PNC to focus on debt, demography, Hong Kong and Taiwan

China’s parliament opens tomorrow to approve the new five-year plan. Government debt now stands at 270.1 per cent of GDP. Demographically, the country has reached a plateau. Hong Kong’s election law is bound to become more restrictive. Observers will watch how Taiwan will be discussed. For Chinese scholar, China should learn from the rise of the US.


Beijing (AsiaNews) – China’s National People's Congress (PNC) opens tomorrow in the capital. For many observers, its main focus will be on the mounting debt, demographic decline, Hong Kong and Taiwan.

Together with the Chinese People's Political Consultative Conference, which opened today, the PNC is called upon to rubberstamp decisions already taken by President Xi Jinping and other leaders of the Communist Party of China (CPC).

About 3,000 delegates are called to approve the 14th five-year economic plan and the 15-year plan laid out in October at the 5th Plenum of the 19th Central Committee of the CPC.

Xi's goal is to double China's GDP and per capita income by 2035, so as to replace the US as the world's leading economy.

Analysts expect the Chinese regime to use the "two sessions" (Lianghui) to highlight successes in the fight against the COVID-19 pandemic and boost confidence in the population.

However, largescale public investments to promote economic recovery have led to a disquieting increase in public debt, from 246 per cent of GDP in 2019 to 270.1 in 2020.

Spending by local governments is biggest problem. Their accumulated debt is worth 26.02 trillion yuan (US$ 4 trillion), more than double the GDP of Italy, the world's ninth largest economy. An exit plan from the current stimulus policy will likely come before the PNC.

In the medium to long term, demography will also not help Beijing. According to government data, China's population will drop behind India's by 2027. Within five years China will lose 35 million adults of working age.

By the end of 2025, more than 300 million Chinese will reach the retirement age of 60. That is more than 20 per cent of the population. This means a greater burden on the public purse and on families with dependent seniors.

For experts, China has little chance turning around the negative trend. Within the country’s leadership, some want to see the two-child limit per couple abolished as a way to solve the pending demographic crisis. The one-child policy was scrapped in 2015. Others point out, however, that for Chinese families raising children has become increasingly expensive.

In his address tomorrow, Prime Minister Li Keqiang is also expected to outline the electoral reform in store for Hong Kong. After the adoption of the National Security Act in June 2020, Beijing's move is seen as a further attempt to reduce democratic space in the former British colony, the scene of repeated protests by the pro-democracy movement since 2019.

In the meantime, the West Kowloon Court today has remanded in custody 47 pro-democracy activists accused of subversion for organising and taking part in primary election in July to select pro-democracy candidates for the upcoming September 2020 parliamentary elections (which were later postponed).

Under the draft proposal making the rounds, at best pro-democracy parties could get 20 seats out of 70 in the Legislative Council (LegCo). What is more, analysts note that the authorities could exclude pro-democracy candidates before the vote or even after they are elected.

With respect to Taiwan, the focus is on what terms Li will use to outline the framework for relations with Taipei, which Beijing considers a "rebel province." The question is whether he will continue to talk about 'peaceful reunification' or use more aggressive language.

For experts, the failure of the "one country, two systems" formula in Hong Kong could prompt the Chinese leadership to think that such a formula will not work for the island.

Jia Qingguo, dean of the School of International Studies at Peking University, calls on the Chinese government to focus on its "peaceful rise" and drop territorial claims, the only way to end growing accusations of "expansionism" in the region.

He argues that China should follow the example of the United States. In the late 1800s Washington began its climb to the role of world superpower without waging war on the United Kingdom, but promoting an open-door policy requesting other countries to do the same.