by then.

The China experts from Merics name three reasons why the announced "greening" of China must be taken seriously: First, the CP leadership sees its power and legitimacy only guaranteed in the long term with a sustainable economy and healthy environment. Second, the trade conflict with the US made the leadership aware of the need for an efficient and sustainable energy and food supply from their own sources. Third, massive investment in green production and consumption offers China the prospect of world technological leadership.

Hong Kong democracy activists on the transport to court on Tuesday

Further tightening expected in Hong Kong

Climate policy is the only area in which Xi Jinping can currently make friends on the international stage, at least in the West. Quite different from his approach in Hong Kong, which is sharply criticized in the West. In June 2020, the NPC Standing Committee passed the so-called National Security Law for Hong Kong. Since then, more and more democracy activists have been tried on charges of violating one or more of its far-reaching provisions.

But Beijing is apparently not enough to increase access to the financial metropolis. Xia Baolong, director of the State Council's Office for Hong Kong and Macau Affairs, recently stressed that Hong Kong must be ruled by "patriots". This is why observers like Wu Qiang suspect that a revision of the electoral law has been initiated: "The defeat of the pro-Beijing camp in the election of the district councils in November 2019 shocked the Chinese leadership. Since then, attempts have been made to intervene in the electoral system of Hong Kong to prevent results to the detriment of Beijing. "

With reference to the pandemic, the election of the Legislative Council, i.e. the Hong Kong Parliament, was postponed by more than a year to the beginning of December 2021 at the latest. Several MPs have already had their mandate withdrawn because of their opposition activities.

China is pretty far behind in vaccinating its own population worldwide

In the shadow of the pandemic

With the rigorous isolation of sources of infection as well as strict entry bans and quarantine requirements, China was able to keep the number of new infections at a manageable level. For most Chinese, the crisis seems to be long over. According to Beijing expert Wu Qiang, however, the pandemic is still a challenge for the Chinese leadership. "The pandemic remains a big issue. In the last few weeks, in preparation for the NPC meeting, the controls on the access roads to Beijing have been tightened again. The additional protective measures for the delegates show that there is great fear of a new outbreak."

The nearly 3,000 delegates have to undergo several PCR tests before their trip to Beijing and during their stay, and their body temperature is measured daily. You are practically only allowed to stay in the hotel and in the Great Hall of the People, the meeting place. A Covid-19 vaccination was "recommended" to them.