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China’s 20th Party Congress: Exploring the key takeaways and broader significance for Australia

Calvin Lu and Patrick Hession


Source: Bloomberg

From 16 October to 22 October 2022, the world turned its eye to the 20th National Congress of the Chinese Communist Party, where the Communist Party of China (CPC) discussed political developments in a room of around 2,300 delegates. The Party Congress, which occurs every five years, sets the overarching Party doctrine and selects who the new slate of leaders will be for a five-year term. The event is designed to be a highly routinised and choreographed affair as seen by the praising of the party’s achievements and reaffirmation of broader overarching goals. In spite of this, outcomes from the Congress can subtly mark preludes to great changes in Chinese domestic and foreign policy. This necessitated ‘China experts’ to go beyond the ‘official’ rhetoric to provide a more comprehensive evaluation of the 20th Party Congress, including its broader significance. One notable example was the speculative significance surrounding Hu Jintao being escorted from the conference, but other aberrations - the “diminution” of Deng Xiaoping’s “relaxation on ideology” via the four cardinal principles, as well as Xi’s changes in leadership personnel - were equally significant and provide a more in-depth analysis of China’s domestic and foreign policy agenda over the next five-to-ten years.


What has been announced?


Kicking off the week-long event, Xi Jinping delivered a two-hour report where he covered the achievements of the 19th Central Committee of the CPC and the Xi administration. Among these achievements include the CPC reaching its 100th anniversary, China completing its poverty alleviation and thus reaching its long-desired “moderately prosperous society”, and socialism with Chinese characteristics entering a new era. Xi also outlined the CPC’s plans for the future development of China against the backdrop of a slowing economy due to the strict “zero-covid’ policy and the fall in consumer confidence after the CPC’s interventions in private markets, such as the property market.


To achieve the future development goals of China, Xi discussed promoting the Chinese concept of ‘Common Prosperity’, accelerating green transformation, and the Dual Circulation Economy approach. Each of these future development goals will now be explored in more detail.


Common Prosperity


The concept of ‘Common Prosperity’ is a confident, idealistic, but ultimately vague expression that will guide how China transitions, defining itself from ‘big’ to ‘powerful’ as a modern socialist country. This will be done by regulating income distribution and wealth accumulation while guaranteeing employment, and improving the social security and housing systems. This initiative epitomises both the rhetoric used to define CPC Congress goals and their highly ambitious plans to lead the country out of its current economic situation and difficulties.


Green transformation


China plans to accelerate green transformation, and promote green and low-carbon industries, controlling pollutant emissions and regulating important ecosystems. Underpinning their approach is the 30/60 strategy to align with global sustainability goals: peak carbon by 2030 and neutrality by 2060. To achieve this, concrete measures were issued in carbon dioxide emissions, energy consumption, industrial capacities (such as controlling the expansion of coal industries), campaign support in high-polluting industries to reduce production capacity, expanding the use of renewable energy such as hydrogen, gas, bio-liquid fuels, and increased financial support to achieve these goals.


The Dual Circulation Economy


Xi emphasised again the concept of the Dual Circulation Economy, which was first referenced in 2020. The concept involves two cycles or markets, domestic and international. The domestic economic cycle refers to its domestic activities while the international cycle refers to its economic links with the outside world. China wants the domestic cycle to play a leading role and create a self-sufficient economy, whereas the international cycle would act as an extension and supplement to the domestic market. The concept is to mitigate the potential ‘decoupling’ from international markets, a very real possibility if the US continues to ‘weaponise’ economic interdependence - through restricting technological development for companies that operate in China via the CHIPS and Science Act 2022 - or if further dramatic geo-political issues arise that would result in global sanctions, as has happened with the advent of the Russia-Ukraine conflict.


Leadership changes


The First Plenary Session of the 20th Central Committee of the CPC was held the following day after the conclusion of the 20th National Congress of the Chinese Communist Party. This is when the CCP’s new leadership was elected. Unsurprisingly, and unprecedentedly, Xi was granted a third, five-year term. There were four leadership changes in the Politburo Standing Committee, which usually reflects the development trend of China in the next five-ten years and beyond. Two developments from the changes in particular epitomise Xi’s direction in governance.


