NATIONAL PEOPLE'S CONGRESS TO OPEN MARCH 5:

C O N F I D E N T I A L SECTION 01 OF 03 BEIJING 000531 SIPDIS E.O. 12958: DECL: 03/02/2033 TAGS: PGOV ECON SOCI CH SUBJECT: NATIONAL PEOPLE'S CONGRESS TO OPEN MARCH 5: FINANCIAL CRISIS, EMPLOYMENT KEY THEMES REF: A. OSC CPP20090224074012 ¶B. OSC CPP20090215968059 Classified By: Political Internal Unit Chief Dan Kritenbrink. Reasons 1.4 (b/d). Summary -------------- ¶1. (C) China's nominal legislature, the National People's Congress (NPC),will convene March 5 and is expected to focus on measures for coping with the global financial crisis, with particular emphasis on fleshing out the PRC fiscal stimulus package, increasing domestic demand and boosting employment. The NPC will provide important clues to the Chinese leadership's policy priorities in the coming year, even as the process remains scripted and closely orchestrated by the Communist Party. The meetings are being held amidst concern over maintaining social stability in the face the worldwide economic downturn, and as is the case each year, security in Beijing has been beefed up considerably for the session. No major personnel changes are expected. End Summary. Annual Legislative Session to Open March 5 -------------- ¶2. (SBU) Thousands of deputies are arriving in Beijing for the annual sessions of the so-called "Two Meetings," China's yearly political pageant involving the National People's Congress (NPC),China's nominal legislature and "highest organ of state power," and the Chinese People's Political Consultative Conference (CPPCC),the largely ceremonial advisory body. The NPC will open March 5 and, according to contacts, will close March 13 (note: the closing date has not been officially announced); the CPPCC will run March 3-12. No major personnel changes are expected at this session, as the current NPC leaders and delegates were "elected" last year to the 11th NPC and CPPCC for five-year terms. The NPC will follow the familiar script of past years, to include Premier Wen Jiabao's presentation of the Government Work report at the opening session on March 5, the Minister of Finance's budget report, NPC Chairman Wu Bangguo's Report on the work of the NPC and reports by the heads of the Supreme People's Court and Procuratorate. In addition, the provincial delegations who are visiting Beijing will hold numerous discussion sessions, and the NPC and CPPCC will convene a number of press conferences, including the Premier's meeting with the media at the conclusion of the final session. The NPC spokesperson is also expected to hold a press conference on March 4 to "preview" the NPC session, at which China's anticipated military budget for the year ahead is normally announced. ¶3. (C) As in the past, however, this year's sessions will be closely scripted by the ruling Communist Party and designed to enhance Party legitimacy and build consensus for Party policies. NPC deputies, as the people's nominally elected representatives, will comment and vote on government reports and pass carefully vetted legislation. Nonetheless, public concerns from around the country will surface, even as discussions are expected to remain largely confined within Party-dictated boundaries and contentious debate normally aired only behind closed doors. The general outlines of Party policy priorities and concerns for dealing with the impact of the financial crisis and unemployment, this year's core issues, will become clearer as the session unfolds. In spite of the general predictability of the outcome, the specific measures for increasing domestic demand, creating jobs and related economic policies are still closely held. Focus on Financial Crisis, Jobs -------------- ¶4. (SBU) Leadership statements, PRC media commentary and Embassy contacts have indicated that the central policy focus of this year's NPC session will be measures to cope with the impact of the global financial crisis, particularly China's growing unemployment problem. In a February 23 speech to the Politburo, carried by China's official news agency Xinhua the next day, Party General Secretary Hu Jintao appeared to set the tone for the meetings (ref A). Acknowledging that downward pressures on economic growth were "increasing," Hu called for "stimulating economic growth" by "expanding domestic demand, especially consumption demand," while also pledging that "reform and opening" would remain "a strong driver" of growth. Hu also called for "creatively seizing opportunities" in the midst of the crisis. ¶5. (SBU) Premier Wen Jiabao solicited suggestions for the NPC Government Work Report from non-Party representatives according to a Xinhua report on February 15 (ref B). Wen BEIJING 00000531 002 OF 003 reportedly said that the Government needed a "profound understanding" of the severity of the international financial crisis and "the uncertainties caused by it," in order to "be more decisive in taking policy measures." He said the NPC Work Report would contain "strong measures" and would "stick to the core task of securing economic growth amid the financial crisis." Similar themes have been prominent in Xinhua commentary. An article on February 23 stated that NPC discussions would focus on "spurring domestic demand to maintain growth as exports slump," and quoted an NPC deputy as predicting that "without continued stable and rapid growth," job creation and social safety net expansion would be difficult. He claimed the government had "pinned its hopes for an economic revival on stronger rural demand" as exports fall. ¶6. (C) Embassy contacts have also emphasized the economic focus of this year's session and have said they expect "no surprises." On February 26, Cheng Zhiqiang (protect), Americas Division Director of the NPC Foreign Affairs Committee, confirmed to PolOffs that the economic crisis, jobs and increasing investment will dominate the NPC session. Cheng said that there is great concern over the growing unemployment in China, noting that this problem had "potential implications" for social stability. The rural reforms enacted by the Party's Third Plenum last fall, especially changes in land-use policy that increase the possibilities for land transfer, have largely been eclipsed by the economic downturn and will not be a main topic of discussion at this year's NPC, Cheng stated. Dong Yuyu (protect),senior editor at the Central Committee paper Guangming Ribao, told PolOffs February 19 that "nothing big" will come out of the NPC and that it will also include "traditional" issues emphasized by the current leadership, such as "people's livelihood" issues (minsheng wenti),to include spending on health care, insurance, social welfare and education, with particular emphasis this year on making these