China: New leadership emphasizes Chinese dream
March 14, 2013
On 14 March, during the 12th National People's Congress (NPC), Xi Jinping replaced Hu Jintao as President of the People's Republic of China and chairman of the all-important Central Military Commission. The following day, Li Keqiang was elected Premier, replacing Wen Jiabao. These appointments complete the transition from the fourth generation of leadership to the fifth, in an event that occurs every 10 years. The new Xi-Li administration will inherit a country that still exhibits a robust economy, but that is also suffering from rampant social inequality threatening the nation's stability. In addition, China's new political leadership will have to deal with an increasing number of territorial disputes with its neighbours that bear the potential to jeopardize economic relations in the region.
During the meeting, former Premier Wen Jiabao disclosed the long-awaited list of economic targets for this year as well as the central government budget. The economic growth target was maintained at 7.5%, although current forecasts suggest that this figure is likely to be overshot by a wide margin. The inflation target, however, was revised down from 4.0% in 2012 to 3.5% in 2013. Regarding the total volume of exports and imports, the target was also revised down from a 10% rise in 2012 to an 8% increase this year. The government set a goal of creating nine million new urban jobs - unchanged from the previous year - in order to keep the registered unemployment rate at or below 4.6%. Moreover, the government will continue to develop low-income housing and to attempt to reduce housing prices. On the budgetary side, the Chinese government projects a fiscal deficit of CNY 1.2 trillion (USD 193 billion) for this year, which represents around 2.0% of GDP and exceeds the CNY 800 billion goal set for 2012.
In the final session of the congress, Xi Jinping exposed again his vision of the "Chinese dream", a concept that has drawn global attention, as it is widely seen as Xi's possible contribution to the guiding ideology of the Communist Party of China. The "Chinese dream" emphasizes people's happiness and a "dignified life", a stark contrast with the previous policies that had focused on economic growth for decades. In this regard, Xi stressed that the country needs further reforms, strengthening the rule of law and accelerating the transformation of China's economic structure.
Finally, the NPC reappointed Zhou Xiaochuan as head of the People's Bank of China (PBOC), despite being at the official retirement age of 65. The election signals the administration's willingness to move forward to build a more market-driven financial system, as Zhou has been the key architect of bold financial reforms during his mandate, including the liberalisation of some interest rates and the abolition of the yuan's peg to the U.S. dollar.