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China’s “Two Sessions” 2025<\/strong><\/p>\n \n By Maciej Gaca<\/strong><\/p>\n (Centre for International Relations, Poland)<\/strong><\/p>\n \n Following the turmoil on global scene caused by the Trump administration, China is changing strategy in a bid to use the moment. The analysis of this year\u2019s March sessions of the National People\u2019s Congress (NPC) and the State Council of the People\u2019s Republic of China forms a coherent narrative of \u201ccontrolled modernisation.\u201d This narrative aims to emphasise China\u2019s economic and geopolitical ambitions while masking growing systemic contradictions. Three main lines of tension are evident: the economy, security, and the Taiwan issue\u2014all further enriched by the significant theme of \u201clawfare.\u201d<\/p>\n The government\u2019s GDP growth target of 5%, reiterated by Li Qiang, continues the 2024 strategy, which relies heavily on exports (trade surplus reached $1 trillion). However, this year\u2019s budget deficit (4% of GDP\u2014a historic record) is financed by issuing local bonds (4.5 trillion RMB) and central bonds (2 trillion RMB). This short-term solution deepens public debt, which will exceed 110% of GDP this year.<\/p>\n The 500 billion RMB technological modernization program and 30% stimulus support for high-tech sectors (AI, semiconductors, green energy) resemble Japan\u2019s industrial model of the 1980s, but with a key difference\u2014lack of market openness and competition. The outdated structure, where 60% of loans still go to state-owned giants, hinders the transition to a consumer-driven economy (household spending as a share of GDP has already fallen to just 38%, according to analyses by The Economist and the World Bank).<\/p>\n In this context, Xi Jinping\u2019s February 2025 meeting with leaders of Chinese tech giants, including Jack Ma, aimed to signal openness to the private sector. Despite declarations of support for the private sector, 60% of loans still go to state-owned enterprises, maintaining structural economic imbalances. This model results in a record-low share of consumer spending in GDP at 38%. While Xi\u2019s meeting with Jack Ma briefly excited investors (Alibaba\u2019s market capitalization increased by $90 billion within days), the market quickly interpreted it as a political signal rather than a promise of genuine economic liberalization. It is thus a policy of gestures, not the beginning of real structural reforms.<\/p>\n Li Qiang\u2019s report clearly identifies the state as the key pillar of China\u2019s internal stability, placing statism and digital authoritarianism at the center of the security strategy. The March sessions of the NPC and the State Council of the PRC brought specific decisions aimed at shielding China\u2019s economy from immediate shocks but may deepen long-term structural problems.<\/p>\n One key measure is the restructuring of local debt\u20142.8 trillion RMB of bad loans were transferred to central funds. While this operation seemingly stabilizes local budgets, it merely shifts financial risk to the central level, increasing pressure on an already strained budget deficit (4% of GDP). Simultaneously, state-owned companies are taking over a million unsold apartments, artificially maintaining real estate market stability. However, analysts point out that this policy only prolongs the speculative bubble and delays necessary reforms.<\/p>\n Significant investments in AI-powered monitoring systems (87 billion RMB) highlight the emphasis on digital social control. These measures aim not only to suppress social discontent more effectively but also to strengthen mechanisms for early detection of socio-economic threats. The IRIS think tank notes that \u201cBeijing consciously prioritizes stability over economic efficiency,\u201d as evidenced by a 22% drop in company bankruptcies in 2024, mainly due to state intervention rather than real improvement in business conditions.<\/p>\n At the same time, the government announced a 7.2% increase in military spending to 1.78 trillion RMB. Officially, the goal is further army modernization, but a significant portion of these funds primarily supports employment in the state-owned defense complex, which employs 12 million people. Such actions mask the unprofitability of strategic economic sectors, diverting funds to maintain jobs instead of investing in innovations or developing new military technologies.<\/p>\n Despite these measures, China still faces a fundamental demographic challenge. The number of births fell to a record low of 8 million in 2024, posing a serious threat to structural stability in the coming decades. An aging society, combined with growing public debt and declining innovation, calls into question the effectiveness of the current strategy of statism and digital authoritarianism. In the long term, this could become a source of significant systemic risk, much harder to manage than current crises.