investments as part of the response to the economic crisis. Fierce Lobbying for a Piece of the Stimulus Package -------------- -------------- ¶7. (C) Further details on the fiscal stimulus package and the ten industrial support plans are also expected to be revealed during the NPC session, according to EconOff contacts. As in the past, provincial delegations are using the NPC period to lobby central government ministries and organs for funding or approval of local projects. This year the emphasis is on securing central support for local initiatives under the four trillion RMB (585 billion USD) fiscal stimulus package announced last November. For example, a Jiangxi Development and Reform Commission official told EconOff on February 25 that the province will be sending a larger delegation than normal to Beijing for the NPC and will be meeting with a total of 56 ministries and other entities, to include the National Development and Reform Commission (NDRC),the State-owned Assets Supervision and Administration Commission (SASAC),large State-owned Enterprises (SOEs),investment funds, and banks, in order to secure funding and approval for local projects. ¶8. (C) There will be no radical changes to the PRC fiscal stimulus plan, although there might be some "adjustments," asserted the NPC's Cheng, claiming that he had heard from some quarters in the NPC and Government that the plan had been issued by the State Council under orders of the Party Center without having been fully "vetted" with the NPC. (Comment: Cheng's revelation raises the possibility that NPC delegates may voice their displeasure with some aspects of the stimulus plan behind closed doors over this supposed short-circuiting of the "vetting" process. End comment) ¶9. (C) In addition to focusing on the stimulus package, particular emphasis will be placed on helping idled migrant workers and new college graduates find jobs, Professor Mao Shoulong (protect) of People's University told POLOFF on February 18. (Note: Mao revealed that some college students will be allowed to remain "temporarily" on campuses following graduation this summer so as to pursue "further studies," as a way of keeping unemployed college students otherwise "occupied.") Mao said that some of the plans that may be addressed at the NPC include loosening credit, especially for individual owners and town and village enterprises to help rural areas, as well as more efficient household registration (hukou) reforms for students. Mao predicted there will also be some steps taken at the NPC to show that the Government is "doing something" about corruption, including by implementing new restrictions on the use of official cars and cadres' overseas travel. BEIJING 00000531 003 OF 003 Concern Over Social Stability; Security Beefed Up -------------- -------------- ¶10. (C) Embassy contacts in recent weeks have emphasized that this year's NPC is being convened amidst an atmosphere of concern over the potential for social instability in the year ahead, even though this aspect has been given only routine attention in mainstream PRC media. This year's NPC session will coincide with the 50th anniversary of the failed 1959 uprising in Tibet on March 10; unrest in Tibetan areas last year that began on March 14 became a major issue during the final days of the 2008 NPC session. (Note: Continuing its hard-line stance on Tibet, China's State Council Information Office on March 2 issued a "white paper" on the 50th anniversary, not of the Tibetan uprising, but of Tibet's "democratic reform.") Recent visits by POLOFF to Tiananmen Square, near the Great Hall of the People where the NPC and CPPCC sessions will be held, have not indicated unusual security preparations beyond last year's sessions. Nonetheless, recent reporting in a prominent Beijing newspaper, Xinjing Bao, indicates that substantial security preparations will of course be taken in advance of the session. For example, on February 28 Xinjing Bao reported that a security posture "similar to the Beijing Olympics" will be adopted, to include a 600,000 officer-strong security reserve contingent; non-Beijing vehicles entering the city will be required to undergo a security inspection; and flying kites or similar objects will be prohibited within 200 km of Tiananmen Square. In addition, there will reportedly be a crackdown on illegal street vendors, commercial advertising distribution, beggars, pedicabs and motor scooters with passengers on Chang'an Street and in the vicinity of Tiananmen Square from now until PRC National Day on October ¶1. (Note: This year's National Day will have particular significance, as it will mark the 60th anniversary of the founding of the PRC.) Although the NPC and CPPCC sessions have traditionally served as a pretext for Chinese authorities to clamp down on dissidents and other activists, PolOffs have as yet received no communication from contacts that such measures have been adopted this year. Still Just a Rubber Stamp? -------------- ¶11. (C) It remains abundantly clear that the NPC remains under the firm control of the Communist Party and lacks the ability to pursue any truly "independent" measures not approved in advance by Party leaders. Nevertheless, the NPC's Cheng Zhiqiang asserted to PolOffs that the NPC has made significant progress over the last five years toward becoming more of a "true legislative body" and less of a "rubber stamp." According to Cheng, the NPC is increasingly run according to clearly established procedures and has contributed to progress in the "rule of law" by passing "a great many laws" in recent years. Cheng asserted that top Chinese leaders can no longer comment on delegate proposals "willy-nilly" as they wish, but must conform to NPC procedures and provide "substantive responses." Cheng also emphasized that the NPC has increased its legislative output, noting in particular the passage of "important" legislation such as last year's Labor Protection Law. Although there will be some "adjustments" made in applying the law due to strong resistance from company managers particularly in the face of the economic downturn, Cheng conceded, the basic law will "stand." Nevertheless, Cheng admitted the NPC is "nowhere near" being a powerful legislature a la the U.S. Congress. In particular, implementation of laws passed by the NPC remains a "key problem," and there is no question that the Party continues to reign supreme over the NPC. Nevertheless, Cheng argued that a growing number of NPC delegates take their work of nominally representing the public "seriously," and behind-the-scenes debates have grown "increasingly lively" in recent years, even if such opinions do not always influence the proposals that are subsequently passed. PICCUTA