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      China People's Congress

      China adopts quieter path to greatness as pressure mounts

      From trade war to declining population, Xi faces slew of problems

      Chinese President Xi Jinping walks to his seat at the Great Hall of the People in Beijing on March 15, for the closing session of the National People's Congress. (Photo by Taro Yokosawa) 

      BEIJING -- China appeared to shift away from cementing its place as the world's rising superpower at its once-a-year congress which ended Friday, instead turning inward as President Xi Jinping grapples with an ever-growing list of headwinds, from the protracted trade war with the U.S. to slowing growth.

      In a sharp contrast from the National People's Congress in 2018, which paved the way for Xi to remain in power into the 2030s by scrapping term limits, the Chinese leader this year was often seen wearing a stern expression, starting with the opening ceremony on March 5.

      Likely on his mind was the recent summit between U.S. President Donald Trump and North Korean leader Kim Jong Un, where Trump unceremoniously rejected Kim's request for sanctions relief. Xi worries he could face a similar brushoff if he goes to the U.S. to negotiate the scrapping of tariffs, fueling speculation that their meeting may now be pushed back to at least April.

      Xi's original game plan was to convene a summit with Trump as early as possible and win a ceasefire in the trade war. For that, the Chinese side laid down concession after concession during the parliament session.

      The Made in China 2025 high-tech manufacturing initiative, a key sticking point for Washington, was no where to be seen. The congress also passed legislation on Friday banning forced technology transfers from foreign-backed companies in China.

      These moves suggest a return to former leader Deng Xiaoping's motto of hiding China's strengths to bide time, the very policies that Xi has been rejecting since coming to power.

      Chinese President Xi Jinping casts a vote at the closing session of the National People's Congress.   © Reuters

      Bowing to American demands risks a backlash at home. But China needs to allay U.S. concerns because of its serious economic slowdown. In a bid to boost economic activity, Chinese Premier Li Keqiang announced a 2 trillion yuan ($300 billion) cut to corporate taxes and social security payments in his annual work report on March 5. Infrastructure construction will be ramped up as well.

      "Growth in China's gross domestic product will stabilize at about 6.3% in the next few years," said Zhu Min, a former deputy managing director at the International Monetary Fund, who now serves as chairman of Tsinghua University's National Institute of Financial Research .

      But all bets are off unless Beijing and Washington can reach a deal. There is no guarantee that China will meet its economic growth target for 2019, set between 6% and 6.5%.

      More worrying is that structural reforms -- a necessity for the country's long-term growth -- could take a back seat as Beijing focuses on quick fixes to shore up the economy.

      Li's report this year was conspicuously silent on giving the market a "decisive role in resource allocation," a policy approved by the Communist Party back in 2013. Xi recently has been prioritizing party discipline and state-run companies over the market economy.

      China faces a demographic time bomb as well. Its working-age population is shrinking, even after the government in 2016 began allowing couples to have a second child. A business leader caused a splash at the congress by urging tax cuts and subsidies to help families raising two children.

      "This will be the worst year of the past decade, " one Chinese executive said, "but it will be better than any other in the coming decade."

      It is apparently a popular refrain among business leaders in recent days. There is growing concern that China's potential has already peaked, which in turn is chipping away at Xi's clout and posing challenges even beyond the trade war.

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