Li Qiang


Li Qiang, a senior party official in Shanghai and a former Chief of Staff to Xi (when Xi was the party leader of the Zhejiang province), is set to replace outgoing Premier Li Keqiang. This is extraordinary. Li Keqiang had been in the role for the past two terms, and with a Western-friendly worldview, would have made for an easier leader to negotiate within an international context. However, at the age of 67 (one year below the normal retirement age), he was not named in the next iteration of the Politburo and is expected to retire from politics.


Instead, 63-year-old Li Qiang was appointed to the Politburo as the next likely premier despite having no experience in a central-government portfolio, let alone deputy premier (a normal requirement for the role of premier). Li was likely rewarded the role for his past association with Xi and after having enforced the harsh months-long lockdowns on Shanghai, reinforcing the party’s policy on ‘zero-covid’.


Wang Huning


Wang Huning’s promotion from the fifth to the fourth highest-ranking official manifests Xi’s vision to carve out his political ideology in China’s history books. Wang is a political theorist who has helped shape the past three president’s ideologies from behind the scenes. Notably within Xi’s administration, he has helped craft national concepts such as ‘The Chinese Dream’, the Belt and Road Initiative, and ‘Xi Jinping Thought’. With Wang likely to assume the role of Chairman of the People’s Political Consultative Conference, he will lead the interface between the CCP and the non-Party elements of Chinese society, and even the Chinese diaspora in countries such as Canada and Australia. With the promotion into this new role and his extensive background in shaping strategic party ideologies, he will be in a very influential position to extend the party’s policies beyond the domestic political context.


What does this mean for Australia?


For Australians, the announcements made in the 20th Party Congress will pose no significant changes in the short term. However, Australia’s economic performance is closely linked with China’s. The strategic and leadership adjustments may cast light on what to expect for our economic relationship with China in the coming years.


One example is the Dual Circulation Economy, which intends to promote internal economic growth. One way the Party plans to stimulate the economy is through a top-down approach by spending money on infrastructure such as high speed railways, bridges, and other big public works, which would inevitably require raw materials such as Australia’s iron ore. This is showcased by the top three Chinese imports in September 2020; iron and steel (55.8 per cent), paper (34.8 per cent), and non-ferrous metals (33.1 per cent). However, with the falling trend of property developments as a result of the property crisis and China’s urbanisation, reduced demand for iron ore is an equally viable outcome given property construction accounts for roughly 35 per cent of China's total steel consumption. Australia is therefore susceptible to any easing in growth; China accounted for around 40 per cent of Australia’s resource exports (as of 2018/19). As a result, China’s property sector will be important to watch over the next few years.


Another part of the Dual Circulation Economy is its ability to be ‘self-sufficient’, which - when coupled with China’s ‘green transformation’ - would see a gradual phase-out of Australian resources such as coal and oil. Australia will therefore need to invest in exporting ‘green metals’ such as lithium, nickel, and cobalt to mitigate the falling demand for fossil fuels.


Final thoughts


Overall, China’s 20th Party Congress provided a potential prelude to great changes in Chinese domestic and foreign policy through both its ‘official’ rhetoric - common prosperity, green transformation, and the dual circulation economy - and unofficial - leadership changes and the reemergence of ideology. Such strategic and leadership changes pose concerns for Australia’s future economic performance. The broader significance of China’s 20th Party Congress, therefore, is that Australia cannot sit idly by as the mutually beneficial economic relationship evolves from the existing status quo.


 

Calvin Lu currently works in strategic communications consulting and was previously on the Youth Advisory Council for the US Consulate in Sydney. He has a strong interest in global public affairs, particularly in areas that affect Australia’s industrial decarbonisation efforts.


Patrick Hession is undertaking a Master of International Relations at the University of Melbourne, having completed his undergraduate with a double-major in Politics and Asian Studies. He has a keen interest in Australia’s international affairs, particularly within the Asian region, and believes in the importance of promoting discussion around Australia’s responses to these events.

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