One of the most relevant aspects of this congress was the expulsion of former Chinese president Hu Jintao. However, the 20th congress closed with the consolidation of Xi Jinping at the reins of China, and several changes that mark the end of a page in China's history.
The Chinese economy is not going through its best moment. Recently, the International Monetary Fund (IMF) cut China's growth forecast to 4.4%. One of the main problems is the crisis in the real estate sector, which accounts for about 30% of GDP. The war in Ukraine, the rising cost of raw materials, especially gas and crude oil, and the Covid zero policy are three key factors slowing down the Chinese economy. This economic issue is being studied globally, but this week, the 20th Congress of the Chinese Communist Party (CCP) was held, marking the end of an era.
Before going on to clarify the main issues during this congress. The CCP National Congress is one of the three key bodies that rule China. It determines the leadership of the Party, electing the Central Committee and its General Secretary, who is the President of the state. At the same time, it sets out the main policies and guidelines that will define Chinese politics for the next five years. On this occasion, the eyes were fixed on the current Chinese leader, Xi Jinping.
During a 2-hour speech, Chinese President Xi Jinping focused largely on domestic issues, but also provided useful insight into how Xi and Party leaders view the world and China's place in it. On foreign policy, Xi shared that China is entering a period "in which strategic opportunities, risks and challenges are concurrent". It also calls for strengthening "[mechanisms] to counter foreign sanctions, interference and far-reaching jurisdiction". Since Russia's unjustified invasion of Ukraine, Beijing has been concerned about the economic sanctions imposed on Moscow.
Consequently, this has fuelled a desire among Chinese power circles to boost China's self-sufficiency and protect the economy from potential sanctions impacts. As a result, the rivalry between the US and China will increase over time, especially in one key area, technology.
One detail that has not been mentioned in this regard was the emergency meeting. Recently, the US administration placed sanctions against the Chinese semiconductor industry. No company will be allowed to supply Chinese companies with certain semiconductors manufactured anywhere in the world using US technology. In addition, US companies are banned from exporting advanced semiconductor manufacturing tools.
For years, Beijing has been pushing the Made in China 2025 plan with the aim of becoming a leader in key areas such as robotics and microchips. High-tech development depends on microchips/semiconductors where the US remains the leader and China is highly dependent. In this sector, it is important to highlight another key player that is also in Beijing's sights, Taiwan.
In line with the guidelines outlined, Beijing regards unification with Taiwan as "a natural requirement for realising the rejuvenation of the Chinese nation". Given that the party has set itself the goal of achieving national rejuvenation by mid-century, in 2049. On the one hand, at this congress the Chinese president was more explicit in China's opposition to "foreign interference" in Taiwan-related affairs, showing greater international support, especially from the US, for Taipei. On the other hand, "opposition to and containment of Taiwan independence" will be moved from the preamble to the articles of the constitution of the People's Republic of China.
Traditionally, during the Party Congress there is a change of leadership, including the General Secretary after two terms in office. This rule was introduced by Deng Xiaoping, the architect of today's China, to forge consensus and avoid abrupt changes in Chinese politics. However, within the 19th Party Congress in 2017, Xi Jinping changed the rules in order to effectively rule for life and eliminate potential political rivals.
One of the most striking events was the expulsion of former Chinese president Hu Jintao, who was highly critical of Xi's policies. Under Hu's presidency between 2003-2013, a model of greater openness and a more economy-focused profile was maintained. On the last day of the congress, Chinese President Xi Jinping revealed the composition of the Politburo Standing Committee, China's highest governing body.
Xi's allies Li Qiang, Cai Qi, Ding Xuexiang and Li Xi joined current members Wang Huning and Zhao Leji to form Xi's inner circle. One figure of note is Li Qiang. Li oversaw the Shanghai confinement and immediately came out in support of Xi, succeeding Premier Li Keqiang (critical of Xi) as China's number two.
In conclusion, following this congress, the confrontation between the US and China will increase in the coming years, with the focus on the technology sector. Moreover, more nationalist rhetoric will make Taiwan an increasingly important player for the US and on the international chessboard. A first consequence was the weakening of the yuan and the fall of the country's shares to the lowest level since 2008. This fall was most pronounced in China's technology sector, which was in Xi's crosshairs. Time will confirm whether this congress marks a departure from the market- and economy-focused guidelines that have guided China since 1979 or a more market interventionist profile.
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