The annual NOC session began on Friday with the Premier Li Keqiang offering a target for economic growth of “more than 6%”. Last year, in the midst of the pandemic darkness, the NPC was postponed and no target number was offered for the first time in forever, but in the end, with a strong rebound, GDP growth in 2020 was announced at 2.8%. This year’s percentage will be off the back of the low base, but 6 is a number everyone will feel is line with “everything under control.” But it’s still going to be a tough ride in some ways. Blowing in the wind are Suning, one of the top China retailer partially owned by Jack Ma’s Alibaba, which had to be bailed out this week, and a major property company, Fortune Land, backed by Ping An, which defaulted on, or at least delayed, the payment of a bond repayment of $800 million.
The new US administration’s policy stance towards China became somewhat clearer still, and the message was resolute and robust. Statements from the Sec of State and other officials indicate there is a pretty consistent view in Washington on the nature of the relationship with China, and restriction of technology is just a part of what is coming down the line. Blinken said China poses “the greatest geopolitical challenge of the 21st century.” The Chinese side has long expected this and prepared for it, and the wording from above is for the PLA to prepare for facing a “strong enemy”.
The technology restrictions are having an impact. Huawei reportedly told suppliers that it is planning to more than halve its mobile phone production this year, and sales of its telecoms equipment around the world must be plummeting. Huawei still has the China market, of course, but is that enough to keep it afloat in the years ahead, and if so at what level? Good question. And then there is the Wuhan semi-conduit for company HSMC, a $20 billion venture, which has just closed. That is not going to make the attainment of semi-conductor self-sufficiency any easier.
And finally, back to Huawei for a moment – the company’s lawyers are taking HSBC to court in Hong Kong to bolster the case against the extradition of the company’s CFO from Canada to the US.
Overall, a busy week and an ever busier weekend coming up for those involved in the NPC. Stay on your toes!