<\/p>\n The March sessions of the NPC and the State Council of the PRC clearly indicated an evolution in Beijing\u2019s strategy toward Taiwan, shifting from direct military threats to a more subtle yet equally dangerous strategy of economic integration and legal pressure (\u201clawfare\u201d). The foundation of these actions is the 2005 Anti-Secession Law, which gives China the legal right to intervene in the event of a unilaterally interpreted threat to territorial unity, treating Taiwan as a domestic issue.<\/p>\n In recent years, Beijing has strengthened its legal strategy with additional regulations\u2014the Cybersecurity Law (2017) and the National Intelligence Law (2018). These laws compel Chinese companies to cooperate with security forces, increasing economic and intelligence pressure on Taiwanese companies operating on the mainland. As a result, Taiwan\u2019s economic dependence on China is growing: already, 45% of Taiwanese SMEs have capital ties with entities from the PRC.<\/p>\n Elements of economic assimilation include new economic zones in Fujian and Guangdong provinces and the \u201cYoung Dreams\u201d program, offering free vocational courses and grants for young Taiwanese, aiming to increase their loyalty to the \u201ccommon homeland.\u201d Despite these integration efforts, this strategy faces strong social resistance\u201478% of Taiwanese residents oppose unification, seeing it as a threat to their sovereignty and national identity.<\/p>\n Beijing\u2019s lawfare also translates into international attempts to isolate Taiwan, including misinterpreting UN resolutions and promoting the narrative that the Taiwan issue is solely \u201cChina\u2019s internal matter.\u201d As a result, the PRC seeks to limit the island\u2019s diplomatic space, using law as a tool of geopolitical pressure. Similar actions are being taken by Beijing in the South China Sea, where legal arguments are used to legitimize territorial claims, despite numerous arbitration rulings questioning their validity.<\/p>\n Paradoxically, however, the lawfare offensive leads to increased resistance to China, both in Taiwan and among South China Sea regional states. According to IISS experts, while Beijing\u2019s legal strategy gives it a short-term advantage, in the long run, it provokes stronger regional resistance, potentially increasing China\u2019s international isolation.<\/p>\n In sum, the strategy presented during the 2025 \u201cTwo Sessions\u201d balances between rhetorical declarations of success and real systemic risks. The economy remains dependent on exports, vulnerable to global trade disruptions (e.g., U.S. 20% tariffs and European slowdown). The security policy, despite effectively suppressing social tensions through digital authoritarianism, does not address structural problems such as an aging society or growing public debt. Meanwhile, regarding Taiwan, the subtle economic-legal strategy may paradoxically strengthen Taiwanese national identity\u2014according to a March 2025 survey, 78% of the island\u2019s residents oppose unification.<\/p>\n Simultaneously pursuing goals of social control, nationalist mobilization, and technological modernization leads to contradictory outcomes. In the short term, this may create an illusion of stability, but in the long term, it risks economic stagnation and international isolation. Xi Jinping\u2019s strategy requires constant maneuvering between ideological dogmatism and economic pragmatism\u2014a balance increasingly difficult to maintain amid growing internal systemic contradictions and global competition. Xi balances between two historical extremes, attempting to combine Mao Zedong\u2019s revolutionary ideological radicalism with Deng Xiaoping\u2019s economic pragmatism. However, such a policy inevitably generates internal tensions, as authoritarian control and reluctance to deeper reforms limit the possibilities for genuine economic development and innovation. \u2014 INFA<\/p>\n","protected":false},"excerpt":{"rendered":" China’s “Two Sessions” 2025 By Maciej Gaca (Centre for International Relations, Poland) Following the turmoil on global scene caused by the Trump administration, China is changing strategy in a bid to use the moment. The analysis of this year\u2019s March sessions of the National People\u2019s Congress (NPC) and the State Council of the People\u2019s Republic […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[16],"tags":[],"class_list":{"0":"post-261476","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-features"},"_links":{"self":[{"href":"https:\/\/arunachaltimes.in\/index.php\/wp-json\/wp\/v2\/posts\/261476","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/arunachaltimes.in\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/arunachaltimes.in\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/arunachaltimes.in\/index.php\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/arunachaltimes.in\/index.php\/wp-json\/wp\/v2\/comments?post=261476"}],"version-history":[{"count":0,"href":"https:\/\/arunachaltimes.in\/index.php\/wp-json\/wp\/v2\/posts\/261476\/revisions"}],"wp:attachment":[{"href":"https:\/\/arunachaltimes.in\/index.php\/wp-json\/wp\/v2\/media?parent=261476"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/arunachaltimes.in\/index.php\/wp-json\/wp\/v2\/categories?post=261476"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/arunachaltimes.in\/index.php\/wp-json\/wp\/v2\/tags?post=261476